Forex broker scam list
If you have ever tried conducting an Internet search on scam Forex brokers, you know for sure that the number of outcomes is really shocking. While the foreign exchange market is gradually getting more regulated, but there are a lot of unscrupulous companies, which shouldn’t be in the industry.
If you relish a thought of trying to trade currencies on your laptop, you need to find a Forex broker you can trust. It should be reliable enough. Stay away from those companies in the Forex market, which make you doubt and hesitate.
To sort out the worthiest companies from numerous mediocre stuff and scams, we should make a series of steps. You shouldn’t deposit your money to your trading account if you aren’t confident with the broker. Forex trading is a serious business, which requires a great deal of intelligence, patience, and dedication. However, when a bad broker implements a number of harmful policies, even a guru of technical analysis won’t be able to earn a profit. Here below we’ll discuss all the intricacies of relationships between brokers and their clients and point out what really matters in choosing a broker. However, if you’re reluctant to dig in a Forex broker scams list or you’re reluctant to memorize 6 ways Forex brokers cheat you, just stick with a ready-made solution – Fxmcapital, a well-regulated Forex broker with an impressive number of returning clients.
True Forex facts versus fiction
When closely watching a potential Forex broker, you require learning to separate true fact from worthless fiction. Well, having viewed all these articles, forum posts as well as disgruntled feedback about a particular Forex broker, you might assume that any trader is a pure scam, unable to let its clients earn a good income. Would it be a sound fact? Here the truth is that literally, anyone who has recently failed to make money in the foreign exchange market can post insulting content on the web blaming the company for his own mediocre strategy.
The Internet is flooded with absurd accusations of Forex brokers. Those who don’t want to find a reason in themselves, prefer merely extending a scam forex broker list, backing it with foolish statements, such as “the market reversed when I opened my trading position.”
It’s quite real that novice Forex players fail to benefit from a well-tested strategy or a sound trading plan. These folks prefer to fully rely on their psychology. They believe they feel where the market is going. However, to say the truth, there’s a 50% likelihood that they will be right. When the novice trader opens a trading position, he bases his decision solely on emotions. Experienced market players certainly know these junior tendencies, and they don’t enter the market when there’s no need to do it. Having failed to move along with the market, traders are more likely to accuse their brokers of hunting down their profits or something like this instead of analyzing the true reasons for their failures.
Of course, it’s possible that a trader can lose his money because of his broker’s fault. It can take place when a broker tires to rack up trading commissions at the trader’s expense. By the way, there have been reports of brokers intentionally moving quoted rates for the purpose of triggering stop orders, while other clients’ rates haven’t even moved to that price. Fortunately, for investors, such a situation turns out to be an outlier. Most probably, it won’t happen again. You need to keep in mind that Forex trading shouldn’t be regarded as a zero-sum game. What’s more, Forex brokers mainly earn from increased trading volumes. In general, normal brokers are interested in having long-term customers who trade on a regular basis. Such clients can only bring them constant profits.
As for the slippage, it can often be explained by behavioral economics. That’s a common thing for novice market players to panic. They’re afraid of missing a crucial market move. Therefore, they impatiently click on their buy button. They can also be afraid of losing everything and open a short trading position for this purpose. In an extremely volatile exchange rate environment, the broker is unable to ensure that this particular order is going to be executed at the specified price. It generates abrupt movements and nasty slippage. It’s also true for the stop as well as limit orders. Well, some Forex brokers can guarantee that all of the client’s limit and stop orders will be executed, while others can’t guarantee it for objective reasons, and they even openly tell about it. Slippage can be noticed even in more transparent financial markets. The matter is that markets keep moving and brokers don’t always obtain the ordered price.
The role of communication between traders and brokers
Real problems can start evolving when communication between a trader and his broker becomes problematic. If a market player fails to get responses from his broker or the company comes up with uncertain answers to the client’s questions, this fact doesn’t speak in favor of the broker. Of course, such problems need to be tackled and explained to the market player, while the Forex broker needs to be helpful and demonstrate good customer relations. Perhaps, the worst thing that can occur between a trader and his broker is the client’s failure to withdraw earnings from his account.
Broker research can protect you
Fortunately, it’s quite possible for you to protect yourself from mediocre brokers and dangerous scams. Just make the following steps:
- Conduct thorough online research of the Forex broker you’re interested in. A generic internet investigation can provide relevant insights on whether downbeat comments could be an irritated client or something more serious. Additionally, a perfect supplement to this type of research will be the BrokerCheck by the Financial Industry Regulatory Authority. It will disclose all legal actions against this company, if the broker has real faults, of course.
- Ensure there aren’t any complaints about not being capable of withdrawing earnings. If there are such negative reviews, you should contact the trader if possible to have him interviewed about his experience.
- Examine all the fine print of the corresponding documents when starting an account. The matter is that incentives to open a trading account are often utilized against traders each time they try to have their earnings withdrawn. For example, you deposit $10,000 and obtain a $2,000 bonus. After this, you lose your funds and try to withdraw some remaining money, but your broker tells that they are unable to withdraw your bonus funds. Don’t forget to read the fine print. Thus, you will guard yourself against nasty pitfalls.
- If you’re fully satisfied with your research on a certain company, start a mini account or any other trading account with a tiny amount of funds. Then, try trading it for a month. After this, you should try to withdraw your earnings. If everything has gone OK, it should be relatively safe to more actively replenish your trading account. In case of having any issues, try to discuss them with your broker. On the contrary, if your experience of working with this broker is negative, don’t hesitate to tell this story online. Thus, you will help other people not to get into this trap.
By the way, you can’t determine the level of risks involved considering only the size of the Forex broker. As a rule, larger Forex brokers grow by simply providing a certain standard of trading services. However, the 2008-2009 financial meltdown taught us that a big or popular company isn’t always a safe solution. If you don’t want to make a thorough financial broker background check on your own, you can always opt for a simpler solution – Fxmcapital. Working with this reputable company r you can forget about Forex broker scams and enjoy the timely withdrawal of your earnings. You will never find Fxmcapital in a Forex broker blacklist
Brokers and their commissions
Forex brokers who are paid commissions for selling and purchasing securities can sometimes fail to resist a strong temptation to effect transactions to earn a commission. Evidently, those who do this too much can be accused of churning. Churning means placing trades for another purpose, different from the client’s one. The Forex brokers caught churning are bound to pay fines. Other punishments include reprimands, dismissal, suspension, disbarment, to say nothing of criminal sanctions.
More about churning
The SEC defines churning as a situation when a broker buys or sells assets in a client’s trading account for generating commissions, which benefit the company. To conduct churning, the broker requires control over the client’s investment decisions. If you notice sales or purchases in your account that you haven’t actually made on your own, that’s churning. It’s an unethical and illegal action, violating numerous securities regulations.
A typical sign of churning is a situation when you notice securities bought or sold in your trading account that doesn’t actually match your investment goal. For instance, if your goal is to earn a stable income, then you shouldn’t see buying and selling positions in your account for small-cap equity or technology equities. As for churning with derivatives, including call and put options, it’s much harder to notice due to the fact these financial instruments can be utilized with the aim of accomplishing a variety of goals. However, selling and purchasing calls and puts should take place only if you demonstrate a high-risk tolerance. Apparently, selling puts and calls can bring current income if it’s carried out rationally.
How watchdogs assess churning
An arbitration panel is expected to consider a number of factors when conducting hearings to figure out whether this particular company has been churning user accounts or not. They are going to assess the trades, placed in light of the customer’s level of education, sophistication, experience and the nature of the trader’s relationship with the company. Moreover, the panel will also estimate the number of solicited vs. unsolicited transactions as well as the dollar amount of commissions, which have been generated against the backdrop of the customer’s losses or profits as a result of these transactions.
However, there are times when it might seem like your Forex broker might actually be churning your trading account. However, it mightn’t necessarily be what you think. If you have any questions as for this or feel uneasy about what your Forex broker is doing with your funds, you shouldn’t hesitate. Instead, you require consulting your securities attorney. Alternatively, you can try filing a complaint on the official website of the SEC.
What to do with a bad broker
To our great regret, you have few options in this case. Nevertheless, you can still try to do the following things:
- Attentively view all the provided documents just to ensure that your Forex broker is doing wrong and against the law. However, if you’ve overlooked something important or neglected reading the documents signed by you, then you’re even in a worse position.
- Talks about the course of action you are going to take if the company doesn’t adequately respond to your questions or it has refused to send back your earnings. Probable measures might include reporting the case to FINRA or another other appropriate watchdog and posting your story online.
While market players might blame their Forex brokers for their decreasing deposits, it’s quite possible that brokers are wrong. As a Forex trader, you need to be thorough. You should conduct research on a suspicious company before opening a trading account with them. If your research appears to be optimistic for this company, you can start with a small deposit, make a couple of trades and then try to withdraw your earnings. You require verifying that your Forex broker is involved in a number of illegal activities against you. For example, it might be churning. Try to reach out to your broker and ask all the necessary questions. If you haven’t been answered, shift to another stage. Come up with complaints and ask reputable watchdogs, such as FINRA, SEC, etc., to help.