How To Spot And Stay Away From Fake Online Forex Broker
With the introduction of online trading, anyone who knowledgeable about internet will know that there is better option than investing their funds on a local brokerage with unbelievably high spread; the alternative is using an online forex trading broker. They employ much lower spread, zero commissions, and permit various types of automated trading systems.
Of course, selecting an online forex trading broker is not as easy as comparing their benefits. Many of them are just scam brokerage whose only goal is drain your fund as fast as possible and their common strategy is attract potential clients with sugary promises and benefits. If you want to survive long enough in forex trading, watch out for these in your online forex trading broker before you make decision:
1. Registered in an Official Financial Authority
This is the simplest way to check them out. Ask their live support where they are registered; is it in the FSA? Is it in NFA? Is it some other financial authority? Enter their live chat/mail support and ask for the link to their official registration page; if they won't give you that, it is very likely that they're not registered anywhere and it is a sign for you to leave the site right away.
When you've acquired the link, read the entire page thoroughly as sometimes there are cases where the broker registered as inactive member. For example: at the time I wrote this article, FXCBS is registered with the Dubai Gold and Commodities Exchange, but they are stated as an inactive member there.
Additionally, you should check whether they blacklisted by any particular financial authority or not. For instance: both CySEC (Cyprus Securities and Exchange Commission) and UK FSA (Financial Services Authority) have issued warning against Forexyard.
Confirming their registration is an important step, but even with that you still can't be 100% sure that they're honest forex broker.
2. Unsolicited Offers
Be careful if you know the forex broker via unsolicited fax or email, especially if they are:
- Sound too good to be true.
- Guaranteed returns; high returns signify high risks, so watch out for any promise that offer you high returns while keeping your money safe.
- Trying to have you send your money RIGHT AWAY with one-time-offer or other means, but this is just a trick so you don't have enough time to check out their company.
Once you pick your online forex trading broker, don't let your guard down yet; watch for these factors:
1. Withdrawal Process
Deposit your fund always a smooth process, but you may not have the same leisure in withdrawal case. If your broker makes the process more complicated that it has to be, prolonging the withdrawal, or even ignoring you, then you're in the hand of a scam forex broker.
2. How they Handle Problems
Support always available and very cooperative when you've just started being a client, but when a problem arise, you'll discover their true nature. If they keep giving you empty promise, keeping your money, or even completely ignore you, then they're scam forex broker.
You might wonder why I don't suggest looking at forums for thoughts concerning the broker, but I have good reasons not to do so. Forums are place where everybody can post their opinions, so it is very unlikely to find 100% unbiased argument there as a fake forex broker can pay someone to post fake positive reviews; on the other hand, their rivals can also post negative reviews to damage the broker's reputation.
The other reason is there are always novices who would blame their broker for their loses and start posting bad things about the broker everywhere while the clients who have received good services won't even bother to post on forums. This is may not entirely their fault; maybe it is connection issues at a bad time, but nevertheless you'll read posts about "my broker cut the connection and my profit" and "my platform freeze at an important time" all over any forex forums.
No, I'm not suggesting that you avoid forums when you're looking for information. I am just pointing that there are way too many inaccurate information regarding forex broker in the forums, but if you're looking for other info such as trading strategies or sharing experiences, forums are a good place.
Choosing an online forex trading broker is a bit tricky and you may need to do some investigation, but the effort will be paid over time. Later when you've discovered one that can meet your expectation, all that you need is a reliable trading system and you will have your income from the forex market soon.
Article Source: FxTradingStock.com
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Learn further about Matthew's best recommended forex broker at AvaFX review. Learn how to identify and evaluate a few essential aspects before you open an account on currency trading account.
by: Matthew Johnson
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Date: Tue, 27 Jul 2010
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