Scams, shams and rip-offs. Unfortunately, these situations are common for traders who have used unregulated brokers. In this article we would like to highlight the importance of using regulated brokers and how you can protect yourself from a Forex broker scam.
A lot of scams have happened due to bad and unchecked Brokers, whose main aim will be to make as much money out of you as they can through illegal activities and methods. A quick internet search will show plenty of results of Forex Broker Scam stories due to dishonest Brokers.
Common warning signs of scams used by dishonest brokers and trading sites include not allowing the withdrawal of funds from investor accounts, or by offering promotion material or trading promises guaranteeing an unrealistically high level, of financial returns. For example, stating that you’ll only make 100% profit, no losses.
However, it is important to remember that not all brokers are a scam, however sadly many are, so if they are not regulated avoid like the plague! The most important thing we can recommend is to use ONLY a regulated broker. This means that the broker is monitored and regulated by one of the following regulative authorities such as CySEC, FCA or others.
They monitor brokers to check that no illegal activity is taking place and to ensure investor protection. They also keep an updated list of regulated brokers, and of unregulated brokers and warnings of the latest scams reported.
That is why on this website we only ever list regulated brokers. Please look at all the broker options listed so you can be sure that you will only use a trusted and regulated broker when trading. Do not let a Forex broker scam happen to you!
And another thing we would recommend that is when you have selected your broker is to remember to read the ’small print’. It’s what anyone would do when registering for a service, but it’s good to go through when opening an account so that you’re completely aware of what will happen for any eventuality.
How to see a Forex Broker Scam
So when selecting a broker it’s always important to remember R.R.R. – Regulate, Read, Review. This is how you can avoid a Forex broker scam:
- 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 money or demo account. If no, choose another regulated broker that is more suitable to what you’re looking for. On the subject of demo accounts though, we would highly recommend trying a demo account out before opening a ‘real’ one.
Many of the main regulated brokers offer free demo accounts, just double check on the broker’s website or ask the broker directly to see if a demo account is available.
A demo account is good because it allows novice traders to test their trading skills and practice trading with virtual money. By using virtual money it removes the pressure of losing and risking real funds whilst learning to trade, plus it also allows users to see if they like the trading 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.