Scam forex brokers

It is common knowledge that a good forex broker is the basis for a fruitful trading career.  Trading the forex market profitably is hard.  It becomes a herculean task when you sign up to forex brokers that are normally hell bent on ensuring that none of their customers make consistent profits.

Many traders erroneously feel that the best brokers are those that are STP or ECN brokers. So they simply locate one of these and deposit the often high initial balance required to open an account with them.   However within a few weeks of trading the trader will be left disappointed by the actions of the broker. 

What many traders do not know is that any broker can decide to label themselves STP or ECN. There is no regulation in place yet to check which broker is ECN and which one is not.  Until this regulation comes into effect, many traders will keep falling for the ploy of some of these brokers.

How Can You Fish Out Dubious Forex Brokers?

The look of their webpage:

Many people ignore this obvious way of figuring out who is a good broker and who is not.  If a webpage is poorly designed and lacks any form of security, the broker is obviously cutting corners to reduce expenditure and this smells fraud.

As a rule of the thumb, always avoid brokers with a stereotypical forex webpage! Only consider those with highly professional designs. A quick click on their member area will let you see if the broker is security conscious or not.

Talk to their customer care:

If the customer care representative doesn’t sound knowledgeable and cant string together two good sentences of English, run away with your money. A company that is looking to take charge of your trading funds should at least be able to pay good English speakers to attend to their clients.

Similarly, if you ask them a fairly easy question like “what kind of a broker are you?” and he can’t answer Market Maker, ECN, STP immediately, the alarm bells should start ringing. What serious broker will use a customer care rep that will have to check a manual etc. before answering such a straightforward question?

Regulation:

This is very important. The broker must be regulated in the country they are operating from. However, you must note that the smaller offshore nations will not be able to regulate a broker as tightly as the UK, US or Australian finance watchdog would. 

So if you are signing up to a broker in Mauritius, Cyprus, etc. you can be likened to someone under the rain with a very thin rain coat.  Signing up to any broker that doesn’t have any form of regulation is as good as throwing away your funds!  Don’t listen to their explanations regarding why they are yet to be regulated either.

 Read reviews:

This is a time tested way of finding out how good or bad a broker is. If many people have good things to say about them, then they must be doing something right. However, you must be watchful enough to pick out fake reviews. This is why it is always advised to use review websites like forexpeacearmy.com.

With this, you can easily know what broker to consider using and which ones to stay away from.

Image by Gerd Altmann from Pixabay