How to Make Sure Your Forex Broker is Trustworthy
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Over the past decade, the popularity of forex has rapidly grown, resulting in thousands of new forex brokers appearing and flooding the market as we speak. All are looking for one thing - traders’ patronage. What happens when there are so many players out there? Well, you’ve guessed right - some of them won’t be as genuine as they seem.
A simple Google search of “forex broker scams” will give you a clear idea of how many unscrupulous and questionable brokers are out there. How are they even in business? How do they manage to scam traders? How can you make sure your broker is trustworthy? We will try to answer all of these questions in this article.
Once you’ve decided that you’re ready to become a trader, it’s up to you to identify the brokers that are reliable and those that are not. Trading Education, however, is here to help you do that by going through the steps you have to take before trusting a broker with your money. To sort out the reputable brokers from the shady ones, we have collected a list of things you should do when you’re looking for your new broker.
Go through these steps before you decide to deposit any amount of capital with a broker.
Forex trading is hard. When a broker is against you and only tries to steal your money, things become even harder.
You don’t want to be part of the next scam story or spend months and even years trying to get your money back or proving that you were lied to by your broker.
Do your homework and verify that your broker is legit. Here’s how you can do it:
Check out Independent Review Sites
Review sites like Trustpilot contain a lot of information about all kinds of companies, including forex trading brokers. The good thing about these independent review sites is that the comments left there are generated by users only so you’d definitely be able to get a good overall picture of the broker you’re considering.
Also, you can check out the average rating of the broker, calculated based on all of the reviews left by the customers. This can further cement your final decision.
While going through the reviews, make sure you carefully read through the negative experiences of others and try to spot the patterns. If many people complained about the same thing (hidden fees, trouble with trading signals, inability to withdraw funds, etc.), you should probably avoid the broker.
If the majority of the reviews are positive, go for it. There will always be people who complain on the Internet or have had a bad experience because of their lack of trading knowledge, not because the broker was scamming them so you may have to take some reviews with a pinch of salt.
Financial Forums - Fortunately, there are many financial threads and online trader community groups on social media. You can participate in discussions, ask questions, seek opinions, etc.
Many novice traders get interested in the forex market because they know someone who’s been trading and told them about it. Nothing can beat the word of a friend or a family member as they have no particular interest in misleading you with false information. They can surely point you in the right direction even if they are using another broker.
Seeking out the help of an investment adviser is also an option. Since their reputation is on the line, it’s highly unlikely that they will lie to you and lead you to an unregulated, questionable broker.
Check with Professional or Regulatory Organizations
Open an account with a regulated broker. Check the affiliation of the broker. The regulatory information should be listed on the official homepage of the broker.
Another step you might take to secure yourself is to go directly to a regulatory organisation, as legitimate brokers are required by law to register with the SEC in the US or the FCA in the UK. There, you might be able to check out record information on broker registration, status or whether they had any disciplinary action against them.
Such databases can’t be manipulated and will allow you to get a clear picture of the broker’s past.
Check the Website / Social Media Channels
Go directly to the source.
Devote some time to checking out the website.
If you see a suspiciously large amount of testimonials, explaining how “great” the broker is, right at the very front of the website, you might want to think twice about how genuine they really are.
Also, it’s advisable to check out the various sections of the website and read carefully. Lack of essential information and big chunks of unnecessary paragraphs that explain how “secure”, “trustworthy” and “amazing” the broker is, might be a big red alert for you.
Did the broker list their address or telephone number?
Legit companies list their company name and ways to reach them very clearly. If such information is missing, the broker is probably not trustworthy.
Check out the year of establishment as well.
If the broker has been out for a short period of time you might have to think twice before investing your money there.
Remember, it’s easy to build up a website with good content for a short period of time but it’s not that easy to build a good reputation that’s been steadily proven for years.
It takes time for traders to figure out that a broker is a scam and spread the word.
Once the community discovers the scam, the broker will likely be shut down.
If the broker is still running after many years, most likely they are a legit broker.
Next thing to do is check the official social media channels of your broker, usually provided on their website. Be cautious of signs, including:
- Number of followers vs. engagement rates
- Social media reviews left by customers
- Comments left by the customers under publications
- How adequately the company responds to comments (if they do at all)
- The quality and type of content they publish
Remember, checking out the official social media pages (Facebook, Twitter, etc.) of your broker is important. You would be surprised how much you can tell just by the way a company structures and manages their social accounts.
What you can do if you suspect wrongdoing?
Sometimes, even the best of us can get caught in a sticky situation. Traders can miss out on an important red flag and get stuck with a lying broker that’s only after their money.
If you suspect wrongdoing, the first thing to do is to remove your funds.
File a complaint with state, federal or private regulators. Don’t forget to check your statements regularly and communicate with customer service to at least try and resolve the issue in a civilized manner.
If a broker is regulated by a body, you can always file a formal complaint.
To sum it up,
In this article, we talked about the ways in which you can verify that a broker is legit and not a scam. Here are, once again, some of the signs to watch out for and that clearly point out that the broker you’re considering is fraudulent:
- Not regulated
- Recently established
- Missing important contact information
- Poor rating and online reviews
- Inadequate customer care and support
- Exaggerated testimonials on the website
Trading Education’s main goal is to make sure future traders avoid the nightmares related to dealing with a bad broker.
The above-listed suggestions will help you make the right choice.
Keep in mind that there are always customers who are going to express negative opinions. Don’t get discouraged after reading one bad review. Use all the information available on the broker’s website, social media, forums, regulated bodies, etc. to make a meaningful conclusion. The research process will take some time. However, if you are serious about becoming a trader, you should be ready to invest the time and effort to pick the right broker and secure your hard-earned money.
Why you need Trading Education to avoid broker scams?
Forex trading carries risk and losing money is certainly something you can’t avoid. However, you have to realise that a huge portion of those losses are a result of either gambling addiction or most commonly, a lack of education. Anyone who decides to trade and put money on the market, without the proper education, is destined to lose.
As previously mentioned, a lot of the reports you will find on the Internet, claiming that a certain broker is scamming traders, might not be accurate. Those with a weak trading ability or lack of trading skills will go bankrupt as a result and that’s in no way a broker’s fault.
To avoid spreading untruthful information and losing money, we highly suggest future traders to get a good trading education first.
Trading Education offers a full trading course, 100% free of charge, to traders who are serious about their new venture. The online course covers all aspects of forex trading and since it’s an online course, anyone can study at a time convenient to them.
Why are we offering the trading course for free?
The forex trading course, which otherwise would cost you £2,500, is sponsored by our partners who want to make sure there are more confident, well-educated traders out there who know how the market works.
More information on the course, chapters and availability can be found on the official website of Trading Education so check it out here.