How to Spot, and Avoid a Scam Broker?

Getting into the trade business is tough, you can’t do everything by yourself.  You need to hire help, someone who knows the energy and

When you search for a broker, make sure you do your research and verify whether the broker is legitimate or not. Following, we ware giving you a guide that helps you avoid frauds in the financial industry.

the difference between facts and fiction. For example, if you find forum posts, blog posts and bad reviews about a broker, it means they cost the trader money.

However, whenever a trader leaves a bad review of a broker, it always doesn’t mean the broker is at fault. Maybe the trader failed because of his bad practices?

A common complaint of traders is the broker was intentionally trying to cause loss by saying something like, “Just when I placed the trader, the market reversed,” or “the broker didn’t hunt for my positions.” These comments are common, and it may suggest the broker was not responsible for trader’s loss.

It is possible new traders fail to make money using a tried and tested plan. The issue with newbie traders is, they make trades based on psychology (how they feel about something), and take big risks.  We a novice enters a position; they let their emotions take charge whereas an experienced broker knows how to control his emotions. However, emotion is not always the case; sometimes the trader fails to understand market dynamics.

We are not saying the broker is always innocent, No, there are cases where the broker tries to profit on commissions while costing his client. They do choose to move quoted rates, and triggers stop orders when other broker rates are way lower.

One thing every trader should know is trading is not a zero-sum game, and brokers make a living from commissions. Their earning increases with higher volumes. So, find a broker who has long-term clients who regularly trade to make a profit, and learn to read Forex currency converter live rates.

Bad Communication

The real problem in a work relation surfaces when the communication between a trader and broker starts to break. If a trader doesn’t receive a quick and proper response from the broker, it raises suspicion. Vague information or avoiding communication is a major red flag.

It tells the broker is not looking out for the best interest of his client. Such issues should be quickly reserved. If there is a problem, the broker should tell the broker. Be helpful; it is a sign of health customer relation. The worst possibility is the trader can’t withdraw money from his account.

Lack of Research

Protect yourself against scammers in the first place. To do so, you must follow these steps:

  • Perform an online search and look for customer testimonials. It offers real insight as negative comments reveal unsettling truths about the trader
  • See if there are complaints registered against a broker not letting the trader withdrawing money. If there is any contact issue, contact the user if possible and ask them about their experience
  • Carefully read the fine print of the documents when you want to open an account. Incentives in the document can be used against you, especially when you want to withdraw your money. For example, if the trader deposits $10 and gets a $2 bonus, then the trader will lose money and attempt to withdraw the remaining funds. The broker can say they can’t let the trader withdraw bonus funds. So, read the fine print carefully, and understand contingencies for such case scenarios
  • If you are confident about a broker after this research, open a mini account for forex fundamental, technical and sentiment analysis and invest a small capital. Use it for a month and try to withdraw money. If everything goes well, you are safe to deposit more money. If you have issues, discuss it with the broker. If it fails, bring this to the broker. In case nothing works, make sure to leave a testimonial describing your horrible experience in detail

Is Your Broker Only Focused on Commission?

Brokers are paid in commissions for buying and selling securities. Therefore, they might fall for the temptation of effecting transactions to procure higher commission. It is better known as churning, and it’s a practice that costs the client.

Churning is a serious crime, and if found guilty, the broker can pay fine, lose his license, get suspended or dismissed.  For a churning to happen, the broker should have control over funds. They should be charged with guilty and have to pay.

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