Finding a trustworthy broker is highly necessary. But most times, brokers don't really tell the truth so it may be hard to know if they're really legit or not.
The forex market is known as the largest financial market in the world. Thanks to the internet and the emergence of online brokers, forex trading is now more accessible than ever. You can start trading from literally anywhere as long as you have some capital and a stable internet connection. On top of that, traders today have the luxury of choice to trade on a wide range of currencies, starting from the popular US dollar and Euro, to more exotic ones like the Russian rubble and the Mexican peso.
However, in such a crowded market, it is almost inevitable that malicious actors and cybercriminals will look for ways to obtain money through illegal means. The giant daily transaction volume indeed makes the forex market attractive to many types of scammers. So, as a trader, we need to take preventive measures. In this article, we will reveal some easy methods to check if a broker is legit.
Is the Broker Regulated?
First things first, you need to make sure of the legitimacy of the broker. Scam brokers are mostly unregulated since they don't need to report to a governing body. They can somewhat trick you into their traps. For instance, you might experience some "glitches" that cause you to get negative slippage or you can ask for a withdrawal and never get your money back. When this happens, there's not much you can do except for giving bad reviews online. The authority won't protect you either because such brokers are beyond their reach.
The easiest way to check a broker's registration is to look at the bottom of their website or click the "About Us" button. Regulated brokers are required to include their regulatory information as well as proper risk disclaimers on their websites, so it should be easy to find. The next step is to double-check the authority that regulates the broker. You just need to visit the website of the governing body and search for the broker's registration number.
Watch Out for Red Flags
Before you register with any broker, you need to conduct your own research and find out whether the broker shows some signs that could lead to fraudulent activities. Apart from the broker's regulation status, you can also look for other things on the broker's website. For instance, check the broker's headquarters' address, company history, and financial policies. If such information is unclear or unavailable, it is most likely a scam. Remember that scam brokers usually hide their identities, so they won't reveal any names, locations, or contact information in case they get in trouble.
Other than that, make sure to check the broker's promotions and bonuses as well. If they promise you abnormally high returns but they do not show the details of the terms and conditions, then you are likely dealing with a scam broker. Also, if you try to get more detailed information about the offer, the website will usually take you back to the sign-up page.
Read User Reviews
In addition to the broker's website, social media is another perfect place if you want to check on businesses. Typically, companies and forex brokers use social media to build their credibility as they can promote their businesses and engage with their clients directly. However, social media is definitely not a great place for scam brokers.
Most traders are so quick to talk about their experiences through their social media accounts. Thus, by scrolling through other users' reviews and comments, you might get an idea of what the broker is like and what kind of services they provide. Just simply head over to popular social media like Instagram, Twitter, or Facebook, and then type the broker's name on the search bar, followed by the word "scam". Check and analyze the results.
Test the Customer Service
Scam brokers never truly care about their clients because their aim is only to attract as many clients as possible, steal their fortune, and get away with their crimes. Thus, you need to check the broker's reliability by testing their customer service. You can simply ask them a few questions before registering and see how they respond. If they take too long to answer or are unhelpful, you might want to move to another broker.
Test the Broker
Last but not least, it's worth noting that even after you register with a supposedly legit broker that passes all of the abovementioned points, you still need to be cautious. It's recommended to start by trading with a small amount to test the broker. While doing so, pay attention to the trading execution and monitor your progress regularly. After that, try withdrawing your money. If the broker takes a long time to process your request or even refuses to let you withdraw, then you might have run into a scam.
In a nutshell, there are loads of things that one needs to consider before signing up for a broker. The key is to conduct proper independent research and make your own analysis based on the data you've collected. Do not hesitate to contact the broker if you have any questions and see if they are helpful.
Apart from that, you might want to join a community forum to discuss your choice or reach out to knowledgeable third parties or other professionals for advice. It also helps to understand that if something is too good to be true, then it probably is. Just remember that many brokers may offer highly attractive features, but not all of them offer reliable services.