In Europe, London is well known for being the center of all forex trading activity. But like many unsubstantiated assumptions, this fact is not entirely true. Advances in technology over the past several years have completely changed the way that the forex market operates and have allowed for German forex brokers to turn Frankfurt into a major player on the Forex market. There are a lot of advantages to trading via the German market such as the one-hour extra that you get because the German market opens an hour before London. This extra hour also gives a significant indication as to the direction that the European market will take for the day, before the London market starts to operate.
FOREX REGULATION IN GERMANY
All financial activities in a country are usually handled of some special agencies or individuals. Financial activity in Germany is handled by BaFIN, which is also known as the Federal Financial Supervisory Authority. What BaFIN does is to dispense licenses to the German brokers, but also to monitor individual activities in the market by both the brokers, traders and companies all by themselves. This means that BaFIN are responsible for the transparency in financial trading, as well as settling disputes among traders and brokers.
THERE ARE SEVERAL GROUND RULES FOR CHOOSING THE RIGHT FOREX BROKER
1. Regulation is the most important factor to consider avoiding being deceived. Never trade with an unregulated broker. The Federal Financial Supervisory Authority (better known by the name BaFin) and the Deutsche Bundesbank are in charge of regulation in Germany. Choosing a local broker is always the best choice as oversees brokerages is harder to deal with. If conflicts occur, the regulation may not always apply to them in the same way that it applies to local brokerages. The local regulation authorities do not have control over offshore brokers and will not be able to help you if any fraud or are scammed are encountered.
2. Choosing a broker with a local presence is always the best policy. Their local office must comply with local rules and regulators, usually in addition to where their home office might be located. If an offshore broker is chosen, then, there may be difficulty pressing your legal rights whenever a dispute arises. This lesson is difficult to accept, but it occurs more frequently than most would like. Let caution be the guide when it comes to safety and security.
3. When making research for a forex broker in Germany, be sure to focus on safety and security, low trading costs, and efficient trade execution. By choosing someone that has a local office, you will be assured that you will not encounter language issues with customer service. Check also for local trader testimonials for confirmation of reviews.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.