{"id":94460,"date":"2016-08-24T13:34:49","date_gmt":"2016-08-24T17:34:49","guid":{"rendered":"http:\/\/countingpips.com\/?p=94460"},"modified":"2016-08-21T13:35:05","modified_gmt":"2016-08-21T17:35:05","slug":"6-signs-of-a-shady-forex-broker","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/08\/6-signs-of-a-shady-forex-broker\/","title":{"rendered":"6 signs of a shady Forex broker"},"content":{"rendered":"
August 24, 2016<\/div>
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By Admiral Markets<\/b><\/p>\n

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Dear Traders,<\/p>\n

Unfortunately many people incorrectly associate Forex trading with scams.<\/p>\n

The problem is the increasing number of unscrupulous companies marketing false info.<\/p>\n

The number of Forex-related scams has significantly increased over the last few years, so it’s important for you to be able to identify a hoax.<\/p>\n

After all, Forex trading should be a potentially profitable<\/a> experience rather than a robbery.<\/p>

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Privacy violation<\/h2>\n

When traders register with a particular broker, they expect their personal info to be protected i.e not passed to third parties.<\/p>\n

When someone you don’t know rings your personal phone number for example, the entity that gave your information to them – has violated your privacy.<\/p>\n

Why?<\/p>\n

Because you haven’t enabled your data to be publicly available.<\/p>\n

Some brokers even buy stolen trader database’s, so they can contact the listed people worldwide.<\/p>\n

Unfair competition and withdrawal refusal<\/h2>\n

Some scammy brokers will refuse to proceed with withdrawals.<\/p>\n

And you’ll know they are not intending to pay:<\/p>\n

…because they won’t be responding to your calls or email requests.<\/p>\n

This is typical behavioural in Forex trading scams.<\/p>\n

We traders, call these scammy brokers bucket shops<\/em>.<\/p>\n

The term originates from the book Reminiscences of a stock operator<\/a>, where Its main character was kicked out of a bucket shop because he was making too much money.<\/p>\n

Bucket shops serve you a redirected price, into a set of charts that they give you for free.<\/p>\n

The catch is that the feeds bringing those prices into your charts, are often manipulated by brokers.<\/p>\n

But there’s more.<\/p>\n

Bucket shop brokers can also cover their risk in the market by:<\/p>\n

…operating a dealing desk and trading against you…<\/p>\n

…while manipulating chart feeds and giving you false price fluctuations.
\nEven if you make money somehow, you probably won’t see it.<\/p>\n

Unauthorised trading<\/h2>\n

Has your broker ever made a purchase for your account, that you didn’t agree to in advance?<\/p>\n

There are only two conditions under which a broker can transact on your behalf, including:.<\/p>\n

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  1. If he has granted discretionary authority<\/li>\n
  2. when you give him expressed and detailed permission.<\/li>\n<\/ol>\n

    Anything less is possibly investment fraud.<\/p>\n

    When you apply to trade with a broker, you are given a lengthy application form and a voluminous agreement booklet with clauses in small print.<\/p>\n

    Read it all.<\/p>\n

    Very few investors have the patience to go through the fine print or the ability to decipher the legal jargon:<\/p>\n

    …and the broker’s relationship manager will helpfully<\/em> put crosses at the places you need to sign on the agreement.<\/p>\n

    If you sign these papers or any other broker agreements without reading them first – you are taking a major risk.<\/p>\n

    Not regulated<\/h2>\n

    When choosing a broker, always ask if they are egulated<\/a> with a relevant authority.<\/p>\n

    Simply put:<\/p>\n

    …if a broker is not regulated, your money is not safe.<\/p>\n

    Every broker should<\/em> abide by the rules of a financial authority.<\/p>\n

    In the context of defending citizens from fraud, many countries have established private or state organisations to regulate the Forex market.<\/p>\n

    Generally speaking, these organisations are actively supported by the government.<\/p>\n

    The top three countries with the most rigorous regulators are:<\/p>\n

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    1. USA (CFTC, NFA)<\/li>\n
    2. Japan (FSA Japan)<\/li>\n
    3. UK (FCA)<\/a>.<\/li>\n<\/ol>\n

      Empty promises<\/h2>\n

      <\/p>\n

      Promises of high profits, often signal a Forex scam.<\/p>\n

      Nobody can guarantee your Forex profits or losses.<\/p>\n

      If a broker says they can – walk the other way.<\/p>\n

      The phantom broker<\/h2>\n

      Broker who?<\/p>\n

      This kind of Forex Broker doesn’t even exist.<\/p>\n

      It’s merely a flashy website, that doesn’t have proper regulations and does not show you the people behind it.<\/p>\n

      Usually the only contact information a phantom broker gives, is a fake<\/a> phone number and email address.<\/p>\n

      Checking this type of broker’s license, usually informs that they are unknown in the Forex industry.<\/p>\n

      Want to know more about how to spot Forex scammers?<\/p>\n

      No problem – the Commodity Futures Trading Commission (CFTC<\/a>) has compiled a short guide.<\/p>\n

       <\/p>\n