The number of people coming to ET with no clue as to what is a decent broker or not is just stunning to me. Everyone knows, there are plenty of scams out there. It might not seem obvious you're getting scammed, and sometimes it's actually done in a totally legal way... but there should be a list on how to identify possible scams. So here's my 2 cents, if anyone want to add to it.. be my guest! - targeting specific clients through low margin/high leverage/low deposit - located outside of a major proper regulated country, usually off-shore/pretty island - make money through selling orderflow - have a Russian language option on website (no-offence to Russians) - have a blog on website - have a private registration website (can't view who owns website) - if it looks like a scam and smells like a scam... it probably is a scam If your broker has 4 or more of these markings...
You put the broker's name into Bloomberg: Legit broker = list of articles on financial matters written by staff Scam Broker = "nothing found" You type the phrase "name_of_broker assets under management" into a search engine Legit Broker = documents showing the assets under management in my case, for my 3 main accounts it was 1.1 Trillion, 42 Billion, 300 Million Scam Broker = "nothing found" You type the phrase "name_of_broker scam" into a search engine Legit Broker = a few hits refuting that they are a scam Scam Broker = pages and pages of sites with thousands of people complaining they are a scam EDIT: If they offer Binary Options .... they are a scam broker.
I'm going to add 2. Anyone that claims to "guarantee" anything is suspect . Anyone that offers a 100% free service. Where do revenues come from? I'm going to respectfully disagree with few. "Make money through selling order flow" (EVERY US BD does this to one degree or another-Your commissions rates would be MUCH higher without it. We do offer both DMA and SMART. Any SMART route likely has PFOF. "Have a blog on website" Not sure why this is a red flag to you. These provide free information to the public. We have one located here: https://www.lightspeed.com/active-trading-blog/. I'm happy we have it. Bob
Kinda joking around... A blog for a broker is obviously a marketing tool... I don't like marketing much