4 Types of Forex Brokers to Watch Out for
Do you know? Fraudulent Forex brokers come in various forms that require different levels of vigilance. What are the types of forex brokers?
Choosing a trusted forex broker is not only a matter of regulation, smooth deposit withdrawals, or other special criteria. Long before getting into these things, there is a measurement that is more general and easy to notice but is quite often overlooked by most traders. This parameter is the authenticity of a forex broker because so far it turns out that many fraudulent forex brokers have become more adept at disguising their cover. What’s even more surprising is that there are various kinds of brokers like this, so it will be easier if we dissect this problem by identifying each type of fraudulent forex broker.
1. Fake Brokers
This type of forex broker is usually able to provide trading services for clients who register, especially when they are just launching and are in the promotional stage to attract clients.
However, fake brokers do not have a clear identity. Both regulatory info and broker addresses, this type of forex broker usually does not reveal their true identity. It could be that he is not regulated, but claims to be regulated. In another example, he claims to be regulated by regulator A, but his license number is not valid. At the most extreme, fake brokers can provide fictitious addresses that, when checked, don’t exist.
From the use of unverified identity, it is clear that this fake broker cannot be relied on for security. If at any time there is an adverse problem, where can you file a complaint?
2. Asphalt Broker
Asphalt Brokers refer to brokers that at first glance look genuine, but are fake. The appearance of this type of forex broker is not kidding, because it dares to resemble the official brokers that previously existed. So it can be said, the asphalt broker site manager deliberately imitates other brokers who are already popular to attract many clients.
Actions like this are of course very misleading and detrimental, not only to clients but also to forex brokers whose appearance and services are imitated. The main feature of this broker is that it uses a domain that resembles a broker, shares its domain info on social media networking platforms, and claims to be a forex broker that accepts client registration.
What you need to know together, two of the three characteristics above are not much different from the IB broker website, which of course cannot be called an asphalt broker. Therefore, to be able to distinguish asphalt broker sites and IB sites, we can pay attention to the About Us or About Us info displayed, and how they provide services to clients. An IB (Introducing Broker) usually only acts as an introductory or mentoring client to understand the broker’s services, also providing a referral link to the original broker. While asphalt brokers bluntly lure clients to open trading accounts on their sites, and do not provide links to real broker domains.
3. MLM Brokers
Cases of MLM (Multi-level Marketing) fraud are already rampant in Indonesia, but the perpetrators never stop ensnaring their victims with various modes. Perhaps because the product sales system has been wary of many, they disguise the MLM program into a forex investment that promises fantastic and consistent profits.
For those of you who are used to dealing with MLM programs like this, you must be very familiar with the offer scheme. In general, the organizers will lure a certain percentage of profit within 1 week or 1 month. The longer the funds are left in the account, the greater the promised profit. In addition, you are promised an additional percentage of the profits of new clients that you attract to register with the broker. Miraculously again, you can get all the profits without doing anything related to trading, whether it’s doing price analysis or opening orders.
Now logically, which forex broker would want to pay clients for free like that? The broker’s main function is to be a liaison between traders and the forex market, not a place for traders to store and grow funds without any trading action. If this is the case, then it is clear that the MLM broker intends to trade his client’s funds without clear prospects. They usually target novice traders who don’t know forex and are easily lured in by bombastic promos with huge profits.
4. Scam brokers
Of all the types of fraudulent forex brokers discussed in this article, the scammer type is the most similar to a real forex broker. How could that be? For your information, a scam broker is a type of forex broker whose identity is clear, (sometimes) regulated, actually offers trading services (not just an MLM investment program), but still takes advantage of the losses of its clients.
In order not to be easily identified, scam brokers usually carry out various fraudulent actions in a ‘subtle way’ that is difficult to track down by parties outside the broker. Some examples include frequently manipulating prices, always wearing negative slippages, and complicating the process of withdrawing funds. This type of forex broker is usually an overt scam because it disappears immediately after complaints from many clients, but there are also hidden scam broker types who fix their system after a lot of criticism, then go back to cheating again after the client’s trust starts to return.
This type of covert scam forex broker is the most widely available on the market. Ironically, they are also the most daring to offer traders’ favorite promos, facilities, and trading conveniences. It is quite difficult to identify a scam broker like this, because the process of collecting evidence requires a lot of effort, from exploring various broker testimonial forums to recording our Trading History. Even then, it can’t be said to be valid, because apart from the broker itself, no one knows and can prove with certainty how the broker executes client orders.
The cover will only be exposed if the victims are busy reporting their fraud to the regulator because the agency will conduct an investigation and can officially convict a broker who is caught scam. But of course, this cannot be done if the scam broker is not regulated or falsifies its regulatory status. Therefore, it is very important to at least choose the type of forex broker that is not fake, to overcome the risk if at any time the broker of your choice shows the characteristics of a scam.
Recognize the Characteristics and Beware of Fraudulent Forex Broker Types
To make it easier to identify the type of fraudulent forex broker and avoid losses from the start, here is an infographic that you can use as a guide.