A trader whom we shall call Mr Dee sees a web page advertising a chance to make money from trading Forex. But this web page is one with a difference. He is taken in by the glamorous video of a pretty brunette detailing all the benefits of trading with the broker whose sales page he is looking at. Just then, something she says catches his attention. The broker is offering him a 100% bonus. He cannot believe his ears, but when he decides to pitch his tent with this broker and wires in $10,000. To his surprise, he is credited with an extra $10,000. But that is when he is told by his broker that he has to trade a certain number of times before he can withdraw any profits. He keeps trading, and when he then decides to make his first withdrawal after fulfilling the terms of the bonus, he gets an email saying he has allowed third party trading on his account, and his account is suspended and all funds seized. The broker cuts off all communications with him, and he is left bemused. Further investigation reveals that the broker is in a location which is completely unregulated.
In another scenario, another trader notices that he keeps getting stopped out in one of his Forex accounts even when the price quotes on other trading accounts indicate that the price action still had a few pips to go. He is at a loss as to why this is the case, and all emails to his broker are met with unconvincing responses.
In yet another scenario, trader notices that any time he trades high-impact news items, and his trade is in a profit, his trading platform freezes up, and he cannot close his trades, until when the market has probably reversed against him. When he tries to withdraw any profits, he has made, his broker finds one reason or the other not to honor the withdrawal request.
If your broker or any other broker you know has engaged in one or all the practices mentioned above, then that broker is a scam broker. The sad thing is that many cases like this occur, and they are not rare; they are commonplace. For any genuine broker out there, there are 10 scam brokers in operation. The wide geographical location and the absence of a specific global legal framework has made it difficult to pursue and prosecute such scam brokers, and traders have to rely on personal due diligence and a bit of luck or prayers to ensure that they pitch tents with the right brokers.
Here is a list of identified scam brokers, who have closed shop and disappeared with traders’ funds.
- CrownForex.com
- CRE Capital Corporation
- CDH Global
- Forexgen.com
- GCI Trading.com (GCI Financial)
- BForex.com
There are a whole lot of others out there. All you need to do is to check on Forex forums, and you will get so much information that it will almost be criminal for you as a trader to fall into the hands of these scam brokers.
Article was written by Alexander Collins. As a general rule, always choose brokers that are regulated and have a good track record when it comes to trading conditions and withdrawals. Stays the question: “How to choose a Forex broker?” Visit my Forex blog to learn how to choose a broker wisely, and what unethical tricks Forex scam brokers use to rip of retail traders.
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