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Trading Futures, Options on Futures and Forex FAQs

  1. How are the futures markets regulated?
  2. How is my futures account protected?
  3. How can I learn about trading futures?
  4. How can I learn more about foreign currency (forex) trading?
  5. What are the differences between on exchange and off-exchange trading?
  6. Where can I find NFA Investor Alerts?

1. How are the futures markets regulated?

The Commodity Futures Trading Commission (CFTC) has jurisdiction to regulate the futures markets with oversight over the entire industry. Each U.S. futures exchange operates as a self-regulatory organization governing its floor brokers, traders and member firms. National Futures Association regulates every firm or individual that conducts futures trading business with the investing public.

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How are the futures markets regulated?

2. How is my futures account protected?

Government regulations require the strict handling of customer funds used to participate in U.S. futures markets. Funds that customers have deposited in an individual account with their futures commission merchant (FCM) to trade on futures exchanges located in the United States are required to be segregated (held separately) from any of the firm's own funds. The amount segregated will increase or diminish as the customer makes or loses money from trading.

Customer funds are not subject to creditor claims against an FCM should it become financially unstable or insolvent, and customer funds can be transferred to another FCM if necessary. Finally, even though an FCM is required to segregate customer funds, customers still may not be able to recover the full amount of any funds in their account if the firm becomes insolvent and there are insufficient funds available to cover the obligations to all of its customers. Customer accounts are not insured. Customers should ask their broker about account protection and should be aware of the limitations imposed on the protection of the funds in their futures trading accounts.

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How is my futures account protected?

3. How can I learn about trading futures?

To learn about trading futures and options on futures, read NFA's booklet, "Opportunity and Risk: An Educational Guide to Trading Futures and Options on Futures."

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How can I learn about trading futures?

4. How can I learn more about foreign currency (forex) trading?

To learn more about foreign currency (forex) trading, read NFA's brochure "Trading in the Retail Off-Exchange Foreign Market — What Investors Need to Know." NFA also offers a free online learning program regarding trading forex.

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How can I learn more about foreign currency (forex) trading?

5. What are the differences between on exchange and off-exchange trading?

On exchange trading is the trading of commodities and contracts that are listed on an exchange. Off-exchange trading, also known as over-the-counter trading is the trading of commodities, contracts or other financial instruments that are not listed on exchange. Off-exchange trading can occur electronically or over the phone. Some foreign currency (forex) contracts are traded off-exchange.

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What are the differences between on exchange and off-exchange trading?

6. Where can I find NFA Investor Alerts?

 Visit NFA's Investor Information section of the NFA's website.

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Where can I find NFA Investor Alerts?
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