Forex Mistake #99 – Forex Broker Scams, a Reality. Learn To Protect Yourself

 Why Forex Brokers Scams Could Get You Broke? (DUH?!)

“Expect the best. Prepare for the worst. Capitalize on what comes.” – Zig Ziglar

Stop hunting, huge spreads out of nowhere, trades canceled, price spikes, profits erased… sounds familiar? If yes, then you’ve probably been scammed by a forex broker and I am sure you want to prevent that from happening ever again. Well, you’re in luck because today we are going to talk about exactly that: how to avoid getting scammed by brokers. The things I’m gonna talk about are not 100% bullet proof but doing them is definitely safer than not.

 

Keep a Journal

I am sure you have heard many people saying that a journal is a definite must and you probably don’t need to hear me say it again. But guess what: keep a journal! Not only it will make you a more disciplined trader, but also you will have evidence against the brokers if they cheat you in any way. But don’t just write stuff. Take screenshots! As many as possible. Do this regularly (on every trade would be best) and especially when you think that something is fishy. Take pictures of your account balance, equity and open/closed trades. If you read the most well known forex forums, you’ll see that people complain about trades missing, money missing and other stuff like that and you don’t want to be one of them. Besides, if you don’t have any evidence of owning something, it will be difficult proving it was stolen. I also recommend using some type of video recording software. There are a lot of free programs that can record your screen so why not have one prepared, just in case.

 

Compare Platform Prices

Say you put on a trade and the next minute price spikes against you, taking out your Stop Loss order. Of course, that could be the effect of a news release or simply a knee-jerk reaction of the market, but… it could also be the work of your evil partner, the broker. You have no way of knowing which one is true if you only use the price feed offered by your broker. It’s like walking down the street and keeping your head down, looking at your feet: you don’t know what’s happening around you and you can see just enough to put one foot in front of the other. The solution is to look at the big picture and to do that you can subscribe to a second broker (or even third and fourth). When spreads widen out of the blue or price shoots to hit your Stop Loss and then reverses, moving in the original direction or any other such shenanigans – it’s time to compare your price feed with other brokers’ (don’t forget to take a picture). If the event (spike, gap, stop hunt, fishy spread) didn’t occur on the other platforms, maybe it’s time to rethink your relation with your current broker.

 

Tell the World Your Story

First you should try and have a talk with your broker’s support team, explain the issue and ask them for explanations and/or reparations. If that doesn’t work, it’s time to hit the forums and spread the word. You know what they say in Hollywood: all publicity is good publicity. Well, it’s not the case with brokers. They hate bad publicity, so if you’ve been wronged by them, fight back and share the story. Don’t try to inflate it! Explain in a calm and detailed way everything that happened and also ask a representative of your broker to join the discussion and to present their version of the story. Remember the pics you’ve taken? Use them.

 

Time for Legal Action

I believe in talking and settling things the polite way but if you have a conflict with your broker and you cannot reach an understanding, it’s time to turn to regulatory agencies. Most brokers “tap out” when they are faced with legal action but sometimes they don’t so if you know you have been mistreated and you have the evidence to prove it (account statements, pictures, video recordings, etc.), then contact the regulatory body that watches over the activity of your broker. Usually you will find the name of the agency on the broker’s Regulation page but to make your life easier I’ve included some links to the Commodity Futures Trading Commission (CFTC) reparations program and the National Futures Association (NFA) arbitration and mediation. Many European brokers are regulated by the Cyprus Securities and Exchange Commission (CySEC) so if that’s the case, you can fill a complaint by following this link.

 

It’s a Jungle Out There

Be paranoid! But take that with a pinch of salt. Think of your broker as a shark who is always ready to take a chunk out of you… out of your account rather. Prepare for the worst and hope for the best but never let your guard down when it comes to money because money brings out the worst in people. Do all the things I’ve mentioned but also do whatever you think is right and never forget that all the preparation in the world cannot protect you from going broke if you don’t know how to trade.

 

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