4 Ways How to Distinguish an Honest and Scam Forex Broker

There are honest brokers, but there are also many fake forex brokers.

Despite the repeated warnings of various regulators and government authorities around the world, but fraud schemes that exploit the lure of huge profit potential in forex trading such as die one grows a thousand; This time it was thwarted, tomorrow it reappears in a new disguise.

How to tell the difference between an honest broker and a fraudulent broker? There are many ways to do this, but this time we’ll take a look at each of them.

Also Read: 6 Types of Forex Brokers: DD, NDD, Hybrid, STP, ECN or Regulated?

how to distinguish honest forex brokers and scammers

Also Read: What is a Forex Broker? This is the Definition and Regulations!

1. Fake Forex Brokers

First of all, it is important to know that there are various types of forex brokers, including regulated and unregulated brokers. Well, ‘Improfessional Brokers’ are brokers that are not clearly regulated where.

Even if they include certain country regulations, when cross-checked it turns out to be incorrect. Moreover, fake brokers often dare to look for clients, even though their office addresses are not clear.

How to check a real or fake broker:

  • Check if the broker is regulated or not. Usually on the broker’s site there will be a ‘regulation’ menu in the ‘about us’ section, or a description in the footer of the Homepage.
  • Check whether the regulation is correct or not. Just claiming ‘I’m regulated’ is easy, but is the broker really regulated? It might be difficult to check directly if the regulatory agency was in a foreign country a few decades ago, but nowadays there is the internet which allows many things to be checked online.
  • Check if the broker’s address is real. At first glance, if the unregulated broker’s address is only a PO BOX, then it is clearly suspicious. If you want to be more careful, just check with Google Map, whether the location where the broker’s office really exists or not.

Also Read: 10 Rules and How to Trade Forex For Beginner Traders

2. Clone Forex Broker

This Klonengan Forex Broker usually uses the name of a popular broker, but changed its name slightly. For example, FXDD becomes FXTT, or something like that. Can also use a similar domain URL.

One of the cases that has happened is the Alpari broker whose original addresses are alpari-forex.org and alpari-forex.com, but clones appear with the addresses Alparimalaysia.com, Alpari-cn.com, even Alpari-cr.com. Because they are very similar, traders who are not careful can make blunders.

How to check a real or cloned forex broker:

  • Remember carefully the address of our subscription broker, if necessary bookmark or record it. Even when you enter the broker’s site, make sure the domain is the same.
  • If you visit a new broker, make sure you get the link from a trusted source, not from an email that suddenly appears without knowing its origin.
  • Before registering with a broker, it’s a good idea to listen to reviews that are widely available on the internet or ask questions in discussion forums among traders about the broker’s features. A real broker will match the description mentioned in the review, but cloned brokers will certainly be much different and appear less professional.

Also Read: 4 Knowledge and Aspects of Forex Psychology for Beginner Traders

3. Money Game Berkedok Broker Forex

Money Game under the guise of a forex broker has long been rife in Indonesia. Usually, these scammers try to trap investors with the lure of extraordinarily high returns with no risk at all.

They even aggressively recruit members with MLM schemes. Therefore, it is very important for us to recognize the signs of a Money Game trap under the guise of a forex broker like this.

Also Read: 9 Types of Orders in Forex Trading that Traders Should Know

Here are the signs:

– Promising a definite return in the amount of tens to hundreds of percent per year

It should be kept in mind that the profit from forex trading is uncertain. There is no 100% accurate trading system that will definitely succeed in predicting the direction of price movements.

Even the most skilled forex traders must at times experience failed trades that end in losses. Forex brokers are aware of this, so they will definitely display risk warnings.

However, the Money Game will promise fixed returns in fantastic amounts, as if traders can harvest profits by just walking around.

– Want to trade our funds, but don’t provide a track record

In general, successful traders trade on their own, but many brokers also provide facilities where we simply invest funds, then the funds will be traded by professional traders, and after that we simply harvest profits.

Real brokers will show a track record of how the performance of traders who manage our funds by understanding that the future potential can be profit or loss, while Money Game will only promise ‘certainly a certain percentage of profit’.

– It is difficult to attract capital

Basically, our money is ‘just deposited’ in a forex broker as trading capital. Due to the nature of capital, the funds can be reduced if your trade is losing, and can be increased if your trade is profitable.

Honest brokers will allow you to withdraw your capital plus your profits at any time, and provide many withdrawal facilities, either via Bank Wire or e-Payment.

However, Money Game will require a certain time, such as once every two weeks, once a month or even more before we can withdraw funds.

Also Read: 6 Times and Hours to Forex Trading: From Asian to American Session

4. Cheating Brokers

Regulated brokers can also cheat. This is a very unfortunate fact, but it is true.

This kind of fraudulent broker can do all kinds of trickery to attract new traders, then straddle the trader’s funds. Some of the techniques that are often used include:

– Price manipulation

The price spread looks small, but it really isn’t. For example, when we open a position and it turns out the direction is correct, the system at the broker will slow down the execution;

So it says the spread is fixed 2 pips, but the entry can be -5 or -7. But if the direction is wrong, then the order is executed immediately.

– Stop Loss Hunter

On Stop Loss (SL) positions, the broker system will execute faster. So, they seem to be pursuing these positions.

– Bonus offer trap

Be careful and alert if the broker gives an offer that feels very fantastic, for example a deposit bonus of up to 200% or the like. It should be noted that the broker will not offer anything for free without any profit for them.

So, the bigger the bonus offered, the more difficult the requirements will be and the more likely there will be problems behind it.

Many have happened when traders already deposited to get a bonus promotion, but then later the profit could not be withdrawn for various reasons.

There are many more fraudulent broker maneuvers to watch out for. Therefore, we need to do research or preliminary research before registering with a broker, and know very well the character of an honest broker.

Also Read: Hierarchy and Forex Market Structure that Traders Should Know

Honest Broker Character

If a fraudulent broker has many guises, then what kind of honest broker is it? Compared to the disguise of a fraudulent broker, the character of an honest broker is clear and clear. Among them:

  1. Honest brokers have clear regulations and office addresses.
  2. Official Customer Service (CS) runs smoothly, at least within five working days.
  3. The trading facilities provided are synchronous and transparent.
  4. The site is equipped with education or a disclaimer that explains the nature of the risk in proportion to the profit opportunities in forex trading and other investment schemes it provides.
  5. Brokers are referred by other institutions, including regulations that can be cross-checked, their names have been quoted by important news agencies, or there are testimonials from other traders.
  6. There are no heavy barriers when we want to attract funds. Honest brokers also necessarily don’t like to cut the profits we earn hard, for no apparent reason.

Also Read: History of Forex Trading: From Era of Gold to Online Trading Like Now

Easy isn’t it? By recognizing which brokers are honest and which are fraudulent brokers, we can avoid unnecessary losses, and learn to trade forex more smoothly.

Remember! Forex brokers are intermediaries between us and the forex market. The price that we will analyze to find profit opportunities is also displayed on the trading platform shared by the broker. So, if you want accurate forex analysis and a smooth strategy without interruption, make sure to choose a good broker.