Forex Broker Scams Are Out There. This Is How To Protect Yourself

Some Forex brokers do try to scam you. There is no getting away from the fact. However, that doesn’t mean that you have to let them get away with it. There are several things that you can do to level the playing field.

The first thing to do is to compare price feeds. Why should you simply accept what your broker says about a movement in price, until you know you can trust him?

Suppose, for a moment, that you live in Florida and your neighbour tells you that there is a hurricane coming, and the only thing to do is to get in your hurricane shelter, and stay there until it has passed. Actually, there isn’t one, and he can help himself to your livestock, your garden plants, your car in the garage, and anything else he happens to fancy while you are buried in your shelter.

No, you’d listen to the radio or TV, to find out EXACTLY what’s going on.

So, why simply trust a broker – until you get to know him well? Even then, he is only human, and can make mistakes. If you only trust the price feed on your trading platform, you are pretty much in your hurricane shelter.

The answer is to subscribe to other price feeds. By doing this, you can get an overview of the market and you get a feel for what is really going on, not just what your broker says is going on. This way, you have confirmation – or otherwise – of the price movements at any given moment.

Another thing that you should always do is keep a diary of every single transaction that you ever make. Yes, every single one. OK, it’s another extra little job that you have to do, but you now have EVIDENCE of the trade that you made. It is rather like being taken to court for an offence that you didn’t commit. If you have evidence that you were somewhere else at the time, you are not likely to get convicted.

If you have written evidence of a particular trade, then your broker is not so likely to argue with you in the event of any dispute.

Having said that, there are most certainly cases where a rogue broker will try and bluff it out, and at this point, it is time to consider taking legal action. You have a right to resort to the courts in the case of any dispute, just like anyone else. Most rogue brokers will concede the point if you threaten legal action, but if, by chance, they do not, you still have other avenues open to you.

You can use the services of the National Futures Association (NFA) or the CFTC (Commodity Futures Trading Commission).

Both have programs that can help you in this sort of instance. The NFA has an arbitration/mediation program that helps FCM’s and their clients to settle any disputes.

The CFTC has what they call a reparations program that, in their words, offers an “inexpensive, expeditious, fair, and impartial forum to handle customer complaints and resolve disputes between futures customers and commodity futures trading professionals.”

However, the point is that you really do not want to get into disputes with your broker. A dispute, at the very least, will cost you time, which could be better spent trading.

It is far better to spend your time becoming a more expert trader. This way you will make money; arguing over a disputed trade will, at best, only get you what you had in the first place. You need to learn the discipline to trade in the best possible manner.

You can have the best charting software in the world, and the best broker in the world, but if you don’t have discipline, you will finish up losing money at the end of the day.

It has been often said, and rightly so, that we are all where we are in this world because of choices we have made. Granted, you may not have realized when you made a particular choice that it would lead you where you did not want to be. You can say “I didn’t want to be held up and robbed when I drove down this road, and I didn’t know there were thieves down there anyway.”

However, the fact is that YOU chose to drive down that particular road. Unfortunately, you cannot argue with that.

Make your choices wisely. As we said in the earlier lesson, caveat emptor.