Capitalfxclub.com Review Is CapitalFX Club a Scam or Legit Broker

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Capitalfxclub.com Review: Is Capital FX Club Scam or Safe?

Capitalfxclub.com Review: Is Capital FX Club Scam or Safe?

13 Comments

Last Updated: Feb 13, 2020 @ 12:36 pm

Capital FX Club is a Forex and CFDs broker who proclaims on their website that they are offering the most accessible way to become richer. This is a far fetched statement as far as the risks involved in trading are concerned. They claim that their platform is innovative plus it offers speedy execution of trades with ”single click” easy trading function. Other supposed advantages of trading with Capital FX Club is that traders can enjoy a wide range of trading tools, tight spreads, zero commission, campaigns and bonuses that give traders advantage, Islamic accounts among others.

Capital FX Club allegedly offers more to help traders succeed as they claim on their website that they are offering Autochartist programs to help traders make decisions easily. Personal account managers and signals delivered through SMS are also some of the alleged advantages that traders will enjoy if they open an account with Capital FX Club.

Definitely there are perceived advantages to be enjoyed provided this platform is not a scam. However, we should never let these advantages cloud our judgement before we can consider the most important things that a broker needs to have before they can win the trust of traders.

One of the main things that we usually consider before signing up with a broker is their registration status. If they are registered with the local financial regulator, it means our funds will be safe with that particular broker. If they are not registered with any financial regulator, then it only means that our funds are not safe and the broker must never be trusted. In the case of Capital FX Club, we are a little bit worried because they are providing an Italian phone number on their homepage but the Italian financial regulator has already blacklisted the brokerage for not being regulated.

By the way, if you are looking for brokers who are regulated and licensed to provide trading services to all types of traders, this list contains them all. Pick a broker and start trading and we assure you that you will enjoy the experience because those brokers have friendly trading conditions that favor the trader and moves him closer to success. In the meantime, let’s review Capital FX Club and discuss the things that make this broker very risky to trade with.

�� Want to make money automatically with Bitcoin and Cryptocurrencies without the risk of trading yourself? Are you ready for self-custody of your investment funds? Do you like the sound of regular consistent results and profitable performance? Tired of the forex and crypto scams, false promises and games out there designed to separate you from your hard earned funds? Stop everything! ETBOT is for you! With the ETBOT software, only YOU are in control of your investment funds. The software works using API Key connections that only YOU set up and control. The ETBOT service and mother company EndoTech has been making investors hundreds of percent a year in proven gains since 2020! They use the volatility of the Crypto market to trade long and short using breakout techniques and strategies powered by real Artificial Intelligence. This year so far ETBOT has made over 75% for clients since January 1st, 2020 . If you are ready to leave the trading to the professionals and upgrade your monthly income, now is the time, head to ETBOT now and buy your subscription to get started. PS: ETBOT is a Profitable Forex/Crypto Trading Bot. 100% Verified and Recommended by Valforex.com.

Capital FX Club review

In as much as this broker has their own disadvantages which are discouraging and are the main reasons why a trader would want to shun them, we still see a few perceived advantages which are worth mentioning. But unfortunately we won’t give them credit for those advantages for the simple reason that all other regulated brokers are also offering those advantages with their trading service.

One of them is friendly leverage. Capital FX Club is offering leverage of up to 1:200 and although this is not high leverage compared to 1:500 or higher, we can say that conservative traders as well as those who want to trade aggressively can still find it ideal for their accounts. They also announce on their website that spreads for a pair like EURUSD is 1.6 pips, which is the going rate in the industry. Most brokers charge around 1.5 pips to 1.8 pips for this particular pair. So if this statement is anything to go by, we can rest assured that these are pocket friendly spreads.

The broker also claims that they do not charge any fee on deposits. This is something that most professional brokers practice. So we cannot really consider it an advantage. Apart from this, the broker claims that they are offering 30% bonus. Claiming a bonus from a broker is something you should do based on your decisions and understanding of the implication of trading with that bonus.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Every broker should make their terms and conditions clear regarding accepting bonuses and when bonuses should be withdrawn. Most brokers will state in the fine print that traders can withdraw bonuses once they have reached a certain trading volume. This means that traders can still withdraw their initial capital but they will not be able to withdraw the bonus unless they have attained the minimum volume that the broker requires in order for a trader to cash out the bonus.

But still there are some brokers who will play games with their traders, going as far as refusing to process their withdrawal requests claiming that they have not fulfilled the terms and conditions for the bonus. These are rogue brokers which you should avoid.

Background of Capital FX Club

They are owned and operated by a company known as PRO CAPITAL. This is according to their about us page. This company has allegedly existed since 2020 and has been focusing on offering a wide variety of commodities and Forex products to its customers. Details of the so called Pro Capital are not crystal clear as there is another entity using this name but it is not clear whether this company is the one that Capital FX Club is referring to.

Minimum investment too high

The minimum capital you can deposit with this broker is $250, which is quite high considering that most brokers are now accepting $100 or even less as minimum investment. And with this minimum, traders still can’t access basic features like chat support, platform features, auto chartist, signals and many more until they upgrade to a trading account that requires a minimum investment of $50,000.

This is a way of pressurizing traders to deposit this amount which is not professional at all. Furthermore, these are considered basic features which should come with all account types. So this broker clearly sounds confuses as professional brokers offer these features almost for free with an account of $100 or even less.

Our best advice for you

Capital FX Club is not regulated and that’s one reason why traders must never use their service for whatever reason. Secondly the features they offer for their $250 account are just not sufficient to cater for the needs of traders. It is better to stick with these Forex brokers instead.

CapitalFXclub Review -is it scam or safe?

Trading Accounts and Conditions

Trading account Min. deposit Max. leverage Spread
Standard $250 1:200 from 1.6 pips
Classic $2 500 1:200 N/A
Gold $20 000 1:200 N/A
Premium $50 000 1:200 N/A

Forex and CFD broker CapitalFXclub offers its clients a choice of four trading accounts. All of them provide leverage up to 1:200, variable spreads and access to the MetaTrader 4 platform. Although the broker’s trading conditions seem alright, we would not recommend doing business with CapitalFXclub. Read on to understand why we gave this broker such a low rating.

CapitalFXclub Advantages

Supports the MT4

CapitalFXclub provides its services on the MetaTrader 4 (MT4), which is always considered a plus. The MT4 has stood the test of time and is loved by many traders globally for its reliability and great functionalities. The latter include supreme charting with a number of technical analysis indicators, automated trading strategies, rich back-testing environment and more.

Sufficient leverage, wide range of CFDs

A leverage level of 1:200 will be sufficient for most traders and is not dangerously high, so we also consider this an advantage of CapitalFXclub. Nonetheless, we don’t recommend beginner traders to use the highest leverage ratios possible, as it involves greater risk of loss.

Another possible benefit of using this broker, provided that it is not a scam, is that its offer is very broad in terms of assets available for trade. CapitalFXclub’ product portfolio includes a number of currency pairs, as well as a plethora of CFDs – on indices, commodities, stocks, and cryptocurrencies.

As we have major concerns regarding CapitalFXclub, we would advise you to select a broker from the list below, if you are keen on trading Bitcoin and other digital assets.

CapitalFXclub Disadvantages

Not licensed, blacklisted by CONSOB

According to the information on the broker’s website, CapitalFXclub is a trading name of PRO CAPITAL, which is allegedly based in the UK. First of all, PRO CAPITAL is no company name, and second, there is no mention of license or regulation.

Related to shady company Game Capital Ads Limited

It seems that most of the websites and brands blacklisted by the Italian regulator are operated by Game Capital Ads Limited. Although the company’s name is not present on CapitalFXclub’s website, we suspect that it is also associated with it.

A couple of days ago we reviewed CryptoClubFX which is also blacklisted by CONSOB and operated by Game Capital Ads Limited. When we went through the page of CapitalFXclub, we noticed that the websites of the two brands are almost identical, with some minor differences. This is yet another red flag. See for yourself (click on any of the images to view larger):

Game Capital Ads Limited is an unregulated company which also operates ProCapitalFX, GameBtcFx, SmartProFX, 360SmartFX, and more. Actually, most of those websites have one and the same design, trading conditions, platform and even images. It seems that the people behind them only change the brand and domain names and multiply their scam scheme.

MT4 provided by a shady company

As is the case with the other brands of Game Capital Ads Limited we reviewed, CapitalFXclub’s MT4 is provided by West Media Group, an offshore company operating Platinums Trade. The latter was also blacklisted by Italy’s regulator CONSOB. The reason why they received a warning should be obvious.

Relatively high initial deposit, limited offering on Standard accounts

The minimum investment amount required by CapitalFXclub is $250, which may not seem like to much for some investors. However, a number of licensed and reputable brokers accept deposits as low as $100 or even less as minimum investment.

Furthermore, the $250 invested with CapitalFXclub provide traders with very few possibilities. Standard account holders can’t access basic features like chat support, tradeable assets like CFDs on indices, auto chartist, signals and more until they upgrade to a trading account that requires a minimum investment of $20,000.

Conclusion

It appears that CapitalFXclub is one of the many trading names of Game Capital Ads Limited, some of which have been blacklisted by CONSOB. Most of these brokerage brands have very similar websites, account types, trading conditions, and offer one and the same MT4. It really feels like a multiplied scam scheme, so you’d better stay away and find a trusted and licensed broker instead.

Below, you can find a list of brokers, authorized by one of the most trustworthy financial agencies worldwide, UK’s Financial Conduct Authority.

Here is a summary of our review on CapitalFXclub:

Pros Cons
Supports the MT4 Not licensed, blacklisted by CONSOB
Wide range of CFDs, sufficient leverage Associated with Game Capital Ads Limited
MT4 provided by a third party
Relatively high initial deposit
Limited offering on Standard accounts
Broker Advantages

FXTM a regulated forex broker (regulated by CySEC, FCA and FSC), offering ECN trading on MT4 an MT5 platforms. Traders can start trading with as little as $10 and take advantage of tight fixed and variable spreads, flexible leverage and swap-free accounts.

XM is broker with great bonuses and promotions. Currently we are loving its $30 no deposit bonus and deposit bonus up to $5000. Add to this the fact that it’s EU-regulated and there’s nothing more you can ask for.

FXCM is one of the biggest forex brokers in the world, licensed and regulated on four continents. FXCM wins our admirations with its over 200,000 active live accounts and daily trading volumes of over $10 billion.

FxPro is a broker we are particularly keen on: it’s regulated in the UK, offers Metatrader 4 (MT4) and cTrader – where the spreads start at 0 pips, Level II Pricing and Full Market Depth. And the best part? With FxPro you get negative balance protection.

FBS is a broker with cool marketing and promotions. It runs an loyalty program, offers a $100 no-deposit bonus for all new clients outside EU willing to try out its services, and an FBS MasterCard is also available for faster deposits and withdrawals.

FxChoice is a IFSC regulated forex broker, serving clients from all over the world. It offers premium trading conditions, including high leverage, low spreads and no hedging, scalping and FIFO restrictions.

HotForex is a EU Regulated broker, offering wide variety of trading accounts, including Auto, Social and Zero spread accounts. The minimum intial deposit for a Micro account is only $50 and is combined with 1000:1 leverage – one of the highest in the industry.

Is Your Forex Broker a Scam?

If you do an internet search on forex broker scams, the number of results is staggering. While the forex market is slowly becoming more regulated, there are many unscrupulous brokers who should not be in business.

When you’re looking to trade forex, it’s important to identify brokers who are reliable and viable, and to avoid the ones that are not. In order to sort out the strong brokers from the weak and the reputable ones from those with shady dealings, we must go through a series of steps before depositing a large amount of capital with a broker.

Trading is hard enough in itself, but when a broker implements practices that work against the trader, making a profit can be nearly impossible.

Key Takeaways

  • If your broker does not respond to you, it may be a red flag that he or she is not looking out for your best interests.
  • To make sure you’re not being duped by a shady broker, do your research, make sure there are no complaints, and read through all the fine print on documents.
  • Try opening a mini account with a small balance first, and make trades for a month before attempting a withdrawal.
  • If you see buy and sell trades for securities that don’t fit your objectives, your broker may be churning.
  • If you are stuck with a bad broker, review all your documents and discuss your course of action before taking more drastic measures.

Separating Forex Fact From Fiction

When researching a potential forex broker, traders must learn to separate fact from fiction. For instance, faced with all sorts of forums posts, articles, and disgruntled comments about a broker, we could assume that all traders fail and never make a profit. The traders that fail to make profits then post content online that blames the broker (or some other outside influence) for their own failed strategies.

One common complaint from traders is that a broker was intentionally trying to cause a loss in the form of statements such as, “As soon as I placed the trade, the direction of the market reversed” or “The broker stop hunted my positions,” and “I always had slippage on my orders, and never in my favor.” These types of experiences are common among traders and it is quite possible that the broker is not at fault.

Rookie Traders

It is also entirely possible that new forex traders fail to trade with a tested strategy or trading plan. Instead, they make trades based on psychology (e.g., if a trader feels the market has to move in one direction or the other) and there is essentially a 50% chance they will be correct.

When the rookie trader enters a position, they are often entering when their emotions are waning. Experienced traders are aware of these junior tendencies and step in, taking the trade the other way. This befuddles new traders and leaves them feeling that the market—or their brokers—are out to get them and take their individual profits. Most of the time, this is not the case. It is simply a failure by the trader to understand market dynamics.

Broker Failures

On occasion, losses are the broker’s fault. This can occur when a broker attempts to rack up trading commissions at the client’s expense. There have been reports of brokers arbitrarily moving quoted rates to trigger stop orders when other brokers’ rates have not moved to that price.

Luckily for traders, this type of situation is an outlier and not likely to occur. One must remember that trading is usually not a zero-sum game, and brokers primarily make commissions with increased trading volumes. Overall, it is in the best interest of brokers to have long-term clients who trade regularly and thus, sustain capital or make a profit.

Behavioral Trading

The slippage issue can often be attributed to behavioral economics. It is common practice for inexperienced traders to panic. They fear missing a move, so they hit their buy key, or they fear losing more and they hit the sell key.

In volatile exchange rate environments, the broker cannot ensure an order will be executed at the desired price. This results in sharp movements and slippage. The same is true for stop or limit orders. Some brokers guarantee stop and limit order fills, while others do not.

Even in more transparent markets, slippage happens, markets move, and we don’t always get the price we want.

Communication Is Key

Real problems can begin to develop when communication between a trader and a broker begins to break down. If a trader does not receive responses from their broker or the broker provides vague answers to a trader’s questions, these are common red flags that a broker may not be looking out for the client’s best interest.

Issues of this nature should be resolved and explained to the trader, and the broker should also be helpful and display good customer relations. One of the most detrimental issues that may arise between a broker and a trader is the trader’s inability to withdraw money from an account.

Broker Research Protects You

Protecting yourself from unscrupulous brokers in the first place is ideal. The following steps should help:

  • Do an online search for reviews of the broker. A generic internet search can provide insights into whether negative comments could just be a disgruntled trader or something more serious. A good supplement to this type of search is BrokerCheck from the Financial Industry Regulatory Authority (FINRA), which indicates whether there are outstanding legal actions against the broker. And if appropriate, gain a clearer understanding of the U.S. regulations for forex brokers.
  • Make sure there are no complaints about not being able to withdraw funds. If there are, contact the user if possible and ask them about their experience.
  • Read through all the fine print of the documents when opening an account. Incentives to open an account can often be used against the trader when attempting to withdraw funds. For instance, if a trader deposits $10,000 and gets a $2,000 bonus, and then the trader loses money and attempts to withdraw some remaining funds, the broker may say they cannot withdraw the bonus funds. Reading the fine print will help make sure you understand all contingencies in these types of instances.
  • If you are satisfied with your research on a particular broker, open a mini account or an account with a small amount of capital. Trade it for a month or more, and then attempt to make a withdrawal. If everything has gone well, it should be relatively safe to deposit more funds. If you have problems, attempt to discuss them with the broker. If that fails, move on and post a detailed account of your experience online so others can learn from your experience.

It should be pointed out that a broker’s size cannot be used to determine the level of risk involved. While larger brokers grow by providing a certain standard of service, the 2008-2009 financial crisis taught us that a big or popular firm isn’t always safe.

The Temptation to Churn

Brokers or planners who are paid commissions for buying and selling securities can sometimes succumb to the temptation to effect transactions simply for the purpose of generating a commission. Those who do this excessively can be found guilty of churning—a term coined by the Securities and Exchange Commission (SEC) that denotes when a broker places trades for a purpose other than to benefit the client. Those who are found guilty of this can face fines, reprimands, suspension, dismissal, disbarment, or even criminal sanctions in some cases.

SEC Defines Churning

The SEC defines churning in the following manner:

Churning occurs when a broker engages in excessive buying and selling of securities in a customer’s account chiefly to generate commissions that benefit the broker. For churning to occur, the broker must exercise control over the investment decisions in the customer’s account, such as through a formal written discretionary agreement. Frequent in-and-out purchases and sales of securities that don’t appear necessary to fulfill the customer’s investment goals may be evidence of churning. Churning is illegal and unethical. It can violate SEC Rule 15c1-7 and other securities laws.

The key to remember here is that the trades that are placed are not increasing your account value. If you have given your broker trading authority over your account, then the possibility of churning can only exist if they are trading your account heavily, and your balance either remains the same or decreases in value over time.

Of course, it is possible that your broker may be genuinely attempting to grow your assets, but you need to find out exactly what they are doing and why. If you are calling the shots and the broker is following your instructions, then that cannot be classified as churning.

Evaluate Your Trades

One of the clearest signs of churning can be when you see buy and sell trades for securities that don’t fit your investment objectives. For example, if your objective is to generate a current stable income, then you should not be seeing buy and sell trades on your statements for small-cap equity or technology stocks or funds.

Churning with derivatives such as put and call options can be even harder to spot, as these instruments can be used to accomplish a variety of objectives. But buying and selling puts and calls should, in most cases, only be happening if you have a high-risk tolerance. Selling calls and puts can generate current income as long as it is done prudently.

How Regulators Evaluate Churning

An arbitration panel will consider several factors when they conduct hearings to determine whether a broker has been churning an account. They will examine the trades that were placed in light of the client’s level of education, experience, and sophistication as well as the nature of the client’s relationship with the broker. They will also weigh the number of solicited versus unsolicited trades and the dollar amount of commissions that have been generated as compared to the client’s gains or losses as a result of these trades.

There are times when it may seem like your broker may be churning your account, but this may not necessarily be the case. If you have questions about this and feel uneasy about what your advisor is doing with your money, then don’t hesitate to consult a securities attorney or file a complaint on the SEC’s website.

Already Stuck With a Bad Broker?

Unfortunately, options are very limited at this stage. However, there are a few things you can do. First, read through all documents to make sure your broker is actually in the wrong. If you have missed something or failed to read the documents you signed, you may have to assume the blame.

Next, discuss the course of action you will take if the broker does not adequately answer your questions or provide a withdrawal. Steps may include posting comments online or reporting the broker to FINRA or the appropriate regulatory body in your country.

The Bottom Line

While traders may blame brokers for their losses, there are times when brokers really are at fault. A trader needs to be thorough and conduct research on a broker before opening an account and if the research turns up positive for the broker, then a small deposit should be made, followed by a few trades and then a withdrawal. If this goes well, then a larger deposit can be made.

However, if you are already in a problematic situation, you should verify that the broker is conducting illegal activity (such as churning), attempt to have your questions answered, and if all else fails, and/or report the person to the SEC, FINRA, or another regulatory body that could enforce action against them.

How to Avoid Forex Trading Scams in 2020

Forex markets trade trillions of dollars a day. Traders around the globe are always looking for the best broker to trade forex, CFDs, binary options, stocks, cryptocurrencies, etc. With new forex brokers popping up constantly, determining the legitimacy of a broker can be a real challenge. As a consumer, it is vital to research a company before depositing money to trade. At ForexBrokers.com, it’s our mission to assist you as much as possible with that research.

Most Trusted Forex Brokers Comparison

Taken from our forex broker comparison tool, here’s a comparison of the must trusted forex brokers.

Feature IG
Visit Site
Swissquote CMC Markets Saxo Bank
Trust Score 99 99 99 98
Year Founded 1974 1996 1989 1992
Publicly Traded (Listed) Yes Yes Yes No
Bank Yes Yes No Yes
Tier-1 Licenses 6 4 4 6
Tier-2 Licenses 3 1 2 1
Tier-3 Licenses 1 0 0 0
Authorised in the European Union Yes Yes Yes Yes

Questions to ask to avoid a forex trading scam

  • Is the broker regulated?
  • If regulated, how trustworthy is the regulatory body?
  • Is the broker offering profits or rewards for opening an account?
  • Is the broker offering a cash bonus for opening an account?
  • Is the broker offering automatic trades or signals to guarantee profits?
  • Is any credible information about the company included on its website, such as company history, financials, headquarters’ address, or similar?
  • If awards are cited, can I verify their authenticity?
  • If a big corporate sponsorship is promoted (e.g. athlete sponsorship), am I doing my due dilligence to ensure the company can be trusted?

1) Is the broker regulated?

Unregulated brokers do not have to report to a governing body. This means that if they scam you in any way, whether it be “glitches” or “malfunctions” causing sever slippage in their system, or you go to make a withdrawal and they don’t process it (steal your money), you are out of luck. Beyond posting a bad review online, there is little you can do because these brokers have no legal authority to answer to.

How do I check if a broker is regulated? The easiest way to check a broker’s registration is to look for it at the bottom of the website. The picture below is the bottom of 12Trader, a broker we recommend avoiding. You’ll notice that nowhere in this picture is a regulatory body mentioned. The “about us” pages on the site link to an account login prompt. Nowhere on the site is there any mention of regulation or company history. All of these warning signs should make you cautious.

Now let’s look at the bottom of the homepage of City Index, a trusted and regulated broker.

You will notice 1) the company specifically warns of the risks involved in trading CFDs, 2) the company is registered in England and Wales and has posted an address, and 3) the company is authorized and regulated by the Financial Conduct Authority, and has posted a registration number.

Conclusion: A regulated broker is required to include proper risk disclaimers and regulatory information at the bottom of all their website pages. To make it easy for investors, ForexBrokers.com includes a Trust Score for each broker, which assesses overall trustworthiness based on where the broker is regulated and its history as a firm.

2) If regulated, how trustworthy is the regulatory body?

Some scam brokers claim to be regulated and registered by a governing body that does not monitor or regulate forex companies.

For example, let’s look at Evolve Markets.

The disclosures at the bottom of the homepage give the appearance of a regulated broker. There is a warning of the risks of trading CFDs, and there is a legal section. Upon further examination of the legal section, you’ll notice that while the firm is registered as an international broker company in St. Vincent & the Grenadines, it is not regulated.

This statement from St. Vincent & the Grenadines shows there is a warning against false claims of registration or license.

How do I know what regulatory bodies are legitimate?

Forex brokers that are regulated in a major hub are always more trustworthy. Brokers in emerging hubs can also be trustworthy, but caution is warranted. Based on our annual study of regulatory trustworthiness, here is a list of the regulatory bodies we track and how trustworthy each one is:

  • FCA Regulated – Financial Conduct Authority – United Kingdom – (Great)
  • CySEC Regulated – Cyprus Securities & Exchange Commission – Cyprus (OK)
  • ASIC Regulated – Australian Securities & Investment Commission – Australia (Good)
  • SFC Authorized – Securities Futures Commission – Hong Kong (Good)
  • MAS Authorized – Monetary Authority of Singapore – Singapore (Good)
  • FSA Authorized – Financial Services Agency – Japan (Good)
  • IIROC Authorized – Investment Industry Regulatory Organization of Canada – Canada (Good)
  • FINMA Authorized – Swiss Financial Market Supervisory Authority – Switzerland (Good)
  • FMA Authorized – Financial Markets Authority – New Zealand (OK)

Conclusion: Double check the authority of the governing body that regulates the broker you are looking at. You can go to the website of the governing body to search for the registration number and verify its legitimacy. To help investors find a trusted broker where they live, we have created country-specific forex broker guides.

3) Is the broker offering profits or rewards for opening an account?

Scam brokers often make claims such as “make $50 a day from a $250 investment” or “make 80% returns on profit signals” or “96% success rate.” These claims are a scam, regardless of whether they are being made for forex, CFDs, or binary options. Forex brokers should not promise returns at all, small or large. Simply put, if a broker is promising to make you money, it is a scam. Other common scam practices include advertising pictures of expensive cars that are given away to lucky investors.

This Wikipedia page on binary options does a great job of summarizing risks related to binary options:

“Many binary option “brokers” have been exposed as fraudulent operations. In those cases, there is no real brokerage; the customer is betting against the broker, who is acting as a bucket shop. Manipulation of price data to cause customers to lose is common. Withdrawals are regularly stalled or refused by such operations; if a client has good reason to expect payment, the operator will simply stop taking their phone calls. Though binary options sometimes trade on a regulated exchange, they are generally unregulated, trading on the Internet, and prone to fraud.”

Conclusion: If a binary options or forex broker promises you big returns on your money, this is a clear sign of a scam. You will not make $100,000 on a mega-trade; you will not make a 96% profit in 30 seconds; and you will not win a $40,000 car by depositing $2,000. Save your money and STAY AWAY.

4) Is the broker offering a cash bonus for opening an account?

When a broker offers an abnormally high cash bonus, is not regulated, and does not show offer details for the bonus, then you are likely dealing with a scam broker. For example, 1000Extra hints at a bonus of $1,000 with their vague promotional offer. If you click around trying to gather more information you are redirected to sign up for an account.

1000Extra is not regulated, has minimal information about the company, and has scam reports across the web.

Conclusion: In most regulated regions around the world, promotional bonuses for opening a new account are not allowed. The two exceptions are the United States, which is for US citizens only, and Asia.

How to Avoid Forex Trading Scams

The foreign exchange (forex) market is huge, with an average daily trading volume of more than $5 trillion, including currency futures and options. It’s also not very well regulated. That means the opportunity still exists for many forex scams that promise quick fortunes through “secret trading formulas,” algorithm-based “proprietary” trading methodologies, or “forex robots” that do the trading for you.

Before getting involved in forex trading, perform your own due diligence by visiting the Background Affiliation Status Information Center (BASIC) website created by the National Futures Association (NFA), the futures and options industry’s self-regulatory organization, to learn how to choose a reputable broker and avoid scams. Before dealing with the public, every company or person who wants to conduct off-exchange forex business is required to become a member of the NFA and to register with the Commodity Futures Trading Commission, the government agency that oversees futures and options trading. You can search BASIC to find out what regulatory actions, if any, have been taken against a particular individual or firm.

Signal Sellers

One of the challenges a rookie forex investor faces is determining which operators to trust in the forex market and which to avoid. Signal sellers are one group of operators to consider carefully.

A signal seller basically offers a system that purports to identify favorable times for buying or selling a currency pair. The system may be manual, in which case the user must enter trading info, or it may be automated to put through a trade when a signal occurs.

Some systems rely on technical analysis, others rely on breaking news, and many employ some combination of the two. But they all purport to provide information that leads to favorable trading opportunities. Signal sellers usually charge a daily, weekly, or monthly fee for their services.

A frequent criticism of signal sellers is that if it were really possible to use their system to beat the market, why would the individual or firm that has this information make it widely available? Wouldn’t it make more sense to use this incredible signaling system to make huge profits for themselves?

Other analysts distinguish between known scammers and more reputable sources of market information that offer a well-thought-out signaling service.

Behind these opposing views lies a larger difference of opinion about whether anyone can predict the next move in a trading market. This fundamental disagreement won’t be settled any time soon.

Nobel Prize-winning economist Eugene Fama proposes in his well-regarded efficient market hypothesis that finding these kinds of momentary market advantages really isn’t possible.

His economist colleague Robert Shiller, who’s also a Nobel Prize winner, believes differently, citing evidence that investor sentiment creates booms and busts that can provide trading opportunities.

The best way to determine if a signal seller can benefit you is to open a trading account with one of the better-known forex brokers and enter practice trades that don’t involve real money based on the signals. Be patient, and with time, you’ll determine whether predictive signaling works for you or doesn’t.

Phony Forex Investment Management Funds

In the past few years, forex management funds have proliferated. Most of these are scams. They offer investors the “opportunity” to have their forex trades carried out by highly-skilled forex traders who can offer outstanding market returns in exchange for a share of the profits.

The problem is, this “management” offer requires the investors to give up control over their money and to hand it over to someone they know little about other than the hyped-up and often completely false record of success available on the scammers’ website and brochures.

Investors often end up with nothing, while the scammers use investors’ funds to live high on the hog.

A good rule of thumb in the forex market, as with other areas of investment, is that if it sounds too good to be true, such as annual returns of more than 100 percent, for example, it’s almost certainly a scam.

Dishonest Brokers

Although the forex market is not entirely unregulated, it has no single, central regulating authority. The forex spot market, however, which accounts for the majority of trades, is completely unregulated. Unsurprisingly, some forex brokers do not deal fairly with their customers and, in some instances, defraud them.

Aside from searching the BASIC website, you can help yourself avoid a bad broker by dealing with one that also handles stock market trades and so is regulated by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA). While the forex trade itself may be unregulated, a broker subject to SEC and FINRA oversight probably wouldn’t risk its license for other securities by defrauding its forex customers.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Like this post? Please share to your friends:
Binary Options Trading Wiki
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: