If you do an internet search on forex broker scams, the number of results is staggering. While the forex market is slowly becoming more regulated, there are many unscrupulous brokers who should not be in business.
When you're looking to trade forex, it's important to identify brokers who are reliable and viable, and to avoid the ones that are not. In order to sort out the strong brokers from the weak and the reputable ones from those with shady dealings, we must go through a series of steps before depositing a large amount of capital with a broker.
Trading is hard enough in itself, but when a broker implements practices that work against the trader, making a profit can be nearly impossible.
KEY TAKEAWAYS
If your broker does not respond to you, it may be a red flag that they are not looking out for your best interests.
To make sure you're not being duped by a shady broker, do your research, make sure there are no complaints, and read through all the fine print on documents.
Try opening a mini account with a small balance first, and make trades for a month before attempting a withdrawal.
If you see buy and sell trades for securities that don't fit your objectives, your broker may be churning.
If you are stuck with a bad broker, review all your documents and discuss your course of action before taking more drastic measures.
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Communication Is Key
Real problems can begin to develop when communication between a trader and a broker begins to break down. If a trader does not receive responses from their broker or the broker provides vague answers to a trader's questions, these are common red flags that a broker may not be looking out for the client's best interest.
Issues of this nature should be resolved and explained to the trader, and the broker should also be helpful and display good customer relations. One of the most detrimental issues that may arise between a broker and a trader is the trader's inability to withdraw money from an account.
Broker Research Protects You
Protecting yourself from unscrupulous brokers in the first place is ideal. The following steps should help: If you are looking to trade with a reputable broker, please visit the Wikifx short-list of trusted brokers.
Alternatively, the Broker Review section of our site gives a breakdown of the pros and cons of different brokers – but we only carry out reviews on brokers we rate ‘legit’. If you get the basics right and choose a safe broker, you can then fine-tune your selection by trying out a free Demo account and by doing that, you can test the functionality of the site hands-on.
As a reminder, WikiFX is ready to help you search the qualifications and reputation of platforms to protect you from hidden dangers in the risky industry!
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