How to Spot a Scam Forex Broker?

The Common Signs Regarding Scam Brokers

1. They promise high profits and no risks

Same with the promises that you'll get rich quickly, it is a huge temptation to those traders with a strong desire to gain. And it is a sure sign that this broker is a scam. Forex trading is a “zero-sum” game - some take profits and some make losses. In addition, forex market is not a casino but a very serious market where trillions of currency units are traded daily. It takes time and costs to learn how to trading properly.

2. No regulation

A forex broker under regulation means it is in compliance with the rules and standards laid down by its forex regulator, while, activities of an unregulated broker lack of restrictions and transparency. Investors' funds in unregulated brokers are not safe and cannot be protected by any laws.

3. Clone firm

As many people recognize the significance of regulation, no surprise, clone firms come into being. Some brokers will claim to be an regulated firm but may quote the real firm's regulatory information (e.g. license number or reference number) and address on its website to suggest it is genuine. It might say it is connected to foreign firms listed on the Register or even copy an regulated firm's details only making subtle changes to things like the contact phone number. This makes the unregulated firm appear as if it is regulated. Those brokers are called clone firms, for example, Top Respect. Top Respect claims it a representative of the FCA Regulatory Body (FCA 163299), established in 2016, providing hundreds of forex currency pairs, precious metals, European and American indices, international stocks, commodity futures and other trading products to global investors. TOP RESPECT Oxford FCA FRN: 769915. However, if searching on the FCA website, we found Top Respect is an unauthorised firm that uses the details of a genuine FCA-regulated firm when offering products and services.

4. No segregated accounts

When doing your research on brokers websites, you'll find most of brkers claim that they put clients' funds in segregated accounts. If they do not, consider it a red flag. A broker without sergregated accounts means they can fabricate the way they treat your funds. It gives them the chances to use clients money at will then run away.

5. Dubious trading platforms

We can distinguish the scams according to the trading platfotms they use. Forex borkers on the blacklist are likely to choose little-known or unkonwn trading terminals rather than reputable ones such as MT4/MT5, Ctrader etc. Some would make clients cost a large amount of money to use their trading platforms. That is also uncommon. For other scam brokers, the links for downloading their trading terminals are invalid.

6. Unprofessional practices

This may include many things. No contact or background information is present on its website. Invalid contact information is provided. Custome support do not respond. The client manager suggest nothing but only “you should deposit more now” or they exaggerate their profitability and strongly recommend you their PAMM accounts.

7. BTC/ Cryptocurrency deposits only

People also find out that many scam brokers have limited funding options. Some may accept credit/debit cards and bank wire transfers as well, but they only take BTC or other cryptocurrencies.

8. Withdraw fraud

Withdrawal problems are a major red flag. You should be able to withdraw your profits easily. Withdraw fees, rules and processing times should be clear to you. If not, the brokers is surely less reliable. There are many reasons for a broker holding on your money. It does not have the funds to pay you, or maybe it is trying to make additional trades with you money or stealing your money. Worse, it is a total scam that does not want to give your money back at first place. None of these scenarios are positive.

9. Tons of negative feedback online

Some brokers have fancy websites. You may not find any loopholes. However, those online feedback is also a cause of concern. They come from traders real experience and are referentially valuable.

Most investors who have problems withdrawing their money from a scam forex broker named SPMarket24.

Tips to Avoid Forex Scams

Protecting yourself from unscrupulous brokers in the first time is the best. As mentioned in our previous articles, conduct research on the broker first is the most important action you should take and elements mentioned above need to be considered.

First, check Brokers' information. Look for a physical address and its valid contact information. The withdrawal policy, its fine print of documents and the presentation of its trading conditions are things you should pay attention to.

Second, check regulation status, including its regulators and license details. Make sure that its license is from a reliable regulator and is not out of the vaild date.

Third, check the online reviews and rate, especially the complains about withdrawals and clients supports.

If everything seems to be positive, it is okay to open a mini account and make a small deposit. A few trades could be made and then a withdrawal. In shorts, we suggest you experience the real trading conditions with minimum cost first.

Already in a Problematic Situation？

There are few things you can do to restore most of your losses. But please remember, cutting loss in time is your always your first step. Do not trust them about “You should deposit more to gain your high profits”.

Then, read through all documents you signed to make sure your operations complied with their rules and it is the broker that should be to blame. Third, try every method to contact client support asking for reasonable explanations or to process your withdrawals.

If, unfortunately, these actions were failed, you may report to its regulators or any appropriate regulatory body who can enforce actions against them. You can also share your story online and post reviews and comments as an alert to others.