In the market exists a lot of types of brokers. Some of them work honestly, others are called “black”. These are real swindlers, bandits from the high road. There are gray Forex brokers, they are half or a quarter cheaters. The fraud schemes of such companies keep up with the times and are constantly being improved.
Types of Forex brokers
In order not to fall into the furry clutches of crooks, before starting trading, you need to familiarize yourself with the safety rules and find out which ones you can cooperate with:
- Brokers who bring commercial transactions of their clients to the market. These are banks, brokers-ECN, brokers-STP.
- “Black” brokers, swindlers, do not bring clients’ transactions to the real market, but close them on themselves.
- “Kitchen”, fraudulent companies, do not bring their customers ‘transactions to the foreign market, tie the trading to themselves. Sometimes they allow you to withdraw the client’s deposit.
- “A kitchen in which you can sometimes partially withdraw profit.” By deceiving customers, the “kitchen” can allow withdrawing a deposit and even a part of the profit, provided that this is not a very large amount, up to five thousand units.
- “Half-kitchen”, a skillful manipulator, combines swindling and profitable trading for the elite in its activities.
- SCAM offices have been working honestly for some time, attracting a lot of clients. Then, having collected significant funds from naive and greedy investors, they suddenly dissolve.
How ECN and STP Brokers Work
A daredevil who decides to conquer the raging Forex waves should know what ECN and STP brokers are. Electronic communication network is a system that unites banks, broker firms, retail traders for buying and selling and speculating in the international currency market. These organizations work without intermediaries. ECNs offer tight spreads, high liquidity, speed of transactions and take a decent commission from working capital.
STP broker (straight through processing), works like ECN companies. There are no dealing centers here, all client orders are sent directly to liquidity providers. There may be several of them. They are usually investment banks. The speed of execution of operations on the STP platform is high. Brokers specialize in certain trading instruments. The activities of such brokers are licensed and heavily regulated by state supervisory authorities. The controlling authorities severely punish the guilty.
How to identify a Forex scammer
The principle of activity for all swindlers is approximately the same. There are differences in the style of placing snares, the nature of communication with customers and the availability of withdrawing funds from deposit. The most dangerous scammers, “black” brokers, have acquired customer bases, in relation to which they act aggressively and brazenly. Such villains stop at nothing, their victims are disabled people, decrepit old people or children. They press psychologically, in a boorish way they force you to open an account and start trading.
As a rule, the bandits do not have any regulation, their license documents are fake. “Kitchens” and “semi-kitchens” can deign to withdraw a partial client’s deposit, even a part of the profit, if it is not large. The amount of profit does not exceed five to ten thousand dollars. Some “semi-kitchens”, attracting customers, allow only a few to earn.
Reliable Forex Broker: How to Choose One
Before starting buying and selling on Forex, registering and replenishing a deposit on a brokerage platform, you should familiarize yourself with the security rules on Forex, study information about broker companies. You can also find a huge number of negative reviews about Forex brokers. By the comments one can judge the activities of the merchants. However, often negative reviews are written by competitors or entrepreneurs who clean the Network from negativity for money and make good money on it. Before choosing a broker in the exchange market, you need to study licensing documents and rules for cooperation with your broker. It happens when trading conditions are unfavorable for the client.
It is preferable for a novice speculator to open accounts with the smallest deposit and make transactions, trading with a small leverage. Trustworthy brokers most of the time have a long history. Such a broker is Umarkets. The company has been operating in the European Union since 2008 and has a license for brokerage activities. To protect yourself from fraud, it is necessary to study the terms of cooperation, how the personal data provided by the client will be saved.