How Forex Trading Is Regulated
Looking for a way to make some extra cash on the side? Dabbling in forex trading could be a good way to get started. Forex is a global foreign exchange market where people buy and sell currencies at opportune moments. It’s a huge industry, as more than $5.3 billion gets traded each day on the market. While breaking into this market may take some time, the effort can be worthwhile. Seasoned traders experience about a 20 percent return in their investments each month.
Before you invest your life savings on the market, though, you should consider a few items. Forex isn’t a market where you can trade once and score big; in fact, 96 percent of forex traders end up losing money. To be in the lucky 4 percent, first read up on forex scams. Many people pose as fake forex brokers and promise huge returns. Generally, if anyone promises you a return of more than 30 percent, decline the offer and move on.
Additionally, take some time to learn more about forex regulations and governing agencies. Each country has its own supervisory body. In the United States, these governing bodies are the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). These groups keep leverage rates at 50 to 1 on major currencies and 20 to 1 on minor currencies. Additionally, these groups certify trading companies, so work only with a group that’s been approved by the NFA or CFTC. To learn more about forex trading regulations, explore the infographic below.