When you are interested in trading foreign exchange, it is essential to choose brokers that are dependable and viable, and it is prudent to steer clear of those who are not.
Before putting a significant amount of money into a broker’s account, there is a sequence of actions that need to be completed first. This is necessary so that we can differentiate between trustworthy brokers and those that engage in shady business practices.
Trading is difficult enough on its own, but when a broker employs methods that work against the trader, it may make it extremely difficult, if not impossible, to make a profit. It is, therefore, useful to regularly check the fake forex brokers list online.
How to spot if your broker is a fraud
Regular broker mistakes
There are times when the broker is to blame for a loss. When a broker makes an effort to increase their trading commissions at the expense of their client, this situation may arise.
There have been allegations that certain brokers moved quoted rates arbitrarily in order to trigger stop orders when the rates offered by other brokers had not moved to the same price.
For the benefit of traders, this kind of event is an anomaly and is extremely unlikely to occur again. It is important to keep in mind that trading is not often a game with no winners or losers and that the primary way brokers generate money is through greater trade volumes.
To summarize, it is in the best interest of brokers to have long-term clients who trade frequently and, as a result, maintain capital or generate a profit. This is because brokers can then capitalize on these clients’ continued business, and brokers who are making innocent mistakes may not appear on a fake forex brokers list.
Lack of segregated accounts
Scam brokers will frequently use a single bank account to hold both the funds belonging to their customers and the money necessary to run their businesses.
This indicates that when the funds in their accounts are decreasing, they will be more likely to seek ways to improve operations by utilizing money from their customers as a source of funding.
This is an exceedingly questionable method of conducting business, and in the event that the broker is unable to fulfil their monetary commitments, your funds will be combined with theirs and may even be subject to seizure by their debtors.
Read more: Forex Brokers in Nigeria
Fake bonus offerings
Brokers that are licensed and regulated are required to guarantee that the bonuses and promotions they offer adhere to regulatory rules and do not “trap” the trader.
However, some dishonest brokers attract investors with promotions that are misleading and have terms and conditions that are so stringent or downright unreachable. These brokers are known as “pump and dump” brokers.
This indicates that their investors will almost certainly finish up losing the trading capital they invested in them before they get the opportunity to take any rewards. If something seems too good to be true, there is a strong chance that it is.
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Manipulated prices
This is by far the most typical con that fraudulent brokers pull off. There are some brokers who manipulate their trading interfaces in such a way that it is always to the traders’ disadvantage.
This might manifest itself as negative slippage, which occurs when entry and exit orders are executed at prices that are unfavourable to the trade.
For example, a buy order might be executed at a somewhat higher price, which would cut into any potential future gains from the trade, if there would even be any at all.
