Beware of forex broker frauds!
Some brokers, believe it or not, “cheat” their clients.
One method is to manipulate bid/ask spreads.
Normal spreads between brokers are around 2-3 pips, however scammers’ spreads are over 7-8 pips.
Seven pips may not seem like much, but they add up.
Consider a client who must pay a 7-pip spread every time he trades. Consider if he only makes a few deals per day.
If you multiplied it by hundreds or even thousands of other dumb clients, you’d be rolling in cash!
Another option is to cease hunting.
Remember that forex brokers are aware of where their clients’ stops are placed.
They’ll occasionally make a dash for certain stops, prompting their customers’ positions to close out.
Many, but not all, broker hijinks are now considered old school.
These old schemes have been thwarted thanks to new laws enacted by regulating authorities such as the Commodities Futures Trading Commission and the National Futures Association.
Choose a forex broker who is registered with a regulatory body.
In the United States, search for brokers who are both CFTC-registered Futures Commission Merchants (FCMs) and NFA members. Be cautious of brokers who are not regulated by the CFTC or the NFA.
The CFTC and NFA were established to safeguard the public against fraud, manipulation, and abusive trade practices.
Be cautious, as distinguishing between regulated and unregistered forex brokers can be tricky!
You can check a broker’s CFTC registration and NFA membership status, as well as their disciplinary history, by calling the NFA at (800) 621-3570 or visiting the NFA’s website’s broker/firm information section (BASIC)!
If you trade FX outside of the United States, you’re in luck! Other countries have regulatory authorities that protect citizens as well. More on these will be discussed later.
DO NOT DEPOSIT YOUR MONEY WITH A BROKER WHO IS NOT REGISTERED OR REGULATED BY ANY NATIONAL AGENCY. We warned you, so don’t come to us with complaints if you don’t receive your money back!
Avoid non-regulated companies!