Beware of These Forex Broker Scams
The Forex broker you trade with is incredibly important. You need to know that you can safely deposit and withdraw your own money, that your funds are segregated from the brokers own funds and that the broker you trade with is regulated.
Make sure you are not getting ripped off and you know about these Forex broker scams.
This is becoming more and more common. As the big dogs of the financial regulation world begin cracking down on fraud, scams, leverage and a myriad of other issues they see, many brokers are taking themselves offshore.
This is an issue for you as the trader. If you trade with an unregulated broker you must be prepared for what could happen.
You will have no authority to lodge a complaint with. You will have no authority to investigate wrongdoings and if the broker does not want to play ball, they don’t even have to have a formal dispute process. Basically you are at their mercy.
Fully regulated brokers have a far harder time of it. They have minimum capital requirements. They must have a formal dispute process in place and of course they can have their licence stripped as has been happening more frequently of late with ASIC recently freezing broker funds and stripping licenses.
This is a tactic not just used by scammy brokers, but Forex scammers in general.
I am sure you know of blatantly scammy websites that have amazing reviews on sites like “Trust” pilot.
Reviews can be entered on these sites by anyone and scammers will pay a few dollars to have a lot of fake reviews submitted.
Be Wary of Sites That Bash Every Broker
I am sure you also know of sites that bash every broker and it seems that every broker has a terrible rating.
There are a few main reasons for this; the first is that when a trader loses they want someone to blame. It is a lot easier to accept losing money if it someone else fault.
For example; a trader enters a trade during peak news period and finds the spreads go far wider. They don’t really understand why, they lose the trade and blame the broker.
Another example is not correctly understanding overnight costs and rollover and getting upset when their account loses money they were not expecting.
The other reason is that people in general are far, far more likely to get steamed up and write something angry than to write a positive comment.
Most people don’t wake up and think; ‘hey I am going to find a site and make a positive review today’.
However; if they feel slightly aggrieved and they can post anonymously as a guest, then they will go out of their way to post an angry comment.
The other major reason is similar to the fake positive reviews, there are a lot of fake negative reviews. What is the easiest way to make your competition look bad? Write a dodgy review.
Find it super easy to deposit your money and make trades and then when it comes time to make a withdrawal you hit a brick wall?
All of a sudden the 10 different forms of identification you have sent in are rejected, your email requests are taking longer and longer to get replies and nothing is happening.
This can be frustrating and as discussed above, if with an unregulated broker, not much you can do.
The other common tactic brokers will use is that they will make it very easy and cheap to deposit your money, but when it comes time to withdraw you find there is a fee for processing the withdrawal and then a fee with the provider that is crazy high.
After you see the transfer has been processed some of these unscrupulous brokers will then hold your money for 45 days with a load of different excuses.
Having a stable broker that is fast with not just deposits, but also withdrawals is crucial.
Market Makers With Their Own Platforms
If you have ever traded with a market maker that uses their own platform you will know that some strange things can happen from time to time. Of course not all market makers with their own platform are shady, but some will pull some very tricky stunts.
A common example of this is that even when the market is quiet, you have a great internet connection on a solid computer, the platform will mysteriously begin freezing. You will not be able to manage your trades and often find you have been stopped out when the connection is restored.
This is a tactic that sucks a lot of traders into making deposits and trading more than they probably should.
These bonuses include things like free gifts at the time of signup and deposit, or extra capital depending on how much money you deposit.
What often frustrates traders is that these bonuses are designed to get you to trade more.
An example of this is the classic signup bonus. You signup, make a deposit and are given 100%+ extra capital.
The catch? Whilst you can trade with that extra capital, you cannot withdraw any part of it and can only begin withdrawing the profits once you have traded a certain amount of lots which is normally an extortionate amount. The other trick brokers will use with this bonus is adding into their fine print a set time period you must trade all of these lots to access any of the bonus in real cash.
This is something that is often hard to spot especially for new traders. New traders often don’t know what support they should expect and what knowledge their Forex broker support team should have.
It is often only when a trader needs real help and support that they can find their broker is severely lacking.
Some brokers are excellent. They have great training programs and you can jump on a live chat and get all of your questions answered.
Other brokers have support teams that don’t even know what charts they offer or the time frames they supply.
It can be hard to know the tricks that sneaky brokers are going to use to part you with your money, but hopefully this lesson helps you use a broker you trust and can trade safely with.
To find out more about who the best regulated brokers are with the best charts, checkout; Recommended Forex Brokers