How can I spot scam brokers?

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  • #196729 Reply
    Oak2Smoke

      Yo, I’m kinda new to day trading and tryna to get my head around how to figure out if a broker is dodgy or legit. Like how do I know if theyre a proper provider I can trust and not some scammer out to rob my cash? What kinda stuff should I be checkin for and is there any dead giveaways?

      Cheers!

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      • #196770 Reply
        Steve

          Apply common sense by asking yourself:

          • Are they regulated by well known bodies like the FCA or SEC?
          • Does their website look professional or hastily put together?
          • Are they well reviewed online by experts and other traders?

           

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          • #196921 Reply
            Oak2Smoke

              Righto, cheers.

              So does a firm like Interactive Brokers meet all those criteria?

              Reply
            • #197220 Reply
              Christian Harris
              Participant

                Solid points Steve,

                I’d also be wary of brokers who:

                • Offer deposit bonuses.
                • Only accept crypto deposits and withdrawals.
                Reply
              • #197268 Reply
                James Barra
                Moderator
                  DayTrading.com Team

                  Good addition on deposit bonuses.

                  European brokers are generally not allowed to offer deposit bonuses to retail traders. This is due to the rules set by the European Securities and Markets Authority (ESMA). It’s the same in some other jurisdictions, such as the UK.

                  Deposit bonuses can sometimes incentivise traders to take excessive risks or trade more frequently than they would otherwise, leading to possible losses.

                  Reply
              • #196775 Reply
                James Barra
                Moderator
                  DayTrading.com Team

                  Hi Oak2Smoke,

                  Start by reading our Regulation & Trust Rating, we cover the hallmarks of a ‘legit’ broker.

                  The most important thing to look for is authorization from a trusted regulator, preferably where you’re based if you reside in a well-regulated region.

                  Why? Regulated brokers are required to follow various measures designed to protect retail investors like day traders, from restrictions on leverage trading to mitigate large losses to investor protection covering your balance should your broker become insolvent (available in some countries).

                  In the link above, we’ve categorized all the main regulators in the online trading space so you know which ones you can rely on and which ones you can’t.

                  Reply
                  • #196923 Reply
                    Oak2Smoke

                      I’ve read this now, cheers.

                      So if I reside in France I should choose a company registered with our AFM?

                      Reply
                    • #197050 Reply
                      James Barra
                      Moderator
                        DayTrading.com Team

                        Hi Oak2Smoke,

                        Choosing a broker regulated by the French AMF is sensible. See our pick of the top AMF-regulated brokers.

                        Alternatively, you could choose a broker authorized by another comparable European regulator, such as the BaFin (Germany) or CySEC (Cyprus).

                        These regulators operate under the framework of the Markets in Financial Instruments Directive (MiFID II), which ensures a high standard of investor protection, transparency, and financial stability across the European Economic Area (EEA).

                        By selecting a trading platform regulated by one of these authorities, you can still benefit from passporting rights, which allow financial services firms authorized in one EU member state to operate freely across others, this case France.

                        Reply
                      • #197121 Reply
                        Oak2Smoke

                          Ahh I didn’t even know about this EU rule, but yeah makes total sense lol. Appreciate it JHames!

                          Reply
                        • #197269 Reply
                          James Barra
                          Moderator
                            DayTrading.com Team

                            You’re welcome.

                            You know where we are if you have any other questions.

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