Vantage FX is an Australian regulated, ECN best forex broker – but what does that mean? Why is regulation so important? What’s so special about ECN forex brokers? In this quick piece we will answer both of those questions and empower you to make the right decision when selecting a forex broker.
The Importance of Choosing the Best Forex Broker Regulation in Forex Trading
Regulation means your funds are secure, regulation means you have avenues of recourse if something goes wrong. Regulation means your broker is well capitalized and subject to strict oversight. If you are going to trade forex, make sure you trade with a regulated forex broker.
Are all Forex Broker Regulators Created Equal?
Does regulation always mean that though? Not at all. Knowing your broker is regulated is one thing, but where are they regulated? Some jurisdictions are notoriously easy to operate in and some are overly complex to the point the regulators have choked off all competition.
Australia is renowned for the balance its regulators have found between protecting consumers and encouraging competition in finance. When you trade with an Australian regulated forex broker, you can trade how you wish, with as much or as little leverage as you like; while at the same time knowing your funds are safe and secure in what are arguably the world’s most resilient banks.
Zero Conflict of Interest Forex Trading
The vast majority of forex brokers operate on the market-maker model. This means they don’t just earn money on spreads and fees, they actually make money when their clients lose money and lose money when their clients win. This is a glaring and unavoidable conflict of interest for a broker operating under this model. These brokers actually want you to lose. If you don’t lose, they will. ECN means there is no conflict of interest. ECN brokers only make money as you trade and whether you win or lose has no effect on their bottom line.
It’s not just a Better Forex Broker Model, it’s Cheaper
Not only does the ECN model remove conflicts of interest and ensure you and your broker are on the same side, ECN forex trading is actually cheaper. Though you pay a small commission charge on each trade, this is more than made up for by razor sharp spreads as low as 0.0 pips. Not only do market makers want you to lose, they charge you ridiculous spreads and markups in order to achieve that goal.
Once you have empowered yourself with knowledge about the retail forex industry, choosing a broker is simple. Do you want to trade with some bucket-shop broker in Latvia who’s going to charge you a 2 pip spread and probably disappear if you ever manage to beat the spread and turn a profit? No. Why take the risk when you can trade in a well regulated jurisdiction and save money on your trades at the same time? There is quite simply no contest. Make the right decision and trade with an Australian regulated, ECN best forex broker like Vantage FX.
Source: Vantage FX Blog