More and more people every day try to increase or supplement their income by opening up trading accounts with online retail forex or binary options brokers. The two industries are booming and new brokerages enter the market daily, seeking to capitalize on the increasing number of clients.
Regulatory bodies and watchdogs try to keep up pace and implement safeguards to protect consumers from fraud and being scammed but it is true that the industry is so huge and this is a task they cannot always carry out effectively. Moreover, sadly, many people enter the trading arena without having done their homework properly. They are lured by high bonuses and unrealistic gain expectations or they are carried away by some initial success and end up trusting their money to brokers who are not worthy of such a trust.
We have stressed time and time again on binaryoptionswire.com that trading is a risk activity and should be undertaken carelessly. Moreover, we have also stressed that you are much safer if you trade with recognized, regulated, reputable brokers than with the first fancy website you come across.
The situation is not exactly the same in the forex and binary options industry, since the first is longer established and far better regulated, while the latter is newer and thus effective and uniform regulation is still greatly lacking. However, there are some basics that every trader should have in mind and act upon to avoid or to overcome fraud.
Some brokers falsely claim to be regulated or create a vague impression that they are, when in fact they are not. Absence of regulation means you are not protected and are also left without a higher compliance authority to resort to if the broker breaks any terms of your agreement.
The regulators and watchdogs in each jurisdiction are not the only way through which disputes can be addressed. In most jurisdictions traders can resort to legal intervention and try to bring their case before courts, however this is a lengthy process and may involve substantial costs and often may prove steeper than the amount your complaint against the broker involves.
Moreover, although still at a nascent stage and thus with several limitations as to what they can actually deliver in terms of tangible, effective results, there are some external dispute resolution schemes in place in the industry. In fact in some jurisdictions, such as in the UK and Australia, all retail forex brokers – all the properly licensed and regulated brokers to be more accurate – are required both to have internal complaints processes in place and also be members to an external resolution scheme. Moreover, since 2013 there also exists the Financial Commission, which was launched as an alternative dispute resolution committee to provide the industry with a dispute resolution service that does not involve regulatory interference, however its membership across the several retail brokerages is not as extensive.
Back however to our original discussion about things to bear in mind if you are a trader, always be aware that most brokers dreads the thought of a customer complaint being escalated to an external body and this is why they will often try to settle to matter directly with you and also get you to sign a confidentiality or non-disclosure deed, preventing you from publicizing such a settlement on any blogs or chat rooms. This is because they want to protect their reputation but also perhaps because they do not want to set a precedent for other clients to follow the same route.
Sadly, the truth of the matter is that if a broker can get away with profiting on your back, even unlawfully, they will probably do so. Thus, the burden is shifted on your shoulders to protect yourself and your rights since after all it is your money we are talking about…
So, a few dos and dont’s as they emerge from the several complaints from traders we receive here at binaryoptionswire.com daily:
Make sure you address your complaint to the right culprit. Sometimes, because there is more than one other party involved you may be barking up the wrong tree. If for example you ended up with a broker, though an introducer then your problem may be with the IB and not the broker themselves or an agreement between the two. Moreover, your complaint may be against a software provider or another party involved in your dealings with your broker, but most often brokers are those to blame for your problem.
Thus, make sure you never give your consent to anything that you don’t want happening. Do not sign to accept any bonuses, unless you are clear about the terms and conditions and the strings attached and never allow the broker to be trading through your account. You should be the one deciding at all points.
The Cypriot regulator, CySEC, which was actually the first to regulate binary options, has recently issued guidelines which stipulate that the written consent of the client is required for accepting a bonus.
Ensuing from this, make sure all your communication with your broker, especially when having a dispute or a complaint is done in writing and that you keep meticulous records of all your transactions and communications with them. Telephone conversations should be avoided as often brokers hide behind them and offer different accounts of what was actually said.
Prefer emails or even live chats, provided you save copies of the screenshots to be able to prove what actually went down. Also, it is a good idea to be addressing all your correspondence to more than one receiver because especially if you are using the personal email of a broker’s employee, it might go unnoticed if that particular person is on leave or if they have for some reason stopped working there, since the industry often sees high staff turnover.
Before escalating the dispute and start threatening the broker try to reason with them but also show you are determined to proceed to all available means in order to protect your rights. Have in mind that brokers usually chose to settle a dispute and compensate the client involved only if their cost benefit analysis of the case tells them that they stand to lose more if they let the matter become a protracted conflict.
The worst case scenario is finding yourself in a position where you have been scammed by a broker who is not regulated or part of any alternative scheme, and who is also ignoring all your efforts to communicate them. There are abundant horror stories of traders who where refused withdrawals for no reason and who saw all their deposit and profit money be wiped out of their accounts in no time through trades executed by the broker on the behalf of the trader without consent.
The brokers involved in such cases are definitely crooks and even plain thieves. However, they continue with such unethical behaviour because the ignorance or carelessness of many traders means that they always find new victims to prey on. Such unscrupulous brokers should be exposed and be driven out of the online retail trading industry.
If you were a victim of such a broker cut your loses and close your account immediately and make sure you spread the word on them. If every scammed trader went on a rigorous defaming campaign, especially reporting such brokers on chat rooms, forums and independent guides, then given the power of the internet and social media in today’s world, it would become much more difficult for the unscrupulous and unethical to keep scamming the innocent and damage and spoil image of the trading experience.
Trading forex or binary options online could be safe and enjoyable as an experience and potentially highly lucrative and profitable, but only if you are careful, wise, smart and prudent and only trust those who have proven they respect you as traders and deserve that trust.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.