Fraud
Avoid Scam Brokers
A quick internet search on forex broker scams will reveal some disturbing results. A lot of fraudsters and crooks took advantage of the online forex boom to set up dishonest brokerages and rip off investors. Fortunately, their numbers have decreased. Traders were quick to wise up, and the authorities clamped down on the cheats. However, there are still some unscrupulous brokers out there, and it pays to be alert.
When you decide to look for a CFD broker, there are a few common sense rules to follow. These will protect you against the online sharks and ensure that you have a safe and (hopefully) profitable trading experience..
Some Basic Rules:
1. A good broker will quickly respond to any questions or queries. If you’re being ignored of fobbed off, it’s a red flag.
2. Research each broker online, and take the time to read through their trading and account management terms and conditions.
3. Don’t commit a lot of money for the first month. See how the fees and commissions work and make a test withdrawal.
4. A minority of dishonest brokers may try churning. Be cautious if you see buy and sell trades for assets that don’t fit your strategies.
5. If you think that your broker is dishonest, check their terms and conditions, and get professional advice before you proceed.
See our choice of brokers
Quick Facts:
1. Big brokers are not always safe partners, as size and liquidity don’t guarantee low risks. The 2008 financial crisis showed us that popular financial service providers aren’t always secure – however high their service standards.
2. Some scammers do have top quality sites, but If a website looks amatuerish, it may well be fraudulent. If you see poor quality text and graphics, confusing content, or sloppy design, be very cautious.
3. Don’t assume that a broker is reliable just because they operate a major sponsorship deal with a sports team or are associated with a celebrity. All is means is that the broker has paid to benefit from somebody else’s image or reputation.
See our choice of brokers
Common Sense Checklist:
Don't be greedy
Successful trading takes time and requires effort. Beware of anyone who promises high profits in a short time.
Research each broker
A broker is like a business partner. Check their reputation and credentials very carefully before you hand over any money.
Ask your Questions
Any legitimate brokerage will be happy to answer your questions and provide proof that they are running an honest business.
Check online claims
If you are unsure about official information you see on a broker’s website, check with the appropriate authority.
Avoid confusion
If you’re researching several brokers, keep a clear list and be sure who you are contacting. More than one trader has accidentaly signed up with the wrong broker.
Confirm the Risks
Legitimate brokers will always be open about potential trading risks. Scammers will often promise guaranteed profits in a short time frame.
Understand Withdrawals
Ask about the withdrawals process for your account. Be clear about: payment methods, time frames, fees and restrictions.
Don't be pressured
No honest brokerage will ever pressurise traders to sign up or deposit funds. If you get the ‘hard sell’ from a rep, find a different broker.