How Brokers Scam Traders

How Brokers Scam Traders

To stop these scams without us getting hurt, instead of pointing fingers towards the companies or individuals that act in bad faith, we decided to take the positive road which consists of educating people correctly to ensure they make their own decisions and they’re able to differentiate a good thing from a bad one.


The Broker

To understand who’s scamming and who’s not, the first thing is understanding brokers. If you haven’t read our guide/brokers section or done our beginners course, don’t worry, we’ll summarise it here.

In theory, a broker should only be a middleman between a trader and the markets, which means when you order to buy 100 App shares, your broker executes that transaction, nothing else.

There is also another way to trade through CFD (contracts for difference) brokers. When you deal with these, you’re not trading the actual asset; you’re trading a financial derivative based on the price of the real asset, so technically, you’re taking bets on it going up or down.

CFDs are not traded on exchanges but rather via OTC (over the counter), which means that the transaction occurs directly between you and the broker without anyone overseeing it.

CFD Brokers earn money through several channels. The most common one is through commissions, spread, but also through clients’ losses.

So far, there is nothing wrong; CFD brokers bet on the probability of most traders losing more than the profit, so they do a business out of it. Here lies the importance of understanding how brokers make money.


And the Scam Begins – (How Brokers Scam Traders)

How Brokers Scam Traders

How Brokers Scam Traders

This is the part where the horror movie starts:

Many brokers realised they could accelerate the loss process of their clients in order to make more money, and that’s when they went wild, here’s how:

Account Managers
Good brokers usually operate in two different ways:

The broker never firstly calls you unless there’s a security issue, documents, etc.

In the second way, the broker hires sales agents that call you in order to motivate traders to deposit and in the case of the account manager to motivate you through trade by providing you market updates, none of them offers any advice, so far we’re on the good side of the brokers.

Now we can start talking about the evil ones. In these, there’s no such thing as an account manager. The job title is called “retention agent”.

Sales and Retention Agents
When a trader registers, his first point of contact will be with a sales agent.

The evil sales agent will use many verbal tactics to convince people to deposit money. He doesn’t care if they’re ruined, in debt, dying of cancer. He wants the deposit as he gets paid a bonus per deposit.

Once the sale is closed, the trader leaves the sales agent’s portfolio and moves to the detention officer’s portfolio.

His mission is to receive clients, cultivate deep relationships, build trust, make them invest everything they have and advice them to open the bad trades, so they lose everything.

How do they accomplish it? – (How Brokers Scam Traders)

Now that the sales agent has sold the client. He has inserted the false anticipation of making money through the help of an “account manager”, he comes with some faith towards the process and that’s where the retention agent picks up and begins to plant their mental roots.

In the beginning, they’ll advise you correctly to ensure you see some profits and then slowly start convincing you to deposit more money.

Once the retention agent sees that the trader reaches their maximum potential deposits based on the net worth profile they built by talking, he will advise the trader to open huge trades, not to use stop losses. He will continue to do this until the client goes bust.

Once the trader is in damaging open loss, the retention agent will continue to ask for more money to meet the margin requirements and keep the positions available. Here’s where victims usually sell cars, houses or anything they can to keep their positions open.

This will continue until the market makes a considerable movement and the trader loses everything, causing the account manager to get paid a vast fat bonus.

Some clients hurt themselves. Others are left with post-traumatic stress disorder. The truth is that no one tells the real stories out of shame.

How to identify scammers? –(How Brokers Scam Traders)

The most common place where these scams occur is amongst binary options brokers, unregulated CFD Brokers and a few regulated CFD brokers.

Before, people used to say that only an unregulated broker could be a scam, and they were right, but nowadays the reality is more complex as there is many broker that are regulated and keep performing this type of activities due to the fact that regulators take bribes and keep the party going.

One extremely good positive point is that just like dinosaurs, these scammers don’t change their tactics and we know them by heart, so pay attention to this points and run away when you hear them:

The Sales Agent (How Brokers Scam Traders)

Sales Agent
– They describe trading as a way to change your life and generate a secondary income
– If you tell them you’re busy and you can’t talk, they will keep you on the phone and push more.
– If you say you’re not interested, they will call you anyways and keep insisting
– They promise profits, give investment advice on what to buy or sell
– They are arrogant and mean towards clients
– Everything needs to happen NOW. It’s now or never. Deposit now as the market will disappear tomorrow.

The Retention Agent(How Brokers Scam Traders)

Retention Agent

– Using stop-losses is terrible because it stops you from recovering from losing positions.
– You need to open more significant trades for them to match a better risk management plan.
– The more volatile the market, the better for you. You can make more profits.
– Gold, Oil and Gas are the best assets to trade.
– You must grow your account slowly through your deposits to be able to make actual big trades.
– Take profits to need to be small so you can reach them quickly.

The Broker (How Brokers Scam Traders)

– They don’t display risk warnings on their webpage
– They’re located in questionable places on the earth, such as micro, small islands where there is barely one palm tree (just a front location, they’re not there).

Also, something important to take into account, when the broker is a complete and total rip-off, it doesn’t even matter if you managed to save yourself from the process described before. You’ll never be able to withdraw.

If by any chance you make some profits and decide to withdraw them, alarms will ring, they will never answer the phone, and you’ll never see your money.

The broker will remain operational until they can change their name into a new brand and continue scamming people.


 Conclusion  to How Brokers Scam Traders

Trading is a fantastic thing, a beautiful art. The only thing we want is to make your experience positive by ensuring that:

– If you lose money, may it be your fault.
– If you profit money, may it also be your actions.

You’re prepared to identify scams and save yourself on time with everything you read here. Mission accomplished.

There are other scams, such as electronic platform manipulation, where people talk about stop-loss hunting. Still, as long as you know how to trade, you define correct position sizes, avoid tight stop-loss placement, and avoid scalping on market makers, you should be alright.

This guide can save your life and many others, so please share it and spread the word on social media.

Our dream will be complete when this guide travels the world, and everyone talks about it, as we’ll have saved many more people from going through this.

Note: All the brokers we display in our page are good quality brokers that we have tested, so at least when you’re here, we do our best to provide you a safe experience

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