Along with all the other implications of Brexit, experts are predicting that it will impact foreign exchange (Forex) trading in the U.K. and beyond. While British leadership has promised to protect the British economy following Brexit, investors have not been promised a smooth transition. Foreign exchange markets are volatile and respond vigorously to political shifts and currency changes. If you trade in the Forex market, it’s very important to understand the regulations that govern the industry, as well as common scams and issues.
Forex regulations around the world can vary widely. The U.K.’s Financial Conduct Authority allows some of the highest trading leverage limits in the world, at up to four times the limit U.S. investors are allowed to risk and eight times the leverage allowance in risk-averse Japan. Those high leverage limits mean British investors can make massive profits, but it also leaves room for tremendous losses. Because of that, British investors are on their own to exercise good risk-management strategies and not invest more than they can afford to lose.
If you’re new to the Forex markets, be wary of scams and get-rich-quick schemes associated with Forex trading. The most common scams include selling bogus software that’s supposed to guarantee profits, marketing shady trading schemes or training materials, or even stealing your accounts outright. To learn more about Forex trading regulations around the world and the potential dangers of entering the market, check out this infographic on regulations in Forex trading.