Why are these Brokers not Promoted by Fair Forex Brokers?
First and foremost, it is important to accentuate the fact how not all forex and CFD brokers (or binary brokers for that matter) on this list should be considered a scam. Some of them simply don’t comply with our criteria of what makes a good forex or binary broker that we would recommend but that doesn’t mean they are a scam broker.
We will list some of the characteristics of binary and cfd brokers we can’t and would never recommend.
1. Downplaying the Risks of Trading
Whether it is a binary options, forex, or a crypto broker, bear in mind there is always risk involved whenever trading takes place. However, there are also brokers that use special advertising methods to either downplay the risk or simply ignore the fact that it exists and that trader should be aware of it. For example, some brokers rely heavily on advertising certain sponsorships they have with different sports clubs, while skipping on risk warnings entirely. Even ESMA, European Securities and Markets Authority, noticed that unethical marketing practices are often the biggest issue when it comes to CFD brokers.
2. Misuse of Leverage
Of course, it is up to the trader to completely understand terms and conditions before accepting a certain aspect of service, but there are also forex and CFDs brokers that don’t put any effort into explaining what leverage really is, and what trading under leverage means. They offer high leverage to traders who don’t quite understand it is not free money for them to use but a feature that can highly affect their returns. Basically, some brokers use leverage and traders’ lack of knowledge to manipulate their liquidity.
3. Use of Requotes in Forex and CFDs Trading
Requotes are a big issue in forex industry and traders should avoid them at any cost. Requote is a situation when the broker is not allowing you or isn’t able to provide you with the trade upon the price you entered. It usually happens when the market is volatile and moves fast. For example, you want to take advantage of a certain change in the market and place the order. But, the forex or CFD broker is not able to execute it at that price so they send you a requote – and offer you a new price which is usually not as profitable for you. All trades should be executed immediately and without delay, even though it is possible to encounter requotes even with the best forex brokers. Still, they should be an exception, and not a rule.
4. Markups on Trading Spreads
ECN/STP brokers should only make their money on commissions, but sometimes they also add a markup. Markup can be defined as an additional pip that is added to the initial spread offered by the liquidity provider. For example, if the provider offers 0.3 pips spread on a pair, the forex broker will add a pip so they make more money. The spread is lower when there are no markups added. Traders can simply ask their broker whether or not they use markups and make a decision whether or not you want to use their service. Not all forex brokers who add markups are scams, so try to take a look at the bigger picture.
Slippage is something that is used by market maker brokers. The slippage happens when you wish to open or close a potentially profitable position, but the price suddenly moves as soon as you try to execute it. For example, if it was 1.34567 in the moment of the execution, it will be 1.34580. However, slippage is normal and expected with ECN brokers, but not with market maker brokers.
What are Scam Brokers in Binary Options and Forex?
It is a well-known fact that forex and CFDs trading is becoming more and more popular each year, and because of that significant number of frauds are attracted to it. Cases with scam brokers happen more often than ever, and ruin the reputation of good brokers and the entire industry. What is most important is that scam forex and binary brokers are becoming more and more creative when it comes to frauds, and it is harder and harder to recognize them at a first glance.
How Do People Get Scammed by Forex and CFDs Brokers?
Lack of knowledge, high expectations, naiveté, great promises and well-designed websites can all be reasons why someone got scammed, but sometimes, not even the most educated and experienced traders can’t escape it. Luckily, there are some steps that can be done in order to protect yourself from being exposed to fraud like learning about various types of fraud and signing up with recommended brokers.
We at FairForexBrokers.com are doing our best to warn readers about scam brokers that can cost traders their nerves, time, and money.
All recommendations provided by the company are of non-binding nature. Forex, crypto, CFD and binary trading, entail a substantial risk of loss, and the company cannot be held responsible for any interaction with scam brokers.
Types of Frauds and Scams in Online Trading
As already stated, scammers are developing new methods every day. Sometimes they are so well packed it is almost impossible to distinguish them from good brokers who offer superb service as everything is there: nice website, tools, assets, graphs, maybe even some user experiences regarding how amazing the broker is.
Customer service is friendly and seems to be well informed and helpful, but soon problems occur and trader doesn’t know how to behave and what to do as there is always a certain amount of money still with the broker. That is why research is very important when it comes to choosing the binary broker. Blacklisted CFD and binary brokers list can be a valuable source of information on brokers.
Online Trading Broker Scam Tactics
Blacklisted forex and binary brokers often use various tactics in order to prevent their traders from withdrawing the money and leaving. One of the most popular scams is ignoring the withdrawal requests. The customer service simply doesn’t reply to messages sent by the trader.
Sometimes scam brokers add unauthorized bonuses that are disabling withdrawal as certain (usually extremely high), turnover must be reached before withdrawing. Adding bonuses without prior approval is illegal, and traders should contact legal services immediately. Similar to this, there is a type of fraud that includes managing account without ever requesting it. If you ever notice someone is trading in your name without your approval, try to withdraw the money as soon as possible.
Recently there has been a new scam sweeping the market: cold calls. Basically, a bad broker buys stolen data and contacts traders who never even showed interest in trading with them, trying to convince them to register on their platform. We take this unethical practice seriously and we blacklisted one of the brokers who was doing so.
Forex Scam Broker Protection
The easiest way to protect yourself from fraud brokers is by choosing a broker from our Top Brokers list. Those brokers are reviewed under serious criteria and have our seal of approval. Many of them won various awards for their good business practice and there is a good