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Is Forex Legal? A Hurdle for Novice Traders.

by Ahsan Aslam Khan

Is Forex Legal? A Hurdle for Novice Traders:

The legal status and validity of trading is one of the crucial factors that hamper the investment of the novice traders. “Is Forex Legal?” this question serves as a nightmare for them. Forex Market is the greatest and most widely preferred financial market. It has snatched the spotlight from the stock market. Its volume of trade is increasing day by day. On daily basis investors from all over the world are trying their luck in the arena of forex trading. A trader of any nationality can easily trade in forex market. There are no such restrictions of nationality in forex trading. It is one of the many appealing features of forex market. Still there are some disturbing issues related to it. Such troubling questions pop up in the mind of novice traders. Novice traders, who want to try forex trading for the first time, feel hesitated because of these troubling questions.

Novelty & Legal Status of Forex:

It is in human nature that man is usually afraid of new things. Trying something new requires a lot of courage. In addition, Forex trading involves money, your hard earned money.  People have to work hard to earn money thus they do not feel confident to invest it in something new. Thus those who don’t feel confident enough to invest in it spread rumors about it. They become a practical example of ‘Grapes are sour’. Some even call it illegal as well. After hearing and reading such comments the Novice traders doubt the validity of Forex trading. Then the question disturbs them and prevents them to invest, “Is Forex legal?” They deeply wonder about it. The legal status of Forex trading clouds their judgement and decision making skill. This indecisiveness makes them change their mind to try trading.

Validity of Forex Market:

One of the major questions that serves as a hurdle and stops you to invest in Forex trading is that whether it is legal or not. This form of trading is not a new concept. Traders and investors are well aware of it. The period of Pandemic has heightened its significance twofold. People are witnessing traders earning heaps of profit in this field. This huge amount of profit also raises questions on its validity. Novice traders doubt its validity.

Is Forex trading legal in USA?

Is Forex Legal in USA? The most frequently asked question about the forex trading is that if forex trading is illegal in USA? Novice traders wonder regarding the legal status of the forex market. Frankly Forex trading is legal in United States of America. However there are specific trading rules that are strictly observed in US. Every country has certain rules for trading. In USA, Forex is definitely legal but you have to trade within specified restrictions. These rules and restrictions are basically set to regulate trading. Therefore the Forex trading in US is somewhat different to the trade in other countries.

Violation of trading rules:

These specified trading rules of USA apparently seem difficult to follow. However these steps make trading straight forward and easy to follow. The violation of these rules results in penalties and heavy fine. You cannot play tricks with the laws in USA. This strictness of laws makes Forex trading quite reliable in USA.

Scams of brokers:

Like all other fields, Forex trading is not free from scams. With the increasing popularity of Forex trading, the number of scams of forex brokers is rising as well. The internet is overflowing with the scams of brokers and stories of poor sufferers who lost their entire account. But it does not mean that because of these scammers, you should start doubting the validity of trading.

Is Forex Legal?

Well scammers are everyone. No field is completely free from scammers. You need to be extra-conscious whenever your money is involved. It does not matter in whatever thing you are investing. Same is the case with forex; it is not wise to doubt its legal status. Even if you are a victim of a scam, you cannot call it illegal. It happened because you were not too careful to select the right broker. Now raising this question, “Is Forex legal?” is definitely not the right thing to do. Some conservative traders who feel afraid in investing in it even call it ‘Gambling’. They do not believe in the technical aspects of trading. Rather they call it ‘A Game of Luck’. Such comments often dishearten the novice traders.

Is Forex illegal?

Forex trading is legal and allowed in all the countries. But there are some certain rules to trade in forex market. It is definitely not just a game of luck or a mere form of gambling. It requires full attention and dedication. Traders do not just earn profit by mere good luck. They devote their precious time to learn and master the trading strategies. They try to explore different layers and features of trading. Sometime they often lose money but they do not quit it. They take this loss as a lesson. Their hard work gives them reward in the form of profit. Thus they do not win, rather they earn it. Therefore if you are pondering, “Is Forex illegal?” then my friend, you need to change your mentality. Otherwise you can try something else because Forex trading is definitely not for you.

Red Flag situation:

Here the question arises, “How can you identify that the broker is not working for your best interests?” There are some tips that can help you in this regard. First of all, if the broker is not responding to your queries then you must be alarmed. You should treat this situation as a ‘red flag’. You cannot blindly trust your broker.

Unregulated Forex:

The major cause of these scams is that the Forex trading is still unregulated. Some countries are regulating it. Yet the sheer number of brokers on internet is taking advantage of unregulated Forex trading. The lack of transparency in forex trading is also paving the path of scammers. However with the passage of time, every country is introducing some laws to regulate trading. Therefore in the near term, you can expect transparency in the Forex market which will ultimately cap the increasing number of scams. Obviously, this transparency will attract more traders and the already bulky volume of trade of forex market will further increase.

Selection of Broker:

The Forex trading is 100% safe and profitable if you carefully select your broker. A minor carelessness on your part will lead you to lose all your money. Your trading account will have to pay for your carelessness. Thus you need to check the affiliation and location of the brokerage firm. I would suggest you to consider the firm with considerate regulations. You need to do thorough research for the selection of your broker. It is suggested that you should consider investing with a Brokerage firm that is registered with SEC (Securities and Exchange Commission). You should treat registration as a key in selecting a broker. Selecting a trustworthy broker is the first and foremost step towards forex trading. As it is said that the first step is always the hardest one, same is the case with it. You cannot take it easy.


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