February 9, 2014
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Knowing Which Forex Brokers To Avoid

Forex brokers

A trader relies on his forex broker. He relies on the broker for not only providing a streamlined way to reach the market but also a variety of other types of support systems to succeed in the forex market. Therefore, if you are about to enter the world of forex then you need to know which forex brokers to avoid. Here are a few things that should reveal to you if a broker is dishonest.

Tries to Hide the Risks Involved in Trading

Forex brokers will always try to underplay the risks involved in the market. It is, after all, marketing. However, dishonest brokers will go too far with their marketing efforts wherein they will try to make potential clients think that they have methods and means through which they can help traders avoid the risks altogether.

Makes Claims about Certain Huge Profits

The other side of marketing in the forex market is to present inflated potential profits. This means that the marketers claim that more profit can be made from the forex market than is realistic.

Dishonest forex brokers have been very successful in this regard as they have managed to make many new traders believe that they can get 50 to 60 percent return on their investments from the very beginning when even experienced traders have difficulty achieving such numbers.

Lacks Regulatory Licences

The clearest sign that a broker is dishonest is that he would not have the requisite licences. Every country has its own regulatory body but for Australians, it is of utmost importance to look for a licence from the Australian Securities and Investment Commission.

Has No Support Structure

New forex brokers would be limited in the way that they may not have a good support structure for their traders, which means that their educational services are incomplete or incompetent and the range of tools provided by them are also not as helpful as they can be. Even though you will see this with new brokers, these facets also happen to be tell-tale signs of dishonest brokers.

Is Not Transparent about Terms

There are laws in every country designed to protect individuals from being conned by entrepreneurs in bad faith. However, every law also has its loopholes and this is what dishonest forex brokers try to leverage so that they do not get caught by the law.

Usually, this amounts to clauses in terms and conditions which most traders fail to analyse anyway. Effectively, dishonest brokers would never be entirely transparent about their terms and conditions.

Has High Fees Which They Try to Hide

There are dishonest brokers who are in it for a quick buck and there are dishonest forex brokers who are real brokers but just use dishonest practises to boost their profits.

Such brokers will not con their traders but instead will slowly bleed them of their money through hidden fees which are unrealistically high. Such forex brokers are more difficult to spot but it is possible by checking reviews and comments on the internet.

 

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