Blacklisted brokers. When should you be on guard?
When it comes to choosing a broker, it is very difficult to determine which one is good. But, if you cooperate with a mediocre DC, that’s nothing. It is much worse to go to a fraudulent company. Then you can not only lose money, but also be disillusioned with Forex forever. What negative points should you pay attention to?
We will not provide a blacklist of brokers here; you can see it on the official websites of KROUFR and CRFIN. It will be much more useful to understand on what basis this or that company is included in this list, because:
There are always brokers who have not yet been under the supervision of these organizations.
New similar companies appear constantly.
Many blacklisted companies have yet to harm anyone. They simply work according to a scheme similar to the well-known MMM, so they can be closed at any time. Interestingly, some newcomers to Forex are quite satisfied with this type of profit. Read about it below.
Here is a list of the main characteristics for which companies are blacklisted. If serious organizations that regulate relations between market participants pay attention to this, then an ordinary trader simply needs to be attentive to such “little things”. So what should definitely alert you?
Blacklisted brokers. When should you be on guard?
Unrealistic percentage to attract new customers.
Sometimes it can be a certain amount. But more often it is still a percentage. Here you should clearly see the distinction between a regular affiliate program and a scam. An affiliate program, even in Forex, is a normal phenomenon. This is one of the ways to advertise and attract customers. But the payments must be made with the money that the company will receive from the newcomers. That is, you are given a percentage of the broker’s income.
If you are promised, for example, 10-15% of the client’s profit, think: where will the company get this money from? Do they have such high margins? But who, then, is interested in collaboration? Find out in detail exactly how the company makes money from customers. It also happens that they promise money only to the attracted person, in the event that he deposits the Nth amount into his account. This is also quite suspicious, because the mere fact of having funds in the account does not oblige you to anything, the client can withdraw them at any time. The question arises: will he really be allowed to do this? …
When you are promised such “income to help attract”, always study in detail where this money will come from. If the company itself receives less than you, it is extremely suspicious!
Guaranteed Performance Promise
Blacklisted Brokers. When should you be on guard? 2A good example of the fact that income cannot be guaranteed is the events of January 2016 in the stock market. The world’s richest people lost billions of dollars by investing in the “wrong” assets. Do you think they invest randomly? Of course, most of them are far from the stock market, but that’s why they are rich because they don’t play roulette. This means that they had good consultants and managers, and probably the best expensive professionals.
Even if in this situation people sometimes lose money and a considerable amount of money, then what can we say about some ordinary Forex companies that employ simple traders, even if they are high level? If they offered guaranteed income, wealthy investors would quickly become interested in them. Such a company would flourish and become world famous in a year or two. They just wouldn’t need to attract new customers…
The promise of too high income
Rather, this approach is known as cheating customers. The probability that the profit is not only guaranteed, but also high is very small. Even popular expensive managers show not a very large percentage, and besides, it is unstable. For example, they may have months where revenue growth is 0% or 3%. They treat this normally.
Therefore, be careful. Conscientious companies do not hide the fact that money here is a fickle phenomenon (however, like in business), and a high percentage is achieved only when trading with high risks.
False positioning
Perhaps you know the so-called ” financial pyramids “. They do not sell or produce anything in them, but rather pay money to old customers at the expense of the funds that new customers have contributed. For example, you deposited $1,000 and you will receive $2,000 when several other people contribute the same amount.
This is a highly profitable and very risky scheme. The risk is that:
It is difficult to legally organize such a company, so if the founders decide to abandon their obligations, it will be almost impossible to get their money.
If there are not enough clients, it means that there will be no funds for payments and the activity will be terminated. Naturally, without any refund. Or simply the remaining money is not enough for everyone.
The legislation deliberately suspects such companies. Therefore, even if everything is fine and the payments continue, the company is not immune to the fact that it will simply be closed. After that, no one will receive money.
Therefore, some companies that call themselves brokers attract investments supposedly to invest in Forex, in the form of managing trusts. But in fact they don’t do anything with this money, they just take some for themselves and give some to customers.
All the above suspicious actions of companies can be a sign that it is working according to this scheme. Also, you should be alarmed by the absence of supporting documents. A good broker will provide you with all the evidence that they have managers, they really trade and show good results. Your personal account history is enough for this.
Blacklisted brokers. When should you be on guard? 3
All of these shortcomings are what set blacklist brokers apart. When should you be on guard? Required before investing. First, know the possibilities and then invest. As you can see, the use of most signs applies only to investment matters. The average trader may not pay attention to the conditions that are promised to investors. Don’t forget to study everything the broker has to offer, even if it doesn’t apply to you
