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Fraudulent Brokers in Forex, How to identify?

For traders, choosing a broker to invest in the foreign exchange market is one of the most important things. It is just as important as your trading system, because even if you have the best system in the world, your broker will bankrupt you. Unfortunately, some brokers offer programs that allow you to manipulate spreads to force you to pay higher rates, often delaying your order to achieve that goal.

Therefore, not only can the spread be manipulated, but also the volatility that does not exist when the market is calm. Although spreads and volatility are natural phenomena in foreign exchange transactions, what some brokers do is not natural. This is what you can expect from a broker in a tax haven with no control or affiliated with an official market agency. So, be very careful when choosing a broker.

Choosing a forex broker:

In the beginning of foreign exchange trading, one of the biggest difficulties I faced was choosing a serious and reliable broker. Unfortunately, many companies do not have any type of certification, making their investment more risky.

Regulation and Inspection:

  It is important to know if the broker is supervised by any government agency. Regulated brokers usually bring the information somewhere on the website, but you can consult it on the regulator’s website:

http://www.nfa.futures.org (United States) http://www.cftc.gov (United States) http://www.fsa.gov.uk (United Kingdom) http://www.asic.gov. au (Australia) http://www.arif.ch/ (Switzerland) Information on possible SCAMS, located at: http://www.forexpeacearmy.com

Stability and performance of the platform:

 Currently, there are many trading platforms for all investors in the market. I think the most important thing is the response time between sending and executing the order! Check brokers can execute orders quickly and the platform remains stable even in the most unstable moments.

Operational costs:

 For operating costs, consult the broker’s billing model (commissions, spreads, etc.). See if the broker charges withdrawal fees, these amounts vary widely. Also check if the broker charges a fee for using the platform you choose to trade, and put everything on the tip of the pen, these details can make a difference!

Beware of the trap of high bonuses:

 As the saying goes: “When you give a lot, the saint will have doubts …”. This is absolutely true! There are brokers who offer excessively high first deposit bonuses (40%, 50%, 100%). This practice is very common today. 

Pay attention to the conditions of such withdrawal-related bonuses. Generally, to withdraw dividends, a certain number of lots must be traded within a certain period of time. In this way, (inexperienced) investors will end up “forcing” negotiations to reach the amount necessary for such withdrawals, greatly increasing the risk they run at the exchange price of a few dollars. Be sensible and remember that you live in a capitalist world! Nobody offers anything for free!

Minimum traded lots: 

The minimum number of trading lots to ensure that the minimum number of lots traded by the broker you choose corresponds to your initial deposit. Do not want to enter a brokerage that offers at least mini-lots of trading (10,000 units, 1 USD per point) depositing USD 100, because trading is impossible if you need to perform good risk management. First, look for a broker that offers one or less micro accounts per lot.

Recommendation:

 As I said at the beginning, choosing a serious and reliable broker is the most delicate part, as all your efforts can be in vain. Imagine that you are a sleepless night, passing the damn “heat”. However, as you have the ability to deal with the market, you can reverse the “situation” and make a huge profit. Imagine this pressure (related to the loss of business) repeated several times in a month (normal in this market), but in the end, you can look back and say that the month was challenging, but beneficial.

Then, on a beautiful morning, you got up and decided to withdraw your hard-earned money! When you open the platform, you will notice that all your transactions have been canceled and your profits have been lost! I can properly say that it is a terrible feeling. A mixture of yang, frustration, anger, etc.

If you have a friend who has already traded in foreign currency, he is the right person to recommend you to a broker. But first make sure that he has withdrawn more than the initial investment amount without any problems or delays (exceeding the term defined by the broker, which is an average of 5 days).

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Mick

Mick

Mick is Editor in Chief and writer here on 361forex. I have been involved with the financial market for over 10 years as a self-taught professional trader and financial manager. Other features he loves to ride his bike on weekends, loves movies and going out with friends.

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Best Free and Paid Forex Signals

Know the best forex signals and enjoy.

Are you enjoying the content? Share!

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Mick

Mick

Mick is Editor in Chief and writer here on 361forex. I have been involved with the financial market for over 10 years as a self-taught professional trader and financial manager. Other features he loves to ride his bike on weekends, loves movies and going out with friends.

5/5

For more information click on the links:

Copytrade FBS

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