Who regulates the forex market prices?

Discussion in 'Forex Trading' started by sab1234, Dec 21, 2017.

  1. sab1234



    In stocks my understanding is that the exchange order book influences the market price. However in forex who determines price? Is there a central order book exchange? If not is the forex price different at different brokers locations?
  2. Xela


    Yes - slightly. (Shouldn't be "hugely", at least in theory.)

    But be aware that when you "trade" against a counterparty "broker", it isn't really a broker in the sense the word's normally used. No currencies really change hands when you "trade" with them: all you're doing is betting with them about the price movements. And be aware that they hold your funds and have their own pricing for their own "products", and they make up all the rules and decide how to interpret them, too.

    Unless you have enough funds to trade with a genuine, direct-access brokerage in the interbank market (they execute trades on your behalf in exchange for a commission, and they have no incentive for you to lose, because they're not directly financially involved, themselves, in the outcomes of your trades).

    That said, there are "dreadful" and "not-so-dreadful" spot forex counterparty "brokers" available.

    Where, how and by whom they're regulated is very important.

    For example if you're in the UK and use an FCA-regulated brokerage, at least the chances of outright fraud and losing your whole account that way are very limited, and you have a government-backed protection guarantee if they disappear with your money.

    But in general, you're right to be concerned, and to be very careful.

    Always check their regulatory record as well - not just "by whom they're regulated". There are some very big, very well-known "brokerages" who have been fined multiple millions by multiple different regulators on multiple occasions in multiple countries, for as many years back as you look, and show no signs at all of changing their behavior.
    happyscalpie and drm7 like this.
  3. Overnight


    There, fixed it for you to help with the flow...:)
    Xela likes this.
  4. Xela


    Lol, thank you ... maybe I should just have said "You might be wise to stay away from FXCM" instead of all that repetition? [​IMG]
    murray t turtle likes this.
  5. Overnight


    Sure, but it has multiple letters though.
    Xela likes this.
  6. Xela


    Don't we all? I even have some after my name, and some more lying around somewhere that I haven't replied to for months ... [​IMG]
  7. sab1234


    If a broker does want to play funny how would they do it? Would they manipulate the price at the trading software or would they not pay you?
  8. Xela


    You refer there to two different problems.

    "Difficulties being paid out" apply mostly to "brokerages" that are either unregulated, or have chosen to be regulated in places like Cyprus or the Caribbean (that's for their own protection, not for that of their customers).

    "Manipulating the prices" is a different matter, and it can happen.

    What matters is how they deal with situations arising "when something goes wrong". When nothing goes wrong, everyone's "good".

    If you want a recommendation, in my opinion it's difficult to do much better than a company called Oanda. Their spreads are not always quite the best (though they're also not bad, overall) but they're certainly honest and ethical, as counterparties go. Not everyone will agree with me, perhaps (nothing new there) but I really think it won't be easy to find a better/safer one, overall. Just my own perspective. I had an account with them for 4 years (some years ago) and was happy with them.
    Last edited: Dec 21, 2017
    happyscalpie likes this.
  9. cvds16


    I am a former client of Oanda ... they used to be better with smaller spreads ... so I recently changed to Tickmill ... quite satisfied thus far about them ... hope it lasts ..
    Xela likes this.
  10. JSOP


    No there is NO central exchanges for Spot Forex prices although they are regulated by various regulatory bodies in various countries. There is an central exchange for Forex futures but not for Spot. Spot Forex is traded on OTC (over-the-counter) market meaning that the prices is determined by negotiations between buyers and sellers, no different from haggling in the market. And yes, Spot Forex prices ARE different from one broker to another.
    #10     Dec 21, 2017