Forex is becoming more popular and more accessible than ever. And with this popularity has come a large number of forex brokers who can easily be found online. Unfortunately, the number of unscrupulous forex brokers or forex broker scams is also increasing. While the forex market is starting to become more regulated, there are still plenty of people out there claiming to be forex brokers but running a scam. So, if you are looking to start out as a forex trader, you need to know how to tell the trustworthy brokers from the untrustworthy ones.
How to Tell if Your Broker is Trustworthy
You need to do your research before you pick a broker to make sure they are trustworthy. Here we will look at a few points for you to consider before choosing your broker.
An untrustworthy broker will do their best to avoid regulatory bodies. These bodies, such as the US Commodity Futures Trading Commission (CFTC) aim to set a standard for trustworthy practices among brokers. Any broker that is avoiding these bodies and is not regulated should be avoided at all costs.
Because you do your forex trading online and all interaction between you and your broker is online, you need a broker with helpful and available support. Search online forums and social media to see how a broker treats its traders. Do they only treat them well when they want to open an account or also once they have deposited their money? Do they help if you have any issues? Also, make sure that the broker has no complaints against them about not allowing people to withdraw their funds.
The best forex brokers offer competitive spreads that are neither too high nor too low. Look at how the spreads compare to those offered by other brokers and make sure they are not significantly higher. Many scam brokers hide behind spreads in order to cheat their customers out of funds.
Many untrustworthy brokers use attractive-looking incentives to lure in customers, but the fine print might make these incentives more trouble than they’re worth. Make sure to carefully read all the fine print before you sign up so that any incentives you accept will not impact your withdrawals later on.
Open a Demo Account
Many brokers offer a free demo account where you can trade real trades, but for virtual money. If you have done your research and decided you like the look of a particular broker, open a demo account with them. This will allow you to trial their website. If you are happy with that, then open an account with a small amount of capital, trade for a month and then try to withdraw your funds. If you come across any issues, attempt to discuss this with the broker and see how they will help you solve your problems. If everything goes well, you should feel relatively confident that the broker is trustworthy and you can begin trading with them seriously.