Using a brokerage service is a practical solution for beginner traders or investors to let expert traders trade on their behalf and gain profitable trading.
However, there are hundreds of trading brokerage sites online, but not all of them are legit. You should beware of scam brokerage sites that steal your money in one or another way. Always check Brokers Complaint Alert reviews before making any deposit on trading sites. You can also file a complaint against any brokerage site that has scammed you.
These trading brokerage scams come in various forms, and they’re targeting new traders or investors. These are how scam brokers operate:
The most common trading scam form is by manipulating the price to appear in targeted traders. As expected, the price isn’t real, and the scammers use this plot to target the stop loss levels that would be the area of their gains. Researching prices is a natural behavior; therefore, the scammers capture these interests by manipulating the actual price. You can request the tick history to authenticate the price from the broker.
No Withdrawal Allowed
The simplest and most straightforward scam mode is where a trading site does not allow you to make a withdrawal upon your deposit or profits. This scam form comes in different ways. The sites may apply an unreasonable withdrawal limit.
The scammers will decline your withdrawal request after using the bonus, but they never disclose this information upfront. Another classic reason is that they can’t proceed with your request as they can’t verify your account. The scam brokerage sites may not frontally reject your withdrawal request, and they may require you to make another deposit to be eligible, which you shouldn’t do.
An intermediate but still popular scam mode is the churning brokers, typical for the stock market. Generally, it refers to a process where the broker trades on your behalf using your account on the platform to excessively buying and sell stocks or securities. Unlike legitimate brokers that trade your balance on your agreement, these stock scams drain your credit without the account owner even knowing. The scammer may not frontally perform this churning but take continuous leverage over your trading accounts.
A more advanced investment fraud case is where the broker freezes the user accounts when they reach a higher risk level or as soon as they make deposits. Whenever you’re gaining big or losing big, these scam brokers would freeze your accounts and so forth. They’re taking over control of your account, so you can’t make closing on any trade, but they can. They’d abusively close the transaction of your account anytime they like. If they can freeze your account, they can do everything they want with it.
Controlling Trading Platform
Brokers can easily scam investors by controlling and manipulating trading platforms. Once you’ve signed up an account and made a deposit, you’re entering their controlled environment. In these currency trading frauds and scams, the broker would interfere with your trade for their gains.
They can manipulatively stop you from hitting the profit target by adding pips to your transactions without your authentication. This mode is very smooth for new traders, and they are unlikely to know that the platform is a scam. The trading platform could have been real but not with the mechanism as it’s partially or even controlled by the trading platform for sure.
Fake Signal Offerings
Scam brokers have gained a lot of money from fake signal sales. It could have been the easiest but yet effective method to lure new traders. These signals are too good to be true but pretty convincing for beginner traders. Beware of the fake signal offerings as you’d invest in nothing. Generally speaking, avoid any exaggerating claims and do your research through various sites.
Replicating Major Trading Websites
Beware of accessing trading sites through shared links even though they appear as familiar trading platforms. Google has strictly filtered and ranked search of trading platforms, but scammers can share these fake trading sites with links through emails, message inbox, instant messaging, and so forth.
These scammers convincingly design a phony website that is 89–90% mimicking the real website. Without a depth knowledge of the original trading sites, you can hardly tell the differences between them. They also copy the mechanism for, at least, the step when you can deposit your money for trading you’d never made. At this point, it’s vital to access the major trading sites safely through Google search or legitimate URLs.
Scam brokers may use a more casual way to convince traders to sign up and account and making deposits in their controlled platforms. Users’ testimonials convince many people over brokerage sites, so they decide to fake ones.
They put these fake reviews on their sites and social media sharing, business review sites, forums, blogs, or other common sites. When it comes to checking reviews of trading sites, you can use profit forex reviews or other credible platforms for good testimonials from the users.
It’s natural for a broker to charge you with fees and commissions, but how they do it is what matters. Reputable traders would disclose this information upfront and typically charge reasonably with fixed prices or commissions from the profit you make.
However, if they set the commissions or fees into spreads, they must have been a scam. If you do some time researching the trading platforms, no major trading sites will charge their trading investors that way.
Scam Deposit Bonus
They use the luring trap method to attract people to make deposits with a promise of bonuses. These scammers tie your deposit with your bonus, and you’d never see your money in the bank account except in your account display.
Quick tips: avoid an unreasonable bonus for your deposit.
There are more forms of trading scams out there, and most of them would combine two or more conditions mentioned above. Always use reputable trading sites and avoid exaggerating offers of anything. You would be fine.
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