During today’s global banking crisis, more and more day traders are worried about the safety of their funds if their forex broker goes under.
In the United States, the NFA (National Futures Association) does not protect against insolvency of forex brokers. Nevertheless, I believe that FX (foreign exchange) remains one of the best asset classes for active traders.
That’s one of the main reasons why many traders and investors are switching brokers. Different jurisdictions offer access to brokers and banks that offer account protection in Forex. Some of these firms offer the MT4 (MetaTrader) platform, which has become sort of a standard in the retail forex trading arena despite some critics. The execution quality many of these trading firms are providing has also improved – and many claim there’s no intervention from a human dealing desk.
So the next time someone recommends for you to open an account with a brokerage firm just because of NFA membership, think again. You need to do your homework and find out just how “safe” your trading or investing account with each brokerage firm is.