Why forex trading is legal to few countries?

Question

David · Accepted Answer

A country's exchange rate system is either floating or fixed. For a floating exchange rate, the currency's price depends on supply and demand. The price is not fixed; it changes rapidly, depending on various factors. The government and the central bank work together to maintain a stable exchange rate system in some countries. The fixed currency rate system is one of the reasons why Forex trading is restricted. There are usually fewer restrictions on Forex trading in countries with floating exchange rates than in countries with fixed exchange rates because stable rates are important for fixed exchange rates.

Kenneth · Answer

While many countries have legalized forex trading for their traders, there are still countries that consider forex trading a great threat. Forex trading is illegal in a number of countries. Among these countries are Belgium, North Korea, Malaysia, France, Israel, and many others. Despite being the world's largest liquid market, forex trading is considered a scam because of its lack of transparency.

Dustin · Answer

Countries usually ban Forex trading on their territory for two reasons. There may be some exceptions with a third reason, but these two are the most important. SafetyIt is not the safest thing to trade forex. First of all, it's kind of like a business, which is immediately associated with risk. In addition, many countries still view the market as a form of gambling, so they want to protect their citizens. ESMA is an example. It's not like they're banning Forex trading completely in the EU, but the restrictions they're bringing in can provide insight into why other countries do. Consider the trader benefit, which is the deposit bonus. The broker gives you a percentage of your deposit as a "gift" when you deposit to start trading. You can't withdraw this "gift", you can only use it to trade, which creates the illusion that you have enough money to trade with and won't have any problems. Basically, it gives the impression that you are in control. Some brokers market their bonuses poorly, claiming that you can withdraw them, which is never true unless you start trading. You can also trade with leverage, which allows you to use the money you don't have. It's the same thing: the illusion of control. Losses with leverage seem less impactful, and they should be, because if you lose borrowed money, what will happen? There's trouble, that's what.Fixed currenciesSecond, many countries have fixed currencies. In other words, the government is working hard to keep the currency stable. Let's take Thailand as an example. Their currency, the Baht, was pegged to the USD, which meant that no matter what happened to the currencies, the exchange rate of the Baht needed to remain the same. For example, the US economy grew really well in the second half of the 20th century, while Thailand remained rather slow. So over time, it became impossible to maintain a pegged currency of 20 Baht = 1 dollar. It was just too costly.After this, they had to make the currency “float”, which means that the demand and supply of the currency determine its value, not the government. So people like you, me, and financial institutions would determine the value. As you may have guessed this action devalued the Baht because not many people needed it making the exchange rate 35 Baht for 1 dollar.There are still countries like Cuba, Hong Kong, and Jordan that are trying to keep their currencies fixed. The result is that their system would be obsolete if they allowed Forex because too many people would interfere with their monetary policies regarding currency exchange rate stability.

Why forex trading is legal to few countries?

6 Answer

6 Answer

Why forex trading is legal to few countries?

6 Answer

6 Answer

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