The financial markets were decentralized and as a result, small capital traders were able to enter the trading world directly on the internet. The brokers decided to design the online platforms that required just a small fee to begin investing. There were new financial instruments introduced. These included financial derivatives.
The popularity of financial derivatives grew rapidly. The main reason was a very small investment required to begin trading. It had become possible to speculate about the price fluctuations and get a steady payout with only $1 and only for 60 seconds.
Of course, nothing comes flawlessly. The world of whole new possibilities was opened, but at the same time, the risk of becoming a victim of a scam had increased. There is always somebody willing to take advantage of the opportunity in a negative way.
There were more and more derivative brokers every day. And a great deal of them were only the scams hoping for easy money from unsuspecting traders. The governments in North America and Europe decided to do something about it. So they have set up strict regulations. Brokers in these regions could no longer operate.
The unregulated brokers didn’t give up. They moved their focus to other places like Latin America, Eastern Europe, and Asia. But the governments in these regions also took action and created new regulations.
Still, the fraudulent brokers did not disappear. Often, they operate for a limited time and after several months, maybe even years, close the business. And millions of traders’ money is being lost.
I have created this guide to help you learn the ways of discovering cheating brokers. Another reason is to prove Olymp Trade is the right choice.
- 1 A few ways to recognize a fake broker
- 2 Why the Olymp Trade platform is a good pick
A few ways to recognize a fake broker
You are going to read about the possible ways of identifying the fraudulent derivatives broker. You always have to be careful not to lose your money.
This might be the quickest, and the simplest way of recognizing the fraud. The broker has to have regulation status. If he does not indicate one, stay away and do not engage your money in it.
There are a few advantages to the regulations. For example, they protect your money in a way, that your deposit is insured. If the business goes wrong and the broker does no longer provides services, you will get compensation for lost money.
Another thing is that the brokers must state in the regulations the countries that are excluded from their services.
You will find such information on the Olymp Trade website. It does not operate in North America.
Location of the broker and contact details
It has to be possible to find the location and the office address of the broker on his website. You should always check it before investing any money.
Contact details should be displayed on the website as well. You may wish to contact the support team, just to ask some general questions about trading and the platform. See what the answer will be. If it seems like the answer is not even connected to the question or just does not make any sense, you will rather stay far from such a company.
Location of the customers
The numbers are not all that matters. Some derivative brokers will report having over a million clients. Well, maybe this is true. But the next question should be where they are from.
If 1 million accounts are opened only in a few countries, it will mean this broker is not very popular. You should, therefore, consider checking it further or moving to another one. A good broker will have customers from many different places. Remember, that your country should be also on the list.
A good tool to check the location of the customers is Google Trends. You enter the name of the broker you are interested in and get the results fast.
Financial instruments on offer
Financial derivatives are getting bigger and more popular every day. But not everybody will trade regular financial derivatives. Some people prefer currency pairs or cryptocurrencies.
The best brokers will have a wide offer of financial instruments from various asset classes. It is not a secret that trading derivatives is a risky business. So if a broker provides only financial derivatives, be careful because a lot of fraudsters will focus on only this.
Most traders will probably lose some money on the way. So be aware of the brokers who offer just derivative trading. It is possible that their main purpose is to get your money by manipulating the prices (I will write about it in the next paragraph). When the price is manipulated, the traders are losing and a fraudster will close the company soon after.
The manipulation of the price
Some fraudulent brokers will open the platform only to manipulate the prices and get away with traders’ money. The trading software is the property of the brokers. This way it is not that difficult for them to manipulate the prices. They are in control of what the trader sees on the chart. Such behavior will result in traders’ failure and a big loss.
But there is a simple way to check if the charts are manipulated or not. Just open another platform, like a free MT4 platform, and compare the prices for the specific financial instrument in real-time.
Traders’ complaints about financial operations
Stay alert whenever you will come across complaints from other traders about financial transactions on the particular platform. It could be about some hidden fees on the site or problems with withdrawing money. Consider anything like that as a warning that maybe this broker is a scam. Some platforms seem not to have extra fees while depositing or withdrawing. But once you sign up and do the financial operation, you discover it was not true.
Introducing brokers’ opinion
Introducing brokers are people or companies who introduce new traders to different platforms. They take some commission for their services. It is rather unlikely to hear from Introducing brokers negative opinions about a specific platform. However, if several IBs discourage traders from joining a platform or even they say openly it is a scam, you should be alert.
This works both ways. Not only negative opinions can cast doubts. Too good opinions may as well. So if IBs are too eager to promote a particular platform and promise millions could be made there, be careful. No broker will give free money away.
Do you like recommending things or services? Would you do it in exchange for money? Let’s say you will be offered $50 when someone opens an account on your recommendation. Would you like that?
Maybe it sounds appealing, but again, stay alert. This is a simple model of how multi-level marketing is working. There are platforms now that incorporated such a business style. So to encourage you they will offer you a free trading account with around $30 on it.
You open the account, you trade, and get a profit. The next step is a promise of more free money on your account in exchange for inviting new members to the platform. The only catch is that the broker will make sure that your first transactions win. You are happy, you think it is easy and everyone can win. So you recommend it further.
What happens next is that you invite new members. They join and you get your reward. But when you start trading with your real money, you discover your transactions are more often losing than not.
And it will go like this over and over again until the company closes the business and take your money with them.
Why the Olymp Trade platform is a good pick
Olymp Trade was first launched in 2014. Since then it has been a leader in innovation in internet trading platforms. It is constantly developing and improving. Olymp Trade is well regulated by the Financial Commission. It has many different financial instruments on offer.
Olymp Trade is a platform with the main focus on the traders. There were huge investments made to gather educational materials with video tutorials on trading included. You will find a blog on the website, with many useful advice and tips.
The support team works excellent. It is fast and reliable. Financial transactions like depositing or withdrawing are processed in a concise time, and there are a few payment methods to choose from.
You can access the Olymp Trade platform from both, your computer or your phone which makes it easy to trade on a go. On top of that, you can open a free demo account and recharge it with 10000 in virtual cash. This is a perfect place to try new strategies, new indicators and not to worry about real money loss.
There will always be supporters and opponents. But you can rest assured Olymp Trade is a legitimate broker.
Wish you good choices!
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