Forex history books may record this summer as the lowest period of volatility on record, at least from the perspective of retail traders. Without volatility, the ongoing opportunity for trading gains diminishes drastically in size. Making a profit becomes near impossible for both traders and the brokerage community. Judging from the recent spate of complaints appearing on the Internet, there are a lot of angry traders out there. They are venting their frustrations in whatever forums are available to proclaim the apparent impropriety of their forex or binary option broker.
Is this behavior warranted? The Internet has enabled a plethora of modern activities, including retail forex trading, to prosper and grow over the past two decades. It has also enabled the dark side of human behavior to become more pronounced, whether it be in the form of unscrupulous business practices or in complaining about poor service. The anonymity of the web actually encourages rude behavior. The rare positive comments seem out of place, almost contrived as if someone were paid to write them.
The Commodity Futures Trading Commission (“CFTC”), the forex industry’s primary regulator of record, has made great strides in cleaning up the fraud that persisted for years in the brokerage community, as well as educate consumers on the risks and pitfalls in currency trading. Newly enacted regulations, stemming from the Dodd-Frank Act, have also forced higher capital requirements and better business practices on the remaining domestic forex brokers in the U.S. market. Brokers that chose not to conform have either sold their businesses or exited the U.S. market altogether.
Before crucifying your broker, take a moment to assess the facts at hand
Brokers are successful when you have success. It does not behoove their long-term interests to take your money and run. Yes, there are a few brokers or employees of brokers that will cross the line, but they are in a small minority. In most cases, the source of the issue is a quickness on our part to believe that we have been had.
Markets can move quickly at times, causing spreads to widen momentarily and servers to jam. These delays do not mean that the broker has rigged the game against you. The fine print in your service contract will be quite specific about avoiding times when high volumes are present. Stop loss orders may not work, or market price gyrations may appear to sweep up existing stop losses, as if by design, but it may just be the market at work. Slippage and re-quotes can happen quite naturally at these very times, as well.
If you are complaining about a slowness in response to your withdrawal request, then there are a number of issues that must be considered. International anti-money laundering statutes force all brokers to gather very specific identity information before a transfer of funds can be made. That transfer can only be made to the name on the account, too, so do not expect the broker to re-direct the transfer for you. He cannot. Most of the complaints in this area, however, have to do with promotional bonuses. The fine print again will specify required trading activity counts that you must fulfill before any amount of a bonus can be withdrawn.
What are the reasons that broker complaints may be on the rise?
There is not a central source for complaints of this nature, but there are a number of reasons why a broker that is in financial trouble may be pressured to act in a shady manner:
- The Global Economy: Times are tough for everyone, but the global economy has been stuck in 1st gear for quite a while. Our industry had been growing leaps and bounds, but when growth and volatility dry up at the same time, the ability to make a profit decreases rapidly;
- Competition: Competition has been a good thing for traders. Brokers have upgraded their efforts to attract your patronage by tightening spreads, enhancing offerings, and increasing promotional bonuses. New brokers enter the fray every week, meaning more companies are fighting for a piece of the pie. Binary brokers are also attracting clients away from traditional trading methods, leading to more pressure to make a buck;
- Regulation: Regulatory reviews and requirements are getting more strict, necessitating the need for more capital and better business practices. Those brokers that are not complying must make a decision to comply or leave;
- Casualty Rates: Forex trading is high risk. Casualty rates are roughly 65%, and only one out of three that move on become veteran traders. Brokers must focus an inordinate amount of resources on acquiring new clients, especially if they do not offer digital or binary options;
- Crisis in Cyprus: Last year the two largest banks in Cyprus were taken over by regulators. Deposits were seized. Over eighty financial institutions had chosen Cyprus for back-office operations, mostly forex and binary option brokers. Those that had neglected to segregate client funds offshore in Tier-1 banks suffered losses. Many firms re-branded elsewhere with new capital, sold their businesses, or closed their doors. The forex industry is still recovering from this crisis.
None of these reasons would justify any fraudulent activity that you may have personally encountered, but when pressure increases, desperate people can do desperate things.
Traders often forget to perform the last step in choosing a broker – monitoring the one that you chose. Even good brokers can encounter problems. If you sense your broker is acting strangely, then you might consider changing. Be very careful when selecting an offshore broker. If you move on, start small. Experiment with a withdrawal after one month to test customer service. Remember — You are your best defense against fraud!
- If Market Manipulation Is Behind The Crypto Price Crash, Is Now The Time To Buy?
- Fake Elon Musk Crypto Giveaway Is Scamming Investors Of Millions
- Musk’s Bid For Twitter Could Be About To Lift The Lid On Tech Sector Valuations – And Not In A Good Way
- Gold H4 – Do the bears stand a chance
- Looking Forward To An Uncertain Few Months
- How To Use ETFs To Trade The Current Market Conditions?
If Market Manipulation Is Behind The Crypto Price Crash, Is Now The Time To Buy?
Safest Forex Brokers 2022
|Broker||Info||Best In||Customer Satisfaction Score|
|#1||Your capital is at risk Founded: 2011||Global CFD & FX Broker||
BEST FOREX BROKER Visit broker
|#2||Your capital is at risk Founded: 2014||Global Forex Broker||
BEST SPREADS Visit broker
|#3||66% of retail CFD accounts lose money Founded: 2014||Global Forex & CFD Broker||
Best Trading Conditions Visit broker
|#4||72 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008||Global CFD Broker||
Best Trading App Visit broker
|#5||Your capital is at risk Founded: 2006||Globally regulated broker||
BEST CUSTOMER SUPPORT Visit broker
Stay up to date with the latest Forex scam alerts
Sign up to receive our up-to-date broker reviews, new fraud warnings and special offers direct to your inbox