When you are planning to invest some of your money into CFDs or forex trading, it is important that you choose a trustworthy and legitimate stockbroker. This means using the services of an approved and regulated company because, in most situations, it is the non-regulated trading firms who will commit fraud. Since there is no independent governing body to monitor the activities of an unregistered online trading firm, the company can use your money however they want and report to you whenever they please. This leaves your investment with these firms vulnerable to fraud. This, combined with the fact that there will be no regulatory body that can help resolve your dispute, means that it’s important to reduce the risk of fraud in the first place. The best way to reduce the likelihood of trading fraud is to take these four factors into consideration when choosing the right CFD and forex trading firm for you:
As previously discussed, most fraud cases occur when a customer invests in a non-regulated CFD and forex trader. You can protect your investment by selecting trading firms that are IFSC-affiliated and reading reviews about each of your prospects. These reviews will detail information about your potential CFD and forex broker, providing you with information that you need about their service and most importantly, how legitimate they are.
Secure trading platforms will have strong encryption protocols such as SSLs to protect your payment details. They will also utilize advance deposits to ensure that client investments are well-protected. These types of anti-fraud measures will be used by professional and regulated brokers, and you should expect to see them on any legitimate online trading platform. If you are on a platform that lacks these anti-fraud prevention measures, stop using the service immediately.
Find out if your potential broker is on a trading blacklist. Blacklists are a great indication of whether a broker is to be trusted or not. If the broker appears on the list, find someone else. Blacklists often mean the broker is non-regulated or has a record of committing fraud or trading misconduct. If you allow them to look after your investments, you will be at a significantly higher risk of being affected by forex and CFD fraud.
Despite a potential broker being affiliated with a governing body or using trading platforms that are secure, it is still they who will be managing your investments and trading it on the forex and CFD market o your behalf. Therefore, it’s a good idea to meet your broker and talk to them about any concerns that you may have. A good, reputable broker should be able to put you at ease. Observe how they behave and look at their portfolio. You want someone reliable and competent to manage your investments. If anytime you feel the broker is not the right person for you, trust your gut and leave.
These are the four tips to help you find a legitimate CFD and forex trader. Remember to check that they are regulated and use secure trading platforms. Research their company thoroughly and see if they are on a trading blacklist. Finally, if for any reason you don’t trust your potential broker after meeting them, find someone else. This is a lot of money that you will be investing and you need to reduce the likelihood of you becoming a victim of fraud.