Follow These Tips To Find The Right Broker

While many reputable Forex brokers are available online to choose from, there are even more chances of you running into a broker scam.

Under the guise of a broker, these impostors lure in traders with a fake promise of guaranteed return by charging them excessive fees, profiting from the money these traders have invested, and then disappearing without a trace.

However, some fake brokers will blame it on a bad trade rather than disappearing, and then these scammers convince these poor traders to invest more and more, bleeding them from their wealth.

If you are in the quest to find that perfect broker or already have one and are suspicious about the current broker, we have laid down some tell-tale signs that would confirm if the broker is running a scam or is genuine. 

Promising guaranteed profits:

Every business cannot guarantee a risk-free profit. There are always some elements of uncertainty that could prove challenging and affect the outcome of the profit. 

If you have been attracted to a broker for the guaranteed profit generated from the Forex market, you must be on your toes as the broker tries to scam you. There is always an element of loss in any business. These brokers also charge exorbitant fees after offering a virtual platform supporting Forex trading.

Lacking inherent risk disclaimers

Forex trading has its inherent risk that even the Forex broker should acknowledge. A reputable broker will ensure that all the terms and conditions are explained to their potential clients or traders, including the risk involved in trading Forex on a platform. There are chances that the client or the trader might lose money instead of maximizing their wealth.

Reputable brokers will always communicate and inform what their clients are involved in as they have nothing to fear or lose. These brokers realize that the market can bear both, a profit or a loss; they want you to understand the inherent risk associated with Forex Trading. However, a scammer would always avoid filling you in with such details, as they are interested in milking out as much of your money as is extractable.

Excessive fees

Every broker has their fee structure, but Forex broker scams operate with more aggression than the rest. Since their entire existence is based on ripping you off, they indulge by charging additional, hidden fees, and use other cheap tricks to make more money.

Since you are new to Forex trading, you may not be aware of the fees that a normal broker charges for using their platform. Therefore, it is in your best interest to compare prices among the Forex trading platforms before finalizing the broker. 

Although these fees will appear small while evaluating on a fee sheet, high fees will eventually eat through your profits. This is because scam brokers ensure to drain up the funds of new or inexperienced traders through high fees. They take away as much profit as they can before these new or inexperienced traders smell the rat. 

Trades That Look like Churning

Some brokers charge commissions for buying and selling in the Forex market on behalf of their clients or traders. Although it is not bad, some brokers will buy and sell repetitively irrespective of profit or loss. They do this to earn a commission on each trade. It is a fraudulent activity, as these brokers are more focused on themselves instead of focusing on the growth of their clients or traders.

If the trade pattern on your account does not align with your trading strategy, then it is a sure sign of churning. Suppose you ever feel doubtful about the trading activities on your platform. It is best to halt all the trading activities or pull off your money from the platform and carefully evaluate what happened during the trade. Finally, confirm if the trade carried out was legitimate or a fraud.

Lack of funds for safety and security measures

Certain security measures regarding funds are mandatory for reputable and regulated Forex brokers to ensure the safety of their clientele and their funds. 

One of the best ways to check if the broker is regulated or registered is to look up their license number registered to a private or a government agency. Brokers usually will mention it on their websites. If they have not mentioned it, you can ask for it, and a genuine broker won’t hesitate to provide one. You can then verify it with the agency that has issued the license. Finally, review their policies regarding segregating investment and providing a fully encrypted Forex platform for their clients.

Poor communication and customer service

It would be in your best interest to check the responsiveness of the broker’s customer service. Try to answer these questions after trying to connect to their customer support team. Is the customer representative eager to answer your questions and concerns? Is it difficult to get in touch with the customer representative? 

Sometimes you have to hold on as there may be a long waiting list of customers trying to reach them. For a call center, this is normal. However, if you have been trying to contact them for hours, it is a sure sign that the broker is giving you the cold shoulder.

If there is a lack of communication, you are at a loss as your queries and concerns go unanswered, which is a sure sign of subpar customer service. A scammer won’t indulge in call center operations as it requires money, and money is the one thing they are interested in earning rather than providing service to their clientele.

Conclusion

A legitimate broker will always ensure that all your queries and concerns are answered as they value you as a part of their clientele. Thus, you should be aware of the common practices of the Forex broker scam. It is crucial that you select a broker that reflects genuine efforts, transparency, and good faith. If they are hideous and making crazy offers then there is a lot to be suspicious about. A trader must make it a habit to run background checks on a broker, to establish their reliability. It is always better to be safer than regretting it later.