As forex and CFD trading is becoming progressively popular for investors who want to trade from home or with handheld devices, there is an equally increasing number of scam sites who try to profit from these unsuspecting traders. It’s common to see broker-related questions like “is eToro regulated” or “is AvaTrade safe” or “is Plus500 a scam” because users want to know if such brokers are really trustworthy.
While becoming alarmingly common in recent years, reputable sites have come up with a variety of ways to prevent their customers from falling prey to these rogue sites.
Here are some of the ways on how you can avoid becoming a victim of the scam artists in the trading world.
1. Check Regulation. The financial market is under a regulatory body that oversees the implementation of rules and guidelines that protect both the brokerage site and its investors. The most complicated of economic exchanges can be susceptible to fraud and having these sites licensed is for a good reason. If well-regulated, fraudulent activities are prevented. Investors who have fallen victims are able to pursue a legal action against rogue sites. Check the country where the site is regulated. If the broker is under the jurisdiction of a country where there is a relatively poor regulation, then refrain from doing any financial transaction from this site.
2. Do Your Homework. One can find reliable material about a trading platform by being vigilant in reading online reviews. Also, spend some time in forums and post relevant questions. You will be surprised on the amount of information shared by online customers, ask for their opinions about a particular broker you are planning to work with. You can also benefit from the pieces of advice that seasoned traders impart to those who are just starting out.
Type in “Broker Name scam” in a popular search engine like Google or Bing and go over the listings or results that you came up with. Be wary of fake reviews concocted by sites who want to tarnish the names of platforms operating legitimately. You can check the comments and see if the broker in the complaint furnishes a direct reply. If there is none, then it may be that the site you are looking at is a bogus one.
3. Do the Math. Note Contract Pricing. Even platforms need to make profit off the amount invested by customers. If a broker is paying out a significant amount for customer winnings, then they will be out of business in no time. Sites who profess a payout of 90% may be too good to be true; it will be noteworthy to check it out early.
4. Use Demo Accounts. The creation of practice accounts is not just for testing your financial skills. You can also check the site features by utilizing its platform; see how you are comfortable on how the site operates. If you can use all the facets advertised by the site without feeling shortchanged, then you can go ahead and consider creating an account with them.
5. Call Customer Service. Establish correspondence with a site’s customer service by sending an email or talk to them over a live chat session. You can also call the number posted on the site if it is working. When you do receive a reply, or have spoken with a representative, evaluate the speed on which a reply or feedback has been sent, or if they are giving you a sound financial advice before you become their client.
A thorough research is still the best way to avoid these scams. It is good to use the services of established brokerage firms who have already built a solid track record. This includes the quality of software used, the level of customer afforded to clients, and the ease in the withdrawal process. Make use of the potential of the Internet by making use of all resources made available to you.
It may seem that we have pointed out the very basics that you may have already known. However, it is this basic information that will carry you through your trading days. It will be easy to forget these things, so it is a good idea to run over these guidelines again. Once you have done so, you can now confidently trade, knowing with peace of mind, that you are dealing with a reputable and respected trading platform.
