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How to understand that your broker is a scammer? Action plan

How to understand that you are trading with scammer Julius Conley ★★★★

Choosing a broker is one of the first major decisions a novice trader makes. Unfortunately, it is not uncommon for beginners to accept it hastily, which is why they then face unpleasant consequences. The reason is that in addition to bona fide resellers, there are also fraudulent brokers on the market, whose goal is to maximize the profit from their clients. Alas, cooperation with such brokers often results in large losses of funds and disappointment. How to choose a broker wisely and avoid problems? What if I have already contacted a scammer? We will discuss these issues in our article. 

Fraudulent brokers are not an option: what to consider 

To understand what to look for when choosing, you need to remember what the main goal of the broker is. We know that it is a trading intermediary that brings a trader's trades to the market. Therefore, he must have sufficient technical equipment to have uninterrupted access to the market and promptly execute trader's orders. In addition, he should provide the trader with a convenient way to replenish the balance and withdraw funds, as well as adequate prices for his services. Keeping these conditions in mind, consider what else you need to check before starting to cooperate with a broker step by step.

Step 1: Legal status 

This is the basis. There is no point in researching other parameters of a broker until its legal status is confirmed - that it operates legally in the country and in the financial sphere. 

Step 2: Reliability

The reliability of the broker determines how long it will exist - whether it will go bankrupt at the most inopportune moment, depriving the trader of his money. Among other things, large reliable brokers care about their reputation, so they often offer more favorable conditions and tariffs. 

Step 3: Terms 

Terms of cooperation with a broker can be found on the official website by contacting the manager, or by familiarizing yourself with the sample service contract. Read the terms carefully, especially the points marked with an asterisk and in small print. This way you can get the most complete picture of rates, rates and hidden fees. 

Step 4: User rating and reviews 

One of the best indicators when choosing a broker is the opinion of his real clients. Therefore, take the time to study the reviews and user ratings in order to form an objective opinion on the account of the brokerage firm. Pay special attention to the issue of withdrawing funds from the account and the speed of order execution. If there are many complaints about technical problems or delays in withdrawing funds, it is better to look for a reliable broker.

Fraudulent brokers: special signs With a careful approach to the matter, it is quite possible to notice a fraudster, even before a trader entrusts him with his money. Below is a list of special features of such brokerage organizations. 

1. "Everything is in a fog" 

If you notice that it is extremely difficult to find information about a broker or it is scarce, it is difficult to understand how a brokerage firm works, where its accounts are located, legal address and whether there are any permits, then most likely, the founders are not interested in the awareness of their clients, and this is already alarming. 

2. “They only praise or just scold” 

If the reviews about the broker are extremely positive, without any drawbacks, this should also be alarming. Perhaps these reviews were written by third-party people for money, and not by real clients of the broker. 

If the broker is only scolded, this is also not good. It is unlikely that you will be lucky if most of the cooperation with the broker did not like it. 

3. Loud promises and intrusiveness

If the managers of a brokerage firm "grab your sleeve" and try to persistently persuade you to cooperate, this may indicate that you are in front of scammers. The same applies to the obvious lure in the form of loud and vague promises of stable high profits without risks and experience, huge leverage and big bonuses. 

4. Vague wording

In general, the absence or minimum of specific information is a sure sign of a fraudster. If a cooperation agreement is replete with vague wording, asterisks and links, and the scheme for calculating a brokerage commission is very complex and incomprehensible, this may be a sign of scammers.

What if you have already "trapped"? How to understand and what to do 

Alas, sometimes the broker's suspicions of fraud appear after the conclusion of the contract. To emerge victorious from such a situation is, of course, more difficult than not to get into it, but it is still possible. But before you do anything, you should make sure that your broker is really a fraud. How can you suspect this?  

For example, one of the signs is eternal technical problems. They constantly interfere with timely withdrawal of money, timely opening of profitable positions and closing of unprofitable ones. If technical problems with your broker are more a rule than an exception, then it is possible that these are not problems at all, but the broker's earning system. 

Another suspicious sign is the impossibility of "finding ends." If the broker's support service does not respond to emails or gives formal replies, the broker himself cannot be reached, or he “feeds breakfast,” suspicions of fraud are also quite natural. 

Sometimes bonuses and "goodies", which the broker attracted at the stage of acquaintance turn into disadvantages after the conclusion of the contract. For example, he offered to share analytics or give free trading signals, but in fact, using the data provided, the trader only incurs losses. In this case, there is a risk that the broker deliberately misinforms his client. 

If the money from the deposit “melts” before our eyes and the trader cannot understand and track them, the broker may be collecting hidden fees. You can check this by keeping your own paper books for at least a month.  

If at least one of the four signs listed above is systematically observed by your broker, you should check your suspicions. If before starting cooperation you did not check for a license, do it now. If the broker is licensed, it can be prosecuted by proving the fact of fraud. If not, you may have to put up with the losses already incurred and break off relations with the intermediary, replacing him with a more reliable broker.



We have compiled a list of brokers, that we recommend avoiding.

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