Choosing the right broker is the first and important step to join the forex world. If you're not careful, you will be sucked into the traps of a forex broker scam that leads you to a devastating loss.
Choosing the right broker is the first and important step to join the forex world. Your success in trading can be determined by your choice of brokers as well as your trading strategy. There are so many brokers for you to choose, based on features, minimum deposit, method of withdrawal, even your personal preference.
In fact, not every broker you will find out there is legit. Even when you search on your browser using a keyword "forex broker scam", the number of results will blow your mind. Yes, there are many scam brokers you need to be aware of. Let's say, forex brokers who manipulate spread and chart or even broker who runs away with client’s money.
A problematic broker is one of the biggest forex trader enemies. Therefore you need to make sure if a broker is reliable, viable, regulated, and has tremendous reputable before registering and depositing a large amount of money. To put everything on your checklist, you're going to need some research time.
Here are some items to find out if your broker is a scam or not:
1. Check the Contact Support
One easy thing to check is the contact support. You will need to contact your broker from time to time so make sure they’re reachable. If your broker does not respond to you or take too long to answer, it can be a red flag for you to consider.
You must also ask a lot of questions once they respond. You can ask about what the company offers, minimum deposit, leverage, spread, their program, and their experience with clients. By then you can tell if the broker put their client’s interest first or not. Make sure as well you're comfortable by the way they explain things. If they seem to be in rushed or hiding something, again, it is a red flag.
2. Be careful of Strange Contact
You need to be careful if you receive a call or email from a broker you never had any business with. Also, don’t easily trick by seminar invitation which promises free lunch or goody bags. Especially the ones who tried so hard to convince you to join them followed by so many "too good to be true" promises.
Most of it is just trick from scam broker to get new clients. Legit broker easily gets new clients without wasting time calling or inviting random people. They will also warn new clients about the risk of trading forex, not only bragging about the profit.
3. Read Forum or Review about The Broker
Take some time to conduct digital observation about your broker. You can read an online forex forum or review written by a real trader. Read from more than one source to make your research more comprehensive.
Make sure there is no complaint about not able to withdraw funds. If you read many complaints about it, it's possible if the broker is a scam and runs away with client money. But if there are only one or two complaints, you can contact the user for more detailed info.
4. Make Sure Your Broker is Regulated
A legit broker is supposed to work under license and permit from regulators. The regulator will watch over the broker, make sure the broker works professionally and fair, giving protection for customers. Brokers usually put their license number from the regulator on their website to let clients know it's safe to deposit money to them. It is one of the primary factors that you should make sure of when choosing a forex broker.
On the other hand, traders should be careful of claims of regulation by bad brokers. A bad broker usually claims to have a license from a certain authority to trap new clients but when we check in regulator's website, there is no broker registered under the number. If you find a broker is not regulated, traders should not open an account or deposit any fund at all costs.
5. Check Your Statement Regularly
When you already join a broker but still not sure if the broker is legit, you can check your statement. Brokers should send this once in a month or every time you have a transaction.
Check your statement carefully, whether you receive them online or in a printed version. If you find some items are not matched with your notes, ask your broker. If their response does not satisfy you, ask their manager or someone higher up. You are allowed to be careful and detail with your money.
So, if you find one of these signs appear in your broker, do review all your trading documents. Discuss it with a friend who has more experience in forex trading or ask opinion in an online forum, before taking any action with your account. Don't be doubt to quit and move to another broker if you are not satisfied with your current one. To eliminate the choices of forex brokers that are not suitable to your standard, you can use the Broker Finder.