How to distinguish legit or scam brokers


Honest brokers exist, but many forex brokers cheat too. Although various regulators and government authorities around the world have repeatedly warned, but fraudulent schemes that exploit the lure of potential huge profits in forex trading have attracted traders to be deceived.

So, how to distinguish between honest brokers and fraudulent brokers? There are many ways to do it, but first, let's review each of the disguises.

1. Cloned broker

Cloned Forex broker usually professes the name of a popular broker, but changes its name a little or use a similar url domain.

For example FXDD broker cloned becomes FXTT, Alpari broker cloned becomes Alpri, Alphari, or Alparry broker or they can also imitate the website address was the broker like Alpari, whose address was originally at alpari.com, but the cloning appeared with the address Alparimalaysia.com, alpari-xofficial.com. or alphari.com Because it is very similar, traders who are not careful can cheated.

How to check a real forex broker or cloned broker?

Just remember your broker's address, if necessary, bookmark or write down. Even when entering the broker site, make sure the domain is the same.

If you visit a new broker, make sure you get the link from a trusted source, not from an email that suddenly appears without its origin.

Before registering with a broker, it's worth listening to the many reviews available on the internet or wondering in fellow traders and discussion forums about the broker's features.

Real brokers will match the description mentioned in the review, but the cloned broker will certainly be much different and appear unprofessional.

But it does not close the possibility if the sub-site like that is indeed the official IB of the broker. To differentiate between an official IB or not we can see the information from forums or communities on the internet, but the easiest is to just check the site's domain on the Alexa site (www.alexa.com) where the site ranks sites throughout the world.

If the numbers are smaller means that the site is popular, so if Alexa rank broker is relatively small then we can trust more because it has been widely used by traders around the world (although it does not rule out the possibility of a broker who was honestly a scam).

2. Undercover broker

Please note that there are various types of forex brokers, including regulated and unregulated brokers. Well, "Undercover Broker" is a broker that is not clearly regulated where.

Even if they include certain country regulations, when crosschecked it turns out to be incorrect. Moreover, often undercover brokers are looking for clients, even though the office address is not clear.

Below are some ways to check the original broker or undercover broker:
  • Check whether the broker is regulated or not. Usually on the broker's website there will be a "regulation" menu in the "about us" section, or in the form of information on the homepage footer.
  • Check whether the regulation is correct or not. Just claiming my broker is regulated is easy, but is the broker really regulated? Well, to check directly if the regulator in a foreign country in the past few decades might be difficult, but nowadays there is an internet that makes many things can be checked online. So we can look for it on the official regulator sites and we input the registered broket regulation number if it is true that we can trust that the broker has been regulated by the regulator.
  • Check whether the broker's address is correct. At a glance, if the broker's address is not regulated does not exist then it can be said the broker will scam, but if it does display an address (but not complete), for example only PO BOX is displayed, then it is clearly suspicious. If you want to be more careful, just check with Google Map, whether the location where the broker's office really exists or not.

3. Money Game Impersonating Forex Brokers

Money games impersonating forex brokers have recently become very popular investments on behalf of CopyTrade, recently MIA FintechFX also found out to be spam (you can read this article: Is MIA FintechFX scam? Beware of spam investments and money games on behalf of CopyTrade).

Usually, these fraudsters try to trap investors with the lure of unusually high returns without any risk at all. They even aggressively captured members with the Multi Level Marketting scheme.

Therefore, it is very important for us to recognize the signs of a Money trap Game under the guise of a forex broker like this. Here are the signs:

Want to trade our funds, but do not provide a track record.
In general, successful traders trade on their own, but many brokers provide facilities where we can invest enough, then the funds will be traded by professional traders, and after that we can only harvest profits.

A real broker will show a track record of how the trader is managing our funds by understanding that the future potential can be profitable or loss, while the Money Game will only promise certain percent profit only.

Promising a definite return in the amount of tens to hundreds of percent per year.
Keep in mind that the profit from forex trading is uncertain. There is no trading system that is 100% accurate and must succeed in predicting the direction of price movements.

The most expert forex traders must at any time experience a failed trade which ends up losing. Forex brokers are aware of this, so they will definitely display risk warnings.

However, the Money Game will promise a fixed amount of fantastic returns, as if the trader can harvest profits with just footsteps.

It's hard to attract capital.
Basically, our money is "only deposited" in forex brokers as trading capital. Because of the nature of capital, then even then the funds can be reduced if your trading loses, and can increase if your trading is profitable.

An honest broker will allow you to withdraw your capital plus profits at any time, and provide many withdrawal facilities, either via Bank Wire or e-Payment. However, Money Games will require a certain tempo, such as once every two weeks, once a month or even more before we can withdraw funds.

4. Fraud Broker

Regulated brokers can also fraud. This is a very unfortunate fact, but it is real. This type of fraud broker can do all kinds of tricks to attract new traders, then straddle traders' funds.

Some techniques are often done, including:

Price manipulation

Price spreads look small, but they don't. For example when we open a position and it turns out that the direction is correct, the system at the broker will slow down the execution; so he said spread fix 1 pips, but the entry directly minus a lot. But if the direction is wrong, then the order is executed immediately.

Requote

One mode that is often used by forex scam brokers to disrupt your trading is by requotes or changes in open values. If when trading platforms we often experience requotes when trying to execute orders even though market conditions are calm, then you should start being vigilant with your forex broker.

Freeze

Systems that often hang or freeze especially when you want to win a transaction can also be a sign that your broker has a problem. But the conditions that cause the cessation of the movement of the chart in the application cannot be the only benchmark. Such system interference also often occurs when many orders occur at the same time.

Trading limits

If your forex broker restricts the use of trading techniques that you can do, you should be vigilant because the reason might be that you don't get too much profit. What enforces the ban is usually dealer brokers who have to pay your profits from the company's cash because they are market makers so that trading is carried out between the customers themselves.

Stop Loss hunter

At Stop Loss positions, the broker system will execute faster. So, they seemed to be pursuing these positions.

Pitfalls of bonus offers

Be careful and cautious if the broker gives an offer that feels very fantastic, for example a deposit bonus of up to 100% or the like. It should be noted that brokers will not offer anything for free without any benefit for them.

So, the greater the bonus offered, of course, the more difficult the conditions will be and the more likely there will be problems behind. There have been many instances when the trader has already deposited a deposit to get a bonus promotion, but later the profit cannot be withdrawn for various reasons.

Service differences between deposit and withdrawal

Fraud brokers often make it difficult to withdraw their client's profits or clients cannot even make withdrawals at all. There are various reasons stated so that the client cannot withdraw the profits. Conversely, if there is a client who wants to deposit, the process is fast and smooth.

Difficult to contact

If the response given to your complaint is long or not responded to at all, it could be that the forex broker is indeed a problem. Brokers who are difficult to contact will certainly make it difficult for traders to get decent services. Broker companies that use weak servers for their sites can certainly be concluded that the broker does not prioritize the interests and benefits of the client.


There are many other fraudulent broker that need to be watched out. Therefore, we need to do research or preliminary research before registering with a broker, and know the honest character of the broker.

Basically, the characteristics of the broker will deceive the client or we cannot see it from the broker's regulation whether the broker is indeed regulated or not.

In addition the fraudulent broker is usually only regulated fake or unregulated, and the age is still new, but the legit brokers usually stand long and can survive. 

Whereas the characteristics of honest brokers are usually:

  • The trading facilities provided are synchronous and transparent.
  • The site is equipped with education or a disclaimer that explains the nature of the risk in proportion to the profit opportunities in forex trading and other investment schemes it provides.
  • Official Customer Service runs smoothly, at least in five working days.
  • There is no heavy obstacle if we want to withdraw funds. Honest brokers should also not like to cut the profits we earn hard, for reasons not clear.
  • Brokers referenced by other institutions, including crosschecked regulations, have been quoted by important news agencies, or have testimonials from other traders.
  • And of course, honest brokers have clear and valid regulations and office addresses.
Well, there are some easy ways to distinguish between legit brokers and scam bro, therefore you should be more careful in finding brokers so that you are not fooled.

If you are interested, read also: The basic criteria for choosing a good and reliable Forex Broker . Thanks.