Forex Broker Scam
The forex market is very active with millions of dollars traded in it each day. Besides forex, many new traders are looking to trade stocks, cryptocurrencies and commodities online as CFD’s.
However, with so many online brokers available, it can be difficult to check whether a broker is legit or not.
As a trader, it’s important to research a company before you deposit money with them to start trading. This way you can protect yourself against a forex broker scam.
Keep reading to learn how you can protect yourself from fraudulent companies and how to spot a forex broker scam.
We’d always recommend that you ask yourself the following points when choosing a broker:
- Are they regulated?
- How is the small print on the terms and conditions?
- Is the broker offering any rewards to open an account?
- Do they offer a free demo account?
- What are the reviews like of their service?
We’ll take a look at each of these points in this article, let’s get started!
Unregulated Brokers
Horror stories of people being ripped off by dishonest brokers are awful to hear. Unfortunately, many of these situations have involved unregulated brokers.
Regulation is important in trading because it means that regulated brokers are monitored by a financial governing authority. As a result, brokers must follow rules put in place to protect investors and keep trading secure.
For example, regulated brokers must let clients withdraw their money when they wish.
However, unregulated brokers DO NOT have to report to any authority. Which means that if they scam you, you have no support to turn to as these online brokers have no governing body to deal with.
Their goal is to defraud traders via illegal activities and methods. A quick internet search will show many Forex Broker Scam stories due to dishonest ones.
Some common forex scams used by dishonest brokers include not allowing people to withdraw their funds, so they can keep and steal the money.
Another popular trick is that they’ll offer trading promises that guarantee an unrealistically high level of financial returns. For example, they may say that by forex trading with them, you’ll only make 100% profit, no losses.
This of course will never happen as making only 100% profits is impossible! Sadly though, there are still people who get fooled by these unregulated platforms.
Make sure you protect yourself by only using regulated brokers. If they are not regulated, stay away.
How to Check if a Broker is Regulated?
It’s important to remember that not all brokers are a scam. Many regulated brokers have millions of active traders securely using their platforms. You just need to make sure that they’re regulated.
To do this, the quickest way is to look for a broker’s regulation details on their website. This is normally near the bottom of the website page. Some brokers will also have a detailed regulation page with a full list of registrations.
For example, the picture below shows the homepage of an unregulated and scam broker. In the text at the bottom there’s no mention of any regulatory bodies, or anywhere on their website. This is a big warning sign that they should be avoided.
However, we’ve also added a picture taken from the homepage of eToro who is regulated. Here you can see clearly the regulation details and licence numbers. This is the information which you need to look out for.
If a broker is regulated they should have state the name of regulation authority, as well as their licence number. Some important authorities to look out for include:
- CySEC (Cyprus Securities & Exchange Commission) – based in Cyprus
- FCA (Financial Conduct Authority) – based in UK
- ASIC (Australian Securities & Investment Commission) – based in Australia
- MAS (Monetary Authority of Singapore) – based in Singapore
- FSCA (Financial Sector Conduct Authority) – regulation authority for South Africa
- NFA (National Futures Association) – regulator for the USA
- CFTC (Commodity Futures Trading Commission) – regulator for the USA
Many of these brokers also keep an updated list of unregulated brokers and the latest forex broker scams on their official website.
For instance, both CySEC and the FCA have a register where you can check a platform’s status. If you have doubts about a broker, we’d recommend checking these registers.
Also here at tradingonlineguide, we take your security very seriously, which is why WE ONLY ever list regulated brokers in our reviews and comparisons.
Read the Small Print
Another important step to avoid any nasty surprises is to read the ‘small print’. If you’ve found a broker that you like the look of, it’s important to check their terms and conditions.
This is a normal step that happens when registering for a service, but it’s good to check the details when opening an account.
Details could include general terms and conditions, key account and fee info. Many legit platforms will be clear with their terms so you can know what to expect.
Many fraudulent brokers though will be vague about their terms, so they can charge very expensive fees.
By knowing what you’re signing up for, is another way to protect yourself against forex broker scams and unregulated platforms.
Forex Broker Scam rewards
Account opening rewards are another popular type of forex broker scams. If you see that a broker is not regulated, and they offer a very high cash bonus if you open a new account with them, then it’s likely a scam.
Warning signs should flash especially if the details of the cash promotion are hidden.
In fact, brokers in Europe and the UK are not allowed to offer any bonuses at all, as they were banned by European regulators back in 2018.
So if you’re based in Europe and come across a platform offering cash rewards to new customers, avoid as what they’re doing is illegal.
The only exceptions where new customer promotions are allowed are for brokers based in Asia and the USA.
Do broker scams offer a Free Demo Account?
A good sign of a legit platform is if they offer a free demo account. A demo account is a great way for you to test your trading skills using virtual money.
All forex demo accounts come with a set amount of virtual funds for you to spend.
It also removes the pressure of risking money in a ‘live’ trading account. This is why we’d highly recommend trying a demo account out before opening a ‘real’ one.
Many regulated brokers offer free demo accounts, these are normally unlimited and have nearly all the same features as the real trading account.
However, many fake platforms won’t offer free demo accounts, as they want you to start spending as soon as possible. So if you come across a broker that does not offer a free demo account, it’s likely a fraudulent broker.
Another common forex broker scam involving demo accounts, is that a broker might want you to fund and activate a live trading account first, before giving you access to the demo account. See our screenshot below for this example.
This is a clear scam, no reputable broker will ever ask you to deposit funds before using a demo.
Instead all regulated brokers, like the ones listed on our website, offer completely free demo accounts which are available to new traders.
Forex Broker Scam Reviews
One good way to check a broker out is by looking at reviews of their service. This normally gives a good indication of whether a platform is legit or not.
We’d recommend doing a standard internet to see if any reviews or articles come up. The only important thing is to separate serious complaints from general disgruntled comments.
Forex and CFD trading is obviously a volatile market and not everyone is suited to trading. It’s often the people that fail to make profits, due to poor strategies or from lack of experience that will be the first to complain.
Many forum post reviews may blame the broker for price slippages, which is not always the broker’s fault and normally due to market dynamics.
Instead we’d recommend looking for serious allegations in reviews.
This can include any comments on lack of communication from the broker, or if someone has had serious issues withdrawing their money. These are both red flags that are a good indicator that a platform might be fraudulent.
Conclusion
Although forex trading continues to attract new clients daily, unfortunately many scam forex brokers also try to gain new online victims.
One way to avoid them though is to ask yourself all the questions that we’ve covered in this post, and remember if something seems off, it probably is.
Remember these points and you’ll be able to find a broker to start trading with securely:
- Are they regulated?
- Read the small print
- Are there any new customer rewards offered?
- Is there a free demo account?
- What are their reviews like?
To get started with your search and to get trading, please see this page on our website to see a full list of the best forex companies in South Africa here.

Author of this article and founder of Tradingonlineguide.com
My aim is to help you increase your trading knowledge with helpful content. I come from an economic background and have a strong passion for forex trading. With more than 6 years in the online trading world, I want to share my financial knowledge so that anyone can develop their investment skills.
In my spare time I enjoy cooking and travelling.
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