Today we are going to talk about how to identify a scam broker literally in one minute. It’s actually very easy if you have enough experience or information from other experienced traders.
As in any other sphere of entrepreneurial activity, there is quite a big list of companies on the Forex market, which earn not as the broker is supposed to, but by creating conditions for zeroing out the deposit or stealing the client’s money at all. Unfortunately, the reality is that with powerful marketing support a trader cannot always distinguish a real company from the one that is a fraud broker. An experienced trader, who has been in this environment for a long time, knows all the active players on the dealing services market, that is why the calculation is usually made for the people who have never traded before and have zero knowledge of how the currency market works.
The schemes of work barely change over the years, although forex scam brokers are quite inventive and it can be difficult to understand how to distinguish a broker from a scammer.
Before you start working with a broker, the first thing you need to do is check the regulation. Take it as an immutable rule. Regulation is important because it is essentially the power that controls all these companies.
The whole concept of regulation is to supervise the forex business in a particular country or region, to protect customers and provide a safe environment for forex trading. Thus, in simple words, a regulated broker is a safe and legal broker that meets various rules and criteria set by an international body in order to ensure safe trading and good customer service.
Forex brokers are regulated with a license issued by local authorities, such as the world-renowned FCA in the UK, ASIC in Australia, MAS in Singapore, Commodity Futures Trading Commission CFTC in the US, etc.
In short, scam brokers very often entice clients to invest in securities, cryptocurrency and other assets and even with capital insurance and often with a guaranteed profit! This is a scam from the very beginning because the market has a huge volatility and only scammers can guarantee a profit.
According to the sad experience of many inexperienced traders, most of the scam brokers are regulated by such countries :
In fact, there is a whole gradation of fraudulent actions towards traders, this includes:
Scammers can also be defined by the following features:
We also recommend finding out the real reviews about the broker from traders. For this purpose there are a lot of forums on the Internet, where you can easily find information and ask questions. The main criterion here is to recognize a «true» review. True reviews are usually supported by all sorts of documents: various screenshots, copies, emotional vocabulary may be used. These reviews are not written according to the script and, in the future, they are the ones that help the broker to gain a good reputation on the market.
I personally love working with companies that are controlled by the FCA.
For example, HYCM is the company I use. It’s FCA regulated because it’s the UK, they have probably one of the longest legal histories. I love working with the FCA because they can block money, they can start sanctions, they can start investigations and block the bank accounts of scammers. HYCM has been regulated by the UK since 1998 and has been providing trading services since 1977.
HYCM’s clients get over 300 trading instruments, a personal account manager and 24/5 customer support. I also really like that execution time is less than 12ms, spreads from 0.2 pips, low requotes. Their deposit/withdrawal commission is 0%. They really have the lowest spreads and lowest swaps.
You should choose a broker responsibly. Based on the aforementioned recommendations, it will be easier for you to find a «true» broker, with whom you will not have problems in the future. And before concluding a contract with a broker, remember that it is necessary to: check the broker, find out reviews about him, so to speak, from the «first hands», check the information about the firm — broker and filter out unnecessary information.