Regulatory compliance, governmental regulation, and licensing may not sound like the most fun aspects of investment, but they are essential to ensuring equitable trades and keeping investors safe.
The Financial Conduct Authority (FCA) is the leading entity that regulates financial markets and ensures brokers, banks, and other financial firms are following the law and treating their customers well.
This article will discuss why FCA-regulated brokers are important and why trading with them is a better decision than an unregulated exchange.
Trading Can Be Rewarding
Trading financial securities such as stock, options, and forex enable traders to implement strategies and generate returns based on their research and understanding of the financial markets. Savvy traders understand that they can learn from their wins as well as their losses, and often look to ancient Chinese general Sun Tzu for inspiration in The Art of War when he said, “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, you will also suffer a defeat for every victory gained. If you know neither the enemy nor yourself, you will succumb in every battle.”
Traders who understand why they win and why they lose are better prepared for the next investment opportunity. However, implementing effective trading strategies will not get you very far if you are not working with a reputable FCA licensed brokerage.
Brokerages and Exchanges Are Not Created Equally
Finding a brokerage that fits your trading style is important, but ensuring they are licensed and meet regulatory certifications is essential to avoid scams. Suppose you are interested in working with a brokerage or trading platform that offers appealing features. In that case, you should check the FCA database to see if they are registered and meet governmental compliance.
Don’t worry; this is not complicated and should only take a minute. Many fraudulent firms practice deceptive and predatory marketing strategies to dupe unsuspecting investors.
Search For Red Flags
Along with searching the FCA database, there are clear red flags to search for if you are skeptical of a brokerage:
Lack of Customer Support
The best brokerages offer accessible and friendly customer support. Customer support should be able to answer your questions clearly and provide helpful information about your potential account. If you can’t find any customer support information or chat capability, you may want to look elsewhere.
Poor and Limited Reviews
Likewise, legitimate trading platforms should be well-reviewed and maintain high marks from their users. Bad reviews or sparse feedback can be indicative of limited capability or a warning sign to avoid that platform altogether. Modern trading platforms usually offer mobile apps to pair with a desktop experience, so check the app store ratings as well as their online reviews.
Finding a secure and reputable trading platform can be easy if you know where to look. By searching the FCA database and reputable reviews for the top FCA-rated brokerages, you will be prepared to start trading with peace of mind.