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XMarkets was an unlicensed Forex & CFD trading broker that opened in August of 2020. For complaints and withdrawal problems, go read this.
XMarkets Broker Review
Our review of the brokers XMarkets shows that they are offering investors the Tradologic CFD trading software for Forex and CFD trading. This trading platform has all Major Currency pairs as well as minor crosses. There is a large selection of Commodities, Indices, Stocks, Futures and Metals for trading.
Their website is available in the following languages; English, German, Nederlands, German, Italian and Swedish. A few things that are missing from this brokers website, are option to use the MetaTrader4 software, mobile apps or social media pages. Minimum deposit for a new account is $250, and if you do not trade for more than 3 months, they change an inactivity fee of $50 a month.
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XMarkets License Check
Scam Broker Investigator reviews hundreds of Forex & Currency brokers to see if they are scam brokers or legitimate brokers. The way to properly assess a broker is by checking to see if CySEC in Europe or ASIC in Australia gave the broker a license. You can see all the licensed brokers listed here.
XMarkets does not have a license. Payment provider for this broker is Celtic Pay Ltd, located at: Dept 1308 43 Owston Road, Carcroft, Doncaster, United Kingdom.
XMarkets is owned and operated by the company SG INNOVATION LTD, which is located at: Trust Company Complex, Ajeltake road, Ajeltake Island, Majuro, Marshal Islands MH 96960. Contact phone numbers are; United Kingdom: +44 203 958 4405 and Germany: +49 322 2109 1443. Customer support email is: [email protected]
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If you are currently investing at XMarkets, please share your experience in the comments section below.
XMarkets Review – is it scam or safe?
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Xmarkets claims on its website to be owned and operated by Celestial Trading Ltd, located at Rue de la Perle, Mahe, Seychelles. Seychelles is an archipelago of islands in the middle of the Indian Ocean with a population of just about 95 thousand people. We have serious doubts about this brokerage. Read the whole review to find out why!
Major security concerns
Let us first start with an obvious red flag regarding this brokerage. The Financial Conduct Authority came out with a specific warning in relation to the purported forex trading service provider Xmarkets. “This firm is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorization”, the FCA said, advising investors to only deal with authorized companies. Such a warning is pretty straight-forward, but let us see what else the brokerage offers. It’s stated address is in Seychelles which is an archipelago of islands and a sovereign state in the Indian Ocean. However, we may not be entirely sure about the legitimacy of the address, since in other reviews from months ago we read that Xmarkets is registered in the Marshall Islands. Such inconsistencies are very typical and showing for shady brokerages. We have to at least acknowledge the effort of the broker, because way down on its website (where the address is usually stated) it gives a London address of a financial entity where the payments will be proccessed, while hiding its own address in the middle of the paragraph. Here is a screenshot to see for yourself:
This is obviously done in a such manner as to mislead misinformed and vulnerable traders. However, trading with an unlicensed brokerage brings with it a hornets nest of risks and due diligence requires us to state them. In layman’s terms – there is no assurance for the safety of the clients funds, besides the supposed cordiality of the brokerage. Without regulation, we have no guarantee of the segregation of accounts i.e. the clients funds may well be mixed with those of the company and liable to all sort of illegal encroachments on part of the broker. Compliance with a regulatory agency such as the FCA also requires the broker to have a starting capital of € 730 000 which significantly lowers the risk of them being frauds, since not many scammers can pull through with such an amount.
Having in mind the uncertainty over the regulatory status of XMarkets, as well as its “floating address”, we advise potential traders to orient themselves to safer and more legitimate brokerages. They can check out our list of recommended FCA-regulated forex brokers:
Diverse payment methods
Xmarket does provide diverse payment methods for traders which is always a welcoming sign. Potential clients may deposit or withdraw funds via Visa, Mastercard, Maestro, Neteller, Paysafecard, Wire transfer.
Xmarkets is an unregulated brokerage which purports to be registered in an archipelago of islands in the Indian Ocean and has an issued warning from the FCA hanging on its head. It would be safe to say that any potential dealings with such a brokerage will be overshadowed by the high possibility of fraud. The feeling of knavery permeates through much of the information presented on the website. All in all, we would suggest interested traders not risk it and put their trust in regulated and reputable brokerages to which we have linked throughout the review.
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.
X Markets Review – 5 things you should know about Xmarkets.com
Beware! X Markets is an offshore broker! Your investment may be at risk.
Don’t put all your eggs in one basket. Open trading accounts with at least two brokers.
X Markets is a Seychelles-based forex CFD brokerage owned and operated by Celestial Trading Limited. The brokerage does not disclose much of its information to traders. On it’s website we can only read that the minimum deposit for the most basic account comes at $250 which is pretty much the industry average. We always view the lack of information with unease, because credible brokerages would usually be open about their trading conditions.
X Markets regulation & safety of funds
X Markets not only does not state any sort of regulatory status on its website, but the Financial Conduct Authority came out with a statement expressing concern about this specific brokerage. The authorities highlight the fact that the broker is not regulated by them, but has targeted traders. Furthermore, X Markets changes it’s address – a few months ago it was registered in Marshall Islands and now it has chosen Seychelles. All this constitutes a major security concern and opens up potential clients to a number of risks.
Prestigious regulatory agencies, such as the UK’s FCA and CySec, require compliance with a number of strict rules that give significant assurance for the safety of the clients funds.
The segregation of accounts is among the rules which are especially important in the trading world, because it drastically lowers the risk of possible commingling.
Another is the participation in a compensatory scheme by which the client’s losses will be covered in the unlikely case the broker goes bankrupt or attempts to scam traders.
X Markets deposit/withdrawal methods and fees
Potential clients of the brokerage may deposit or withdraw via Visa, Mastercard, Maestro, Neteller, Paysafecard, Wire transfer. X Markets also has a minimum withdrawal amount of $250 and states that it may take up to 14 business days for the withdrawal to be processed. On top of that, inactive for more than three months accounts are liable to a $50 fee.
How does the scam work?
Information is a pretty solid criteria for judging a brokers legitimacy. Scammers would not share much of their information, because precisely there inconsistencies and irregularities may appear which expose the whole set-up. After informing themselves for the brokers trading conditions – traders should be well-versed in the way of the scam:
In most cases through clicking a tempting ad with promises for fast money, you will be redirected to a website where registration will require you to give your address, email and phone number. Your personal information will be immediately shared with brokers in call centers who are ready at the phone to bait you with benevolent trading offers. After a few minutes hearing them talk, you decide to deposit some $200-250. And just like that – the scammers take a fat commission from this initial deposit.
After pulling a fast one on you, senior scammers will take you up and begin pushing you to further invest. You may even budge and make a few more trades. At this point, regardless whether you are losing or winning, you probably begin to consider closing the account and getting back your money.
However, now comes the “recovery” part of the scam. After stating that you wish to withdraw your money, they will redirect you to yet another representative who will begin pleading with you to wait it out, six months at the most. The angle here is simple – remove the last guard you may have – filing a chargeback with your bank. If six months expire, that option is closed and your money is gone for good.
What to do if scammed?
Even though most of us think it cannot possibly happen to us – it is much better being as well-informed as you could so that you may react to a scam in an adequate manner. Here are the available options you have in front of you:
You may contact your bank or credit card provider and file a chargeback, but only within six months of the initial deposit, as was noted above.
If, however, you have provided the broker with your credit card details, immediately cancel your credit card.
If you have given information regarding your online banking pass – you should switch it asap!
Beware of potential calls from self-described “recovery agencies”! They prey on scammed and vulnerable traders who are desperate and ready at anything to somehow retrieve their funds. They will say that in exchange for an up-front payment, you will get your money back, but no such thing will occur!
MarketsX, which many traders may know by its former name Markets.com, is a global Forex broker that became operational in 2020. This broker started its journey as GFC Markets but rebranded as Markets.com in 2020 following the merger between Safecap Investments LTD, the owner of GFC Markets, and TradeFX. In 2020, the FTSE250 listed gaming software company Playtech PLC, ticker symbol PTEC, acquired TradeFX for £458 million. This made Playtech the owner of Markets.com, which is now rebranding itself as MarketsX. This broker went under a massive restructuring in 2020, selling its binary options platform TopOption, and reducing its workforce. MarketsX is regulated across five jurisdictions, offers more than 2,200 assets from three trading platforms, and was a top sponsor of Premier League football team Arsenal FC for five years from 2020 until the deal expired in 2020. All of these signs point to it being a highly competitive broker that is here to stay.
Regulation and Security
MarketsX is owned by TradeTech Alpha LTD, a division of Playtech PLC. The Financial Conduct Authority (FCA) is the principal regulator, but MarketsX is regulated across five jurisdictions. This indicates an important fact to consider, as each jurisdiction grants particular benefits and various degrees of trader protection. Besides FCA regulations, MarketsX is authorized and regulated in Europe by the CySEC, globally by FSC in the British Virgin Islands, in Australia by ASIC, and in South Africa by the FSCA. The strong global ownership and unique global regulatory environment create an extremely secure brokerage.
Client funds remain segregated from companies’ funds across all five operating subsidiaries, but traders operating under the CySEC regulatory environment are exposed to the Financial Instruments Directive 2020/65/EU or MiFID II and the EU’s 4th Anti-Money Laundering Directive. The EU Directive 2020/49/EU mandates participation in the Investor Compensation Fund (CIF) with maximum coverage of €20,000. UK-based traders are protected by the Financial Services Compensation Scheme (FSCS), up to £85,000. Negative balance protection applies to all five subsidiaries. Traders regulated under FCA, ASIC, and FSCA receive incentives and loyalty rewards. MarketsX remains a very transparent broker, and regardless of which subsidiary accepts traders, the regulatory environment is solid.
MarketsX enjoys the financial backing of a powerful corporate owner, listed on the FTSE 250.
This broker is regulated in five jurisdictions and executes an excellent task when it comes to transparency.
Traders are advised to carefully consider the pros and cons of signing up under the subsidiary that would ultimately manage their portfolios.
The primary regulator for MarketsX is the FCA in the UK.
MarketsX generates most of its revenue through spreads on over 2,200 assets. The EUR/USD is listed with a starting spread of 0.4 pips, which represents a very competitive offer. No commissions are charged at this broker, adding to the excellent trading environment. Before the rebranding, MarketsX solely deployed a market maker execution model and profited directly from traders’ losses. It now extends a dual model after the addition of an STP model.
Swap rates on leveraged overnight positions apply, and traders can retrieve the applicable rates from inside the trading platforms. Corporate actions, like dividends, stock splits, or takeovers on equity and index CFDs, are passed on to traders. MarketsX doesn’t charge for deposits or withdrawals, but third-party charges may apply. The fee structure introduced by this broker is extremely trader-friendly and remains a critical factor to consider.
MarketsX offers a very competitive pricing environment for traders to consider.
What Can I Trade
Traders have over 2,200 assets across the Forex market, commodities, equity and index CFDs, cryptocurrencies, bonds, and ETFs to choose from. Pure Forex traders will find a great selection of currency pairs but, as with many brokers, the cryptocurrency market is only represented with five names. Twenty-five commodity CFDs offer solid exposure to this sector, but only four bonds are offered. Twenty-one index futures CFDs complement the large equity CFDs selection covering twenty countries, while the ETF offering further allows traders to branch out. Cross-asset diversification may easily be accomplished for retail traders and professional ones alike.
With over 2,200 assets across seven categories, traders have the option to properly diversify their portfolios.
MarketsX provides all traders with the Classic CFD account, and an upgrade to a professional account is available. A Premium account is mentioned in one section, but no details are provided. Leverage remains one critical difference between the Standard account across the five regulatory jurisdictions. The FCA and CySEC regulated subsidiaries allow maximum leverage of 1:30, while the FSC, ASIC, and FSCA cap the maximum leverage at 1:300. This will cause a significant difference in the trading environment, directly influencing profitability.
The Classic CFD account is the default selection for all traders.
The regulatory framework directly impacts the trading conditions, and traders need to consider this carefully.
Professional accounts are only offered by the FCA and CySEC regulated entities, and strict requirements apply. Traders will get the same conditions at the FSC, ASIC, and FSCA regulated subsidiaries. The most significant difference remains leverage.
The MT4/MT5 trading platforms are available but reduced to a mere mention under MetaTrader Trading Conditions. Not even a general description of the platform features is provided, a download link for either platform is equally absent. MarketsX strongly promotes its proprietary webtrader and has created all tools specifically for it. The MT4/MT5 trading platforms are offered as the fundamental version only. This may create a less-than-ideal offering for some traders (especially advanced traders) as popular third-party plugins aren’t available in either platform offering.
The proprietary webtrader is presented as an easy-to-use platform with powerful trading tools. MarketsX provides fifteen tools for traders and, compared to a basic version of the MT4, the webtrader offers a much more sophisticated gateway to financial markets. Traders who have no existing trading solutions that would require the MT4 infrastructure will be adequately served by the webtrader. The biggest flaw remains the lack of support for automated trading solutions, as provided by MT4. While the webtrader offers great trading tools, an upgraded MT4 would result in a superior product. Traders will need to assess if they want to invest in an MT4 upgrade, or use the webtrader for manual trading.
The MT4/MT5 trading platforms are offered but not properly presented.
MarketsX introduces its webtrader as an easy-to-use trading platform.
Trading tools provided by this broker are solely available for its webtrader.
MarketsX offers fifteen trading tools on its webtrader, which enhances the trading environment, offering research and analytics tools, including insights into financial markets. They are broken down into fundamental, technical, and sentiment tools. The XRay segment provides a live and interactive stream, covering a broad range of topics. It is important to note that a majority of those trading tools are provided more efficiently through MT4 plugins. The combination of all tools provides traders with a powerful suite for a manual trading approach.
Events & Trade is an interactive economic calendar, with data from over 30 leading analysts around the globe. The Dow Jones News feed keep traders informed on global developments which may impact their trading strategy.
The Thomson Reuters Analyst Research provides traders with a fundamental analytical tool for equity, index, and ETF CFDs. Advanced Alerts can assist traders with relevant changes to desired assets.
Financial Commentary may help traders identify new trading opportunities.
Advanced Charting consists of an extensive charting package for the webtrader to enhance technical analysis.
Analyst recommendations may be viewed for trade confirmation or to conduct sentiment analysis. Hedge Fund Confidence shows trading positions held by hedge funds as filed with the SEC, but the data is three months delayed.
Insider Trades is another helpful tool for equity traders, displaying trading activity from key insiders at firms. Bloggers Opinions is an innovative tool providing insight from over 50,000 contributors.
Acuity News Alerts further diversifies news coverage that could impact assets. The Acuity News Sentiment provides a quick overview on assets as gauged by news coverage.
Signals and Traders Trends are provided by MarketsX. The former creates trading signals based on Daily Analyst Recommendations, Insider Trades, Hedge Fund Confidence, and Bloggers Opinions. The latter merely displays the sentiment of this broker’s trading positions on the webtrader.
XRay is an interactive stream, provided directly from inside the webtrader. It represents a very useful service for traders as it features relevant topics, and a welcomed intermission from regular trading activities.
Research and Education
MarketsX doesn’t provide any in-house research or education. It opted to outsource the entire research capabilities to third parties, but given the broad reach and investment into this approach, the result is outstanding. Traders have access to a more than ample supply of research and analytics, and this broker additionally offers trading signals based on the array of tools provided.
Regrettably, no educational content is offered. This is a major oversight by MarketsX.
Customer support is accessible 24/5 in English, French, Spanish, Italian, Arabic, German, and Bulgarian. The most convenient method to engage with support is through live chat, but traders may also call or fill out the web-form. The response time for queries submitted via web-form is listed as 28 hours. A support section dedicated to the most common questions is available and should take care of basic questions. Most traders will never require customer support, especially at a well-operated brokerage. MarketsX falls into this category, but support is easily available if required.
Bonuses and Promotions
MarketsX mentions incentives and loyalty rewards for the FSC, ASIC, and FSCA regulated entities, without providing more details about them. Either they have been discontinued, and the website was not updated, or they are provided after clients open an account. The broker would benefit significantly by taking a second look at this section and fixing it up.
Opening an Account
New traders may conveniently open an account through the online application form, the standard operating procedure across the brokerage industry. The webform merely asks traders for their e-mail address and password creation. The option to complete this process through a Google or Facebook account is available. This will grant new traders access to their client portal, from where a copy of the trader’s ID and one proof of residency document is required to verify the account and to satisfy AML/KYC requirements, as mandated by the regulators. Traders can completely trust this broker with their information.
A very simple sign-up process is offered by MarketsX, and given the sound regulatory environment, traders can trust this brokerage without hesitation.
Deposits and Withdrawals
Deposit and withdrawal options consist of bank wires, credit and debit cards, Skrill, Neteller, and PayPal. Local bank transfers, Ideal, and Sofort are listed under deposits methods but not as a withdrawal option. Not all methods apply to every trader, as they are based on geographic location. Unfortunately, the minimum deposit and withdrawal amounts are unequal for each entity. Most minimum deposits are listed as $100 or a currency equivalent, except for the UK, where the minimum is increased to $250. The same lack of consistency applies to withdrawal amounts. Processing times may take up to eight business days for credit card transactions, which appears overextended. As mandated by regulators, deposits and withdrawals can only be processed if the accounts are in the same name.
Pros and Cons
Where is MarketsX based?
MarketsX is headquartered in London, UK. This brokerage has five regulated entities with their respective headquarters, but London is where the corporate owner is authorized and regulated.
How does MarketsX make money?
MarketsX derives its income from spreads charged on over 2,200 assets and profits directly from traders’ losses where it acts as a market maker.
How can I deposit into a MarketsX account?
MarketsX supports bank wires, credit and debit cards, Skrill, Neteller, and PayPal.
What is the minimum lot size at MarketsX?
The minimum trading size in the MT4 trading platform is 0.01 lots, while the minimum CFD size in the webtrader is presumed to be 1.0.
When does a margin-call take place at MarketsX?
MarketsX Group LTD issues a margin call at a 50% equity-margin ratio.
Is MarketsX regulated?
The Financial Conduct Authority (FCA) is the principal regulator, but MarketsX is regulated across five jurisdictions. Besides FCA regulations, MarketsX is authorized and regulated in Europe by the CySEC, globally by FSC in the British Virgin Islands, in Australia by ASIC, and in South Africa by the FSCA.
What is the maximum leverage offered by MarketsX?
The maximum leverage for clients of MarketsX Group LTD equals 1:300, but clients of the FCA and CySEC regulated entities are limited to 1:30.
How do I open an account with MarketsX?
MarketsX has an online application form, which is the standard operating procedure.
What trading platforms does MarketsX offer?
MarketsX provides the basic MT4/MT5 trading platforms without required upgrades, as well as its proprietary webtrader for which fifteen trading tools have been developed.
MarketsX offers traders a fantastic trading environment with over 2,200 assets, tight spreads, and no commissions. This brokerage started its journey in 2020 and went through a merger as well as a rebranding phase. It now operates as MarketsX, a well-regulated brokerage in five jurisdictions and a member of FTSE250-listed gaming software company Playtech PLC. The core services provided by this brokerage are exceptional, but as is the case with all brokerages, there is always room for improvement in some areas.
The MT4/MT5 trading platforms are available but merely mentioned in one section of the website without a proper introduction. This is done to push the MarketsX proprietary webtrader, and while nothing is wrong with promoting an in-house developed solution, it would certainly make MarketsX more attractive if it offered a comprehensive MetaTrader offering. Over fifteen trading tools are developed, but exclusively available for the webtrader.
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Traders without existing trading solutions requiring the MT4 infrastructure and relying solely on manual trading will be properly served at MarketsX. However, traders who want to manage their portfolios in MT4 are reduced to the fundamental version and would need to invest in upgrades. That being said, traders who are willing or interested in learning about the MarketsX webtrader may find that all (or at least most) of their needs are met through this strong proprietary platform. Trading conditions vary across the five entities due to regulatory restrictions, and the best environments are provided by the FSC, ASIC, and FSCA regulated subsidiaries. MarketsX provides a sound choice and remains an excellent option as a primary or secondary broker. The fifteen trading tools offer to users of the webtrader provide more than enough of a reason to manage a portfolio at this brokerage as part of a well-diversified strategy.
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How to Spot a Forex Scam
The spot forex market trades over $5 trillion a day, including currency options and futures contracts. With this enormous amount of money floating around in an unregulated spot market that trades instantly, over the counter, with no accountability, forex scams offer unscrupulous operators the lure of earning fortunes in limited amounts of time. While many once-popular scams have ceased—thanks to serious enforcement actions by the Commodity Futures Trading Commission (CFTC) and the 1982 formation of the self-regulatory National Futures Association (NFA)—some old scams linger, and new ones keep popping up.
Back in the Day: The Point-Spread Scam
An old point-spread forex scam was based on computer manipulation of bid-ask spreads. The point spread between the bid and ask basically reflects the commission of a back-and-forth transaction processed through a broker. These spreads typically differ between currency pairs. The scam occurs when those point spreads differ widely among brokers.
For instance, some brokers do not offer the normal two-point to three-point spread in the EUR/USD but spreads of seven pips or more. (A pip is the smallest price move that a given exchange rate makes based on market convention. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point.) Factor in four or more additional pips on every trade, and any potential gains resulting from a good trade can be eaten away by commissions, depending on how the forex broker structures their fees for trading.
This scam has quieted down over the last 10 years, but be careful of any offshore retail brokers that are not regulated by the CFTC, NFA, or their nation of origin. These tendencies still exist, and it’s quite easy for firms to pack up and disappear with the money when confronted with actions. Many saw a jail cell for these computer manipulations. But the majority of violators have historically been United States-based companies, not the offshore ones.
The Signal-Seller Scam
A popular modern-day scam is the signal seller. Signal sellers are retail firms, pooled asset managers, managed account companies, or individual traders that offer a system—for a daily, weekly, or monthly fee—that claims to identify favorable times to buy or sell a currency pair based on professional recommendations that will make anyone wealthy. They tout their long experience and trading abilities, plus testimonials from people who vouch for how great a trader and friend the person is, and the vast wealth that this person has earned for them. All the unsuspecting trader has to do is hand over X amount of dollars for the privilege of trade recommendations.
Many of signal-seller scammers simply collect money from a certain number of traders and disappear. Some will recommend a good trade now and then, to allow the signal money to perpetuate. This new scam is slowly becoming a wider problem. Although there are signal sellers who are honest and perform trade functions as intended, it pays to be skeptical.
“Robot” Scamming in Today’s Market
A persistent scam, old and new, presents itself in some types of forex-developed trading systems. These scammers tout their system’s ability to generate automatic trades that, even while you sleep, earn vast wealth. Today, the new terminology is “robot” because the process is fully automated with computers. Either way, many of these systems have never been submitted for formal review or tested by an independent source.
Examination of a forex robot must include the testing of a trading system’s parameters and optimization codes. If the parameters and optimization codes are invalid, the system will generate random buy and sell signals. This will cause unsuspecting traders to do nothing more than gamble. Although tested systems exist on the market, potential forex traders should do some research before putting money into one of these approaches.
Other Factors to Consider
Traditionally, many trading systems have been quite costly, up to $5,000 or more. This can be viewed as a scam in itself. No trader should pay more than a few hundred dollars for a proper system today. Be especially careful of system sellers who offer programs at exorbitant prices justified by a guarantee of phenomenal results. Instead, look for legitimate sellers whose systems have been properly tested to potentially earn income.
Another persistent problem is the commingling of funds. Without a record of segregated accounts, individuals cannot track the exact performance of their investments. This makes it easier for retail firms to use an investor’s money to pay exorbitant salaries; buy houses, cars, and planes or just disappear with the funds. Section 4D of the Commodity Futures Modernization Act of 2000 addressed the issue of fund segregation; what occurs in other nations is a separate issue.
An important factor to always consider when choosing a broker or a trading system is to be skeptical of promises or promotional material that guarantees a high level of performance.
Other scams and warning signs exist when brokers won’t allow the withdrawal of monies from investor accounts, or when problems exist within the trading platform. For example, can you enter or exit a trade during volatile market action after an economic announcement? If you can’t withdraw money, warning signs should flash. If the trading platform doesn’t operate to your liquidity expectations, warning signs should flash again.
The Bottom Line
Conduct due diligence on the forex broker you’re considering by going to the Background Affiliation Status Information Center (BASIC), created by the NFA. Many changes have driven out the crooks and the old scams and legitimized the system for the many good firms. However, always be wary of new forex scams; the temptation and allure of huge profits will always bring new and more sophisticated scammers to this market.
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