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Shady Forex Brokers – Don’t Get Scammed

Hundreds or brokers scam thousands of traders every day.

Recently I visited a Forex anti-scam forum and I was literally shocked by how many people get scammed by their brokers. These brokers take your money, allow you to trade, but when it is time to cash out your money they give you nothing but excuses.

Did you know most of these brokers have one thing in common?

They’re based out of small nations which have very little or no regulations on the Forex industry.

When you’re dealing with brokers from large nations such as the US, the UK, Australia, Canada ect you’re much safer as the brokers is strictly regulated. However, trading with brokers from small nations such as Mauritius, Panama and the Seychelles can be risky. Often smaller nations have.

  1. Little to no rules in place to regulate the Forex industry.
  2. Little to no organizations that deal with misconduct within the Forex industry.
  3. Low minimum capital requirements for brokers.

In the US it literally takes tens of millions to start up a Forex broker. In Mauritius you could probably start a brokerage firm for less than $100k. In other words these brokers are usually very poorly funded. So when they inevitably run unto money problems they can start eating into your hard earned cash.

So what’s the solution?

It’s simple, only trade with brokers from large and wll regulated nations such as.

  1. US
  2. UK
  3. Canada
  4. Australia
  5. Switzerland

There are other countries that are safe but I am not going to list them all.

Research before You Commit

When you’re looking for a broker take a good look around their site and find out where their head office is located. If it is located in a small unregulated nation do not risk giving that broker your money.

If they claim that their head office is in regulated nation like the US you should not take their word for it. You should always call them and ask them if they’re US based. If they say they are then ask for their NFA registration number. The visit the NFA site and check the number to make sure. You can never be to safe. If the broker claims to be UK based asked for their FSA number ect.

There are many brokers who claim to be US based yet they clear in countries such as Panama. So in reality they probably have a small call centre in the US but all the money goes to Panama. This means they will likely has no US regulation.

Be smart, ask questions and be suspicious!

Below is a list of regulatory agencies for specific countries. Most of these sites give you the ability to check a brokerage company’s registration number online. If they don’t you can always call.

United States
http://www.nfa.futures.org/
http://www.cftc.gov/

United Kingdom
http://www.fsa.gov.uk/

Australia
http://www.asic.gov.au/asic/asic.nsf

New Zealand
http://www.sec-com.govt.nz/

Switzerland

http://www.finma.ch/

Canada

http://www.iiroc.ca/

Japan
http://www.fsa.go.jp/en/index.html

Below is a list of regulatory agencies for smaller nations which are notorious for hosting shady brokers. I do not know how much help it will be but if you have been scammed by a broker from a nation below try contacting the regulatory agency.

Cyprus
http://www.cysec.gov.cy

Panama
http://www.conaval.gob.pa/

Seychelles
http://www.siba.net/

Been scammed by a broker who’s country is not listed? Let me know and I will do some research to find the proper regulatory agency for that country.

Leave a Reply

4 Responses

  • Nathan Kay says:

    You know what?? Regulation don’t mean that much. Yes sure, CFTC and alike are very strong regulators, but CySec? Virgin Islands (should be mentioned aswell)? Seychelles?? Those mean nothing. Even British FSA sometimes screw up. Always take reputation over regulation, and if you have them both – you’ve got a safe broker.

    What’s more interesting about those websites you’ve mentioned is that you can actually find warnings/alerts of specific brokers. If those guys decided to issue an alert- you should take the advice.

  • BarryMulligan says:

    Hello, I have a question maybe someone can answer it. What about EasyForex? That one is from Cyprus, isn’t it? Is it scam? Should I open an account with them? Did someone open an account with them, someone you may know?

  • dallia says:

    First, thanks for the link to the various regulatory agencies in different countries. Good solid info and it will save folks hours searching on the internet. Next question is why in the world would someone use a broker located in one of these countries? Your advice is like commonsense, should be common but it is not.

  • Chris Greenberg says:

    Thank you for this good research and the list of all financial authorities. There are just too many scam brokers, stop hunters… Here is my advice: stick to the big players and hide your stop prices from their platforms as long as you can!