The forex market is the biggest financial market worldwide, with trillions being traded every day.
In seconds you can trade any currencies of your choice and with hundreds of currency pairs to pick from, you will have no difficulty in finding ones that interests you.
While forex trading appears to offer enormous financial rewards, it is far from easy. Before you begin trading, you need to devote enough time and effort studing the fundamentas of trading and developing an understanding of how to manage risk before you get started. As a consumer it is important to research a company before you deposit your fund to trade. At brokerswatch.com, our goal is to assist you as much as possible with that research.
To begin with, unregulated brokers do not have a governing body. The regulation is important indicator whether or not a firm can be trusted. If they are regulated in their country of origin, they are more likely to be a legitimate, act responsibly and be accountable for their actions. This means that if they scam you in any way and you go to make a withdrawal and they do not process it, then this is clear that they steal your money.
How to check if a broker is regulated?
The easiest way to check if your brokers is regulated is at the bottom of the website. The picture below is from a broker that we recommend you avoiding. You will see that nowhere in the picture is a regulated body mentioned.
Further, let us look that the bottom of the homepage of FXPRO, a trusted and regulated broker.
You will notice that FXPRO is mentioning the percentage of clients losing money rapidly due to leverage. The company is authorised and regulated by the Financial Authority of the UK and mentioning the registration number. They are also mentioning their licence by the CySEC regulator.
It is also worth mentioning, that a regulated broker is required to include proper risk disclaimers and regulatory information at the bottom of their website pages.
How do recognize the scammers.
Some scam brokers claim to be regulated and registered by a governing body and they provide the licence number of a regulated company.
Another tactic they use is to provide a scam website of a regulator. PrimeQX recently reported by the FCA claiming to be an authorised firm by CySEC. On the bottom of their page they were pointing their licence number to a clone CySEC website. By researching the official website of CySEC there was nowhere such a licenced company nor approved domain.
How do I know what regulatory bodies are legitimate?
Here is a list of the regulatory bodies we checking up:
- FCA – Financial Conduct Authority – United Kingdom – (Great)
- CySEC – Cyprus Securities & Exchange Commission – Cyprus (OK)
- ASIC – Australian Securities & Investment Commission – Australia (Good)
- SFC – Securities Futures Commission – Hong Kong (Good)
- MAS – Monetary Authority of Singapore – Singapore (Good)
- FSA – Financial Services Agency – Japan (Good)
- IIROC – Investment Industry Regulatory Organization of Canada – Canada (Good)
- FINMA – Swiss Financial Market Supervisory Authority – Switzerland (Good)
- FMA – Financial Markets Authority – New Zealand (OK)
Double check the authority of the governing body that regulates the broker you are looking at. You can go to the website of the governing body to search for the registration number and verify its legitimacy.
Protecting Yourself from Scammers
The best way of avoiding these common forex scams is to simply take enough time to make decisions before jumping into an investment. Weigh up the advantages and disadvantages and do your research. Read reviews on trustworthy websites. Check for known forex scams online. Visit brokerswatch.com to see if any complaints or penalties have been made about brokers and, most of all, steer clear of opportunities that sound far too good to be true. Remember, there’s no such thing as easy money, so take your time to learn how to trade forex properly, and you’ll be able to enjoy the benefits successfully.
