There are many Forex brokers available, which is why it can take a long time to choose a broker. The Forex market is largely unregulated and although there are regulatory authorities, not all brokers are regulated and there are scammers about. There are noticeable indications of cheating Forex brokers though, that you should recognize.
First of all, make sure to watch all of the orders you place. Your broker is responsible for executing your orders and this means they can essentially do as they wish. Confirm that nothing suspicious goes on, regarding your broker and its filling of your orders.
Some brokers offer fixed spreads and others don't. However in general, brokers that offer variable spreads tend to be less reliable and cheating Forex brokers tend to use variable spreads. The spread is the difference between the buy and sell price of a currency pair. Spreads differ across different brokers and currency pairs. Forex brokers make their money through the spreads - larger spreads will make brokers more money, so lower spreads are always more appealing as they are cheaper to traders and investors in the Forex market. But variable spreads mean that brokers can change these spreads when they like, which allows for potential cheating. Although variable spreads are sometimes recommended due to the high liquidity of the currency market, it is recommended that you go to a broker that provides fixed spreads.
Stay away from Forex brokers that formulates its spreads according to the account types of its clients. Generally, traders and investors will receive wider spreads with these brokers and these brokers tend to be cheaters.
If a Forex broker makes many promises that sound too good to be true, they probably are. Remember, scamming brokers scam potential traders and investors through fraudulent marketing primarily. Don't give in to false claims, when it comes to choosing a broker. It is advised that you also request a full print of your chosen broker's policies too, for reference.
Customer service and support is incredibly important for any type of business, including for a Forex broker. In Forex trading, you want your broker to be able to answer all of your questions and queries. If your broker cannot respond to your messages and problems, move on. Make sure that your chosen broker has a good customer service team - if a broker does not, this will indicate that they are a cheat.
In conclusion, there are multiple indications of cheating Forex brokers, including: variable and ever-changing spreads, spreads formulated according to client account types, unrealistic claims and poor customer service and support. Remember, not all brokers are cheats and there are many good online brokers available. But beginners especially, should make sure that they go to a broker that is recommended, credible and legitimate as they are most vulnerable to scammers. Bear in mind that most Forex broker scams work through fraudulent marketing, so make sure not to buy into false claims. If in doubt, approach real Forex traders and investors through forums and websites, making sure not to of course go to a biased forum or website. Alternatively, you could check up on a broker through the right regulatory authorities.
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