Brokers are an important compost in the financial markets and link the trader to the trading platform or give them access to the trading instruments. As such your choice of a broker is an important decision that needs you to be keen with several factors.
At the
moment, several brokers are coming up and setting up online trading platforms
which is a trend in the financial market. The online trading concept that
comes, as a result, is a convenient way to trade when looking at its
accessibility. The downside is that they are prone to cases of fraud with some
being initiated by the brokers.
For the
safety of your funds, you need to be on the lookout for such illegitimate
brokers. The following are some of the pointers to some of these sites that you
need to avoid.
·
Lack Of A
Physical Address
Most of the
credible brokerage sites operate under firms such as banks, investment trust or
brokerage companies. The firms have a physical address in known places where
you can access them in case of any issue.
Illegitimate
companies will lack a physical address or have a non-existing one. When looking
for a legit trading service provider, visit their website and look if they have
one. You can also make an extra step and try visiting the offices to know the
profile of the company to be safe.
Additionally,
they may also lack contact lines or have ones that do not go through.
·
Lack Of
Regulation
Regulation is very
important when focusing on the operations of a broker in a particular
territory. Regulation refers to the authorization of the broker to operate in
the territory after meeting certain requirements set by the regulatory body.
The authorization part is very strict and looks at factors such as tax
compliance, client goodwill and corporate responsibility in some instance. The
process also looks for hints at fraudulent activities such as money laundering.
If the
company is not regulated then try avoiding it and look for other options. You
can confirm this at their website and conforming with the regulatory body to be
sure.
·
Dealing In
Banned Securities
You can
also detect a crooked company by the trading instrument they stock particularly
the ones banned in the territory. Some countries have bans imposed on some
financial instruments such as the United States of America prohibits trading CFDs.
Many other
territories prohibit cryptocurrency units due to their decentralization and
undetectable activity. If a broker deals in such securities in areas banning
them then it is a pointer of a fraudulent firm.
·
Reports Indicating
Dishonesty
There may
also be reports that show dishonesty on the broker's part. The reports are
mostly from users with experience dealing with the trading provider. You can
get such information from review websites, forums, and notices. In case it is
unauthorized to run in a given territory, the relevant regulatory bodies may
release a statement indicating caution when procuring services from the firms.
· Lack Of
Information Of The Company
Most
credible companies provide information on their sites regarding their history
activities and many more. If you find that a company is not disclosing such
relevant information, then there is a chance that it is trying to hide
something. You can conduct a background search to be sure if you want to deal
with it.
·
Hidden Fees
Some sites
are notorious for having hidden fees which may get deducted from your account
without your knowledge. This is a fraud and which the regulatory bodies are
against. Knowing about their hidden fees can be a problem if you are new to the
site and you can depend on the experience of the platform's clients.
Bottom Line
The online
broker is a convenient link to the financial markets and provides a platform
where you can trade. However, you need to be keen not to land in the jaws of
deceitful establishments under the cover of brokerage platforms as you can lose
your investments. It is advisable to carry out a background search on their
profile before seeking out their services.
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