Scams, shams and rip-offs. Unfortunately, these situations have happened to traders who have used unregulated brokers.
In this article we would like to explain why it’s important to only use regulated brokers and how you can protect yourself from a Forex broker scam.
A lot of scams have happened due to unregulated and dishonest brokers. 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 Brokers.
Some common scams used by dishonest brokers include not allowing people to withdraw their funds, so they can keep and spend 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 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 brokers.
Make sure you protect yourself by only using regulated brokers. If they are not regulated, stay away.
That’s why it’s important to remember that not all brokers are a scam. There are many leading and respected brokers available too.
This is why we recommend that you ONLY use a regulated broker.
Regulation means that the broker is monitored by an official financial authority, who provides them with a licence to operate.
Some of the most important regulation authorities include CySEC and the FCA (Financial Conduct Authority).
These authorities monitor brokers to check that they follow firm financial rules which are there to protect investors. They make sure that no illegal activity is taking place and that traders can trade securely.
Both CySEC and the FCA will keep an updated list of regulated brokers, and of unregulated brokers on their official website. They also publish warnings of the latest forex scams reported.
That’s why on this website we only ever list regulated brokers. This is because your security matters to us, and we want you to feel secure when trading.
If you’d like to find yourself a leading forex & CFD broker, check out our full list of regulated brokers on our review pages.
With our options, you can be sure that you’ll only use a trusted and regulated broker when trading. Do not let a Forex broker scam happen to you!
Finally, we’d recommend that when you’ve found your broker, it’s important to read the ’small print’. 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 and key account info. By knowing what you’re signing up for, you’re aware and ready for any eventuality.
How to see a Forex Broker Scam
When you’re selecting a broker, it’s important to remember R.R.R. – Regulate, Read, Review.
This is another tool you can use to avoid a Forex broker scam. So when you find a broker you like the look of, always check these points:
- REGULATE – Is the broker regulated?
- READ – Read the terms/small print of the broker account so you are up to date
- REVIEW – Are you satisfied with the broker terms that you have selected?
If yes, you can start trading either with a real ‘live’ account or the demo version. If no, choose another regulated broker that is more suitable to what you’re looking for.
On the subject of demo accounts, 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. All the brokers listed on our website have free demo accounts available to new traders.
A demo account is good because it allows you to test your trading skills and practice trading with virtual money. All the demo accounts come with a set amount of virtual funds for you to spend.
By using virtual money you don’t have the pressure of risking real funds whilst learning to trade. It also gives you the chance to see if you like trading on the platform and the general setup of the broker.
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.