There are many trustworthy online forex brokers from which to pick, but there are also scam brokers operating under the same name. Scam brokers make money by luring unsuspecting traders with promises of high returns, then charging them exorbitant fees, making a profit off of their trading activity, and skimming money from their accounts until the traders catch on and withdraw their funds.
A forex broker is not allowed by law to steal client funds, although dishonest brokers do exist. Once that occurs, you risk quickly exhausting your financial resources. If there are any red flags after going through the checklist in this post, you should look elsewhere for a forex broker. You may use this checklist to examine both the Forex trading platform and website, as well as the brokerage, for warning signs.
How to Know Which Forex Broker Is Real?
Now, we’re going to provide you with a list of factors that you should consider before deciding which forex broker is reliable and trustworthy. Let’s get the ball rolling.
The one thing you can count on from a fraudulent brokerage is unhelpful customer service. For a forex broker to succeed, they need happy, engaged customers, and their support staff must be easy to reach and quick to help. It’s important to keep in mind that not all reputable forex brokers provide equally high-quality customer care and assistance. However, the assistance you get, if any at all, should be consistent and helpful rather than giving you the runaround.
Authorization and Certification
Brokers that operate outside of the regulatory system are not subject to oversight. If your money disappears after being withdrawn from an unregulated broker because of “glitches” or “malfunctions” in their system, you have no recourse. Traders who have been cheated by an unregulated forex broker have few options beyond writing a bad review on the firm’s website since these brokers are not subject to any inspection or reporting requirements.
Forex brokers may get their licenses from a variety of different organizations, and not all of them are created equal. Comparatively, registering with the Financial Sector Conduct Authority (FSCA) in South Africa is less time-consuming, costly, and consequential than obtaining a license from the Commodity Futures Trading Commission (CFTC) in the United States.
Costs and Rewards
If you’re dealing with a trustworthy forex broker, they’ll be transparent about their business model and how they generate money. False forex brokers, on the other hand, like to keep things mysterious. The forex broker’s compensation structure for the services they provide to you should be transparent and easy to learn.
If you have to dig around on the broker’s website or get redirected to a new one, or if you call customer service or your broker and have trouble understanding what they’re saying, you may have stumbled upon a fraudulent Forex broker.
Scam forex brokers will also bait unwary forex brokers by withholding payments from accounts or charging extortionate transaction fees. When you attempt to cash out your bonus money, you find out there’s no way to do so. Or the lone withdrawal option has a fee that is almost as much as your account amount. Or, you can encounter a “waiting period” between making a deposit and getting access to your money. Or you run upon a variant on this topic.
You need to be aware of any fees associated with making a deposit, transferring funds, withdrawing funds, investing funds, etc. before you commit any time or money to doing any of these things.
Communication, Privacy, and Data Protection
It’s almost a given that you shouldn’t do business with a forex broker that requests private information like your credit card number or social security number through email or an online form. You should always make sure the website is safeguarded and encrypted. This information should be simple to find since reputable forex brokers value their clients’ faith in them. Along with the brokers, there are a few reliable trading bots such as Tesler App that take care of users’ privacy and security. Hence, these bots ensure traders that they can trade their hard-earned money without worrying about their financial security.
Demo Account Option
Brokers in the forex market who are worth their salt encourage prospective investors to know how to minimize their losses. This goal is sometimes served by providing investors with access to a “demo account.” This is analogous to opening a demo account with a forex broker. The account is loaded with virtual (fake) money and functions in the same way as the genuine one.
Before opening a genuine, funded Forex account, you may usually use this free, no-fee demo account to trade for as long and as frequently as you wish. You may usually keep your free demo account active and use it to test-drive new trading tactics before implementing them in your real, paid account. If a forex broker doesn’t provide a demo account, it’s another red flag that they can be a fraudster.
One of the easiest ways to assess a forex broker’s legitimacy is to ask online. Check out what others are saying about the brokerage online by searching for both the brokerage’s name and the word “complaints.” Check out the results. You may be certain that other forex traders who have been duped or defrauded by a forex brokerage will share their experiences online.
To determine whether any complaints have been filed against a forex broker, you may contact the two groups mentioned earlier: the Commodities Futures Trading Commission (CFTC) and the National Futures Association (NFA).
Examining the promises made by a forex broker on their website is another great way to determine whether they are legit. Take, for instance, a forex broker that boasts many accolades on its website. Scam brokers in this context rely on the naiveté of inexperienced traders to fall for their fake prizes.
So, it makes sense for you to research them. What credibility do these purported awarding bodies have? Do they keep records of that brokerage, if so, where can I find them? There are forex brokers who deserve the honours they’ve received, and it should be possible to confirm their legitimacy. If you can’t seem to find any third-party confirmation of a forex broker’s legitimacy, the forex broker itself is likely the only entity to bestow such accolades.
Rewards, Bonuses, and Assuredness
Do you recall earlier when I said that certain forex brokers can entice you with “honey” to get you to sign up and start trading with them? This is not to imply that you will never get bonuses or other enticements from a genuine forex broker if you decide to utilize their service. Due to the competitive nature of the forex broker sector, this may be a viable strategy for certain brokers.
However, you should avoid any Forex broker that offers assurances of any kind. Furthermore, if the Forex broker’s bonuses and incentives seem “too good to be true,” they generally are.
In a Nutshell,
It may be difficult enough to trade in the constantly shifting currency market without having to worry about dealing with a fraudulent forex broker. You should not rush this. Join reputable internet forums and inquire about the forex broker you’re thinking of dealing with from seasoned traders who have their ear to the ground. File complaints and share what you’ve learnt to assist other forex traders avoid losing money if you encounter fraudulent brokers. By working together and sharing information, we have a far higher chance of only doing business with reliable forex brokers.
To ensure the forex broker is genuine, you should also look into the company’s transparency by requesting financial accounts, historical data, disclosure statements, and information on regulatory and supervisory bodies. You won’t always be able to obtain information like this, but when you do, you’ll want to verify its veracity.