With so many Forex and CFD brokers out there, it can sometimes be extremely difficult to tell one from the other.
All brokers look nice and sofiticated, many with great sponsorships. Almost all have great graphics and promotions making it really easy to fall into a trap of selecting a not so honest or legit broker.
So how can we avoid these type of pitfalls. Well, there are a number of indicators that can be of help with this
The first and most obvious is the broker’s regulations. To be on the safe side, it would be best to get a broker regulated in the same location you reside. That way if something does go wrong, you can reach out to your local regulation authority for some remediation instead of having to contact an international agency.
Even if the broker is not regulated in your territory, always ensure the broker holds some sort of regulation. Some regulatory bodies tend to be stricter than others. ASIC (Australia) is an example of a pretty strict and are doing some clamping down of brokers not adhering to the rules.
If you get a phone call asking if you’d like an additional income from trading, just say no. New regulations have forbidden brokers from calling you to try and convince you to start trading.
The generally regulated and long standing brokers did not have an aggressive call centre in any case and relied on customers that came to them through ads or word of mouth.
That’s probably one of the largest scams around. A personal broker to help you trade CFDs or Forex. These are usually associated with brokers that only make money when you lose your money.
The result of using such a broker is constant requests to deposit more money. After losses, you’ll get a message with requests for more money so your previous losses can be recovered up till the point you totally run out of money.
So before trading, think about the broker you are signing up to. The general rule of thumb, if it is too good to be true, it probably is.