Broker Blacklist 2020 - be careful when choosing a broker

Broker Blacklist 2020: What should you pay attention to when choosing a broker? These brokers should be avoided.

Trading with binary options, forex or CFDs enables high profits in a short time. It is understandable if new traders do not want to waste time and register as quickly as possible with one of the numerous online brokers on the market in order to start directly.

Here it is however caution is advised, because in addition to the risk of loss that is typical for these trading products, a lot can go wrong when choosing a broker. Not all providers keep what they promise, and in the past there have been several problems with different brokers.

So that you do not experience any nasty surprises when trading on the international financial markets, show we tell you what to look for with an online broker so as not to get to a dubious provider. We explain the tasks of the regulatory authorities and explain what you can do if you should have conflicts with your broker. Ultimately, every trader has to find the broker that is most suitable for him. With our broker blacklist we would like to help you with this difficult decision.

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The importance of EU regulation

Brokers based in the European Union are regulated according to uniform guidelines. In 2007, the implementation of the MiFID directive (Markets in Financial Instruments Directive) became mandatory with the aim of achieving better protection for investors, increased competition and harmonization of the European financial market All member states.

Due to the uniform provisions, traders can be sure from EU brokers that they are bound by certain standards. This includes, for example, the management of customer funds, which is strictly separate from the broker's assets. They can only be used to finance trading and not for the company's own purposes and are available for payment at any time as long as they are not tied up as a margin in an open position.

Die Compliance with the guidelines is checked by the respective regulatory authority. The license terms of the individual EU authorities are not identical, but differ slightly. But they all meet the high MiFID standards.

Should there be problems with an EU broker despite extensive regulation, so that the trader sues the broker If the plaintiff chooses, the corresponding process can take place either in the country in which the broker's head office is located or in the country in which the damage occurred, i.e. the home country of the plaintiff. This means that there is no need to file a lawsuit abroad, but the broker can be held responsible in a German court. This is a clear advantage for traders, which is not available with offshore brokers, which is why the legal process is much more difficult here.

Broker Blacklist 2020 - be careful when choosing a broker

CySEC: One of the most important regulatory authorities

After the Cyprus' accession to the EU was founded in 2004 by the regulatory authority CySEC. This plays a major role in trading forex, CFDs and binary options, because due to the favorable tax conditions a particularly large number of brokers are based in Cyprus.

CySEC issues official licenses to the brokers and regularly checks compliance with the strict regulations. Regulation is based on strict EU standards and is therefore very similar to regulation by other EU authorities.

CySEC-regulated brokers, unlike many other providers, do not offer a bonus for deposits or active trading. In the past, bonus payments were frequently criticized because they were intended to encourage customers to make higher deposits and often generated more trading volume than would have been the case without a broker bonus. The payout conditions for the bonus were often difficult to meet. The bonus balance had to be wagered several times before a payout was possible. Some traders failed to achieve the required trading volume, while others traded well above their ratios to meet the bonus conditions. Because of these problems, CySEC has been banning bonus promotions since the end of 2016. As a result, the conditions of the CySEC-regulated brokers are again much easier to understand, because the providers must now offer financial advantages for their customers solely in the form of low trading fees.

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Another good regulator: the British FCA

In addition to the EU regulators, the UK regulator, the Financial Conduct Authority (FCA), also enjoys one very good reputation. The criteria are similar to those of the EU brokers and also at the FCA high security standards must be observed. The FCA is an independent agency, but reports directly to the Ministry of Finance and Economy. Regular checks ensure that irregularities are quickly identified and can be intervened accordingly.

The FCA regulation is similarly secure as with European brokers, which is why most British brokers can be recommended for trading in financial products.

Broker Blacklist 2020 - be careful when choosing a broker

Are bonus offers dubious?

The bonus ban by CySEC does not mean that all other brokers that offer a bonus must necessarily be dubious. Many reputable and reliable brokers also offer a bonus. In most cases, this is a first deposit bonus for new customers, but a no-deposit bonus or a cashback program are also possible.

If a broker apparently has a offers attractive bonus, you should still look at all other conditions and then decide whether they would be attractive to you even without a bonus. A bonus is in most cases a one-time payment, while the trading fees still have to be paid later for each trade. Therefore, they should be given greater importance than the bonus granted only once.

Before you register with a broker and claim the offered bonus, you should read the payment conditions for read the bonus carefully. As a rule, a bonus cannot be paid out immediately, but must be used several times before when trading with the products offered. Calculate in advance which trading volume is required and then see whether this is compatible with your planned trading strategy. A bonus can only be recommended if the conditions for the payment can be fulfilled almost incidentally. If you had to leave your personal comfort zone when trading for the required turnover, you should better do without the bonus, because high variance can also make high strategies with a good strategy losses created. The same applies to depositing a bonus: Always only deposit as much money as you already planned! Do not let a bonus encourage you to deposit more than planned!

If a broker encourages you to deposit as quickly as possible so as not to miss the bonus, caution is advised. Take enough time to compare the broker with other providers and then make your own decision. There are opportunities for profitable trading at any time when the broker puts you under pressure Tried to set, this is classified as aggressive and not very serious advertising.

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What happens if the broker becomes insolvent?

The goal It is natural for online brokers to make a profit. Nevertheless, it can happen that a provider can no longer cover the running costs and has to file for bankruptcy. This can also happen with reputable brokers.

Due to the bankruptcy the operation is usually stopped, so that customers can no longer trade theirs with the broker concerned However, funds are not necessarily lost. With a comprehensive regulation, the responsible financial authority should ensure that the credit balance of the customers is reliably paid out and that they do not suffer a financial disadvantage due to the bankruptcy of the company.

Die fast payment of customer funds is made possible, among other things, by the fact that the traders' credit is managed in separate accounts and is thus strictly separated from the broker's assets. The trading credit is still property of the respective trader and is therefore not paid out to other creditors of the broker. The requirement to manage customers' money in separate accounts is part of the MiFID guidelines and therefore applies to every broker regulated within the EU. Brokers are also obliged to keep customer funds separate at the British regulatory authority FCA.

Should payment problems arise despite this security measure, good brokers are also entitled to a Investor Compensation Fund hedged. This also steps in and compensates the traders if the broker is responsible for the situation itself.

The serious and customer-friendly approach to handling insolvent brokers within the EU shows how essential it is to look for a Decide providers with good regulation.

Broker Blacklist 2020 - be careful when choosing a broker

The general terms and conditions: you should pay attention to this

Before you register with an online broker, you should Read the terms and conditions carefully and completely. Of course, the brokers want to win new customers, which is why the website usually highlights. In the terms and conditions you will also find the less positive conditions. For example, it is important for brokers for Forex or CFDs to know whether there is a obligation to make additional payments. In addition, inactivity fees, which may arise if the trading account is not used for a longer period, are often not mentioned on the websites or only mentioned in passing. Payments may also apply to conditions, for example, fees may apply or restrictions may apply.

By signing up Before you register exactly about the provisions of your broker, avoid unpleasant surprises. Make a deposit only if you agree to all of the terms in the Terms and Conditions. If there are any ambiguities when reading the terms and conditions , clarify them first and only then do the registration.

Strict controls should prevent course manipulation

While the so-called STP or ECN brokers forward the customers' orders directly to the market and therefore have no influence on the course of the price, market makers set the trading prices themselves. A market maker would at least theoretically have the opportunity to benefit from lost trades by its customers, because it acts as a direct counterpart to the trader. In this case, the customer buys his positions directly from the broker and sells to them.

Although serious market makers secure themselves by automatically balancing the trades of the customers internally and a loss through the prevent overhanging positions by means of hedging with another provider, but it would also be possible to manipulate the prices in such a way that the customers make losses and the broker thereby makes a profit even without hedging, which is above the trading fees received

In order to prevent such a scenario, the regulators also keep an eye on the trading prices and become active on questionable price developments.

Broker Blacklist 2020 - be careful when choosing a broker

Problems cannot be ruled out even with reputable brokers

If you have compared several brokers and, after careful consideration , have chosen, you can start trading. Even if all important criteria are observed, it is not 100% guaranteed that there will never be any problems. Serious brokers can also get into financial difficulties or shut down for various reasons. In this case, however, a good provider should ensure smooth processing so that you receive the money you have in the customer account despite the problems of the broker. If the broker is secured by a deposit guarantee fund, it will step in if it becomes solvent and meet the financial demands of the traders.

Speculative financial products: great opportunities - high risk

Trading in binary options, Forex and CFDs enables high returns and is therefore increasingly interesting for private investors. Speculating on the right product at the right time can lead to profits that would not be conceivable with classic investment forms. However, trading is not only associated with high profit opportunities, but also with a high risk, even if trading is done with a reputable broker. A price analysis can be used to make statements about the most likely course of trading prices, but an exact calculation is not possible due to the many incalculable influencing factors. Thus, the traders are placed on a high variance and must also expect losses when trading. Therefore, always use only as much money for trading as you can easily dispense with in the event of loss. When trading Forex and CFDs, the obligation to make additional payments, which is available at many brokers, should also be considered. With leveraged trading, you can use significantly more money in the financial markets than is in the trading account, but accordingly higher losses are also possible. Especially for beginners, it may be advisable not to use the maximum available lever to the full, but initially with a lower lever and thus a slightly Risk to act.

Our broker blacklist: be careful with these providers

We have compiled a list of online brokers below, in which not all of the conditions outlined above are secure Trading are fulfilled or in the past there have been problems or increased criticism from customers.

  • Banc de Binary: The broker has after numerous complaints Customers voluntarily returned their license and have therefore no longer been regulated by the CySEC since 2017.
  • TopOption: There are several customer fraud allegations against the broker.
  • Option Winner: Another broker of the operator from the above-mentioned provider TopOption.
  • GrandO ption: The operator of the broker was fined by the CySEC for several violations of the regulatory provisions.
  • CapitalOption: The broker does not have the necessary transparency in order to to be recommended to us with a clear conscience.
  • ZoneOptions: Although the broker is licensed by CySEC, we do not recommend it.
  • Option Trade: This broker could not assert itself against the big competition and has ceased to operate.
  • OptionBit: The broker was in the industry mainly through its trading bot AlgoBit OptionBit no longer has EU regulation, but is one of the so-called offshore brokers and can therefore not be recommended for trading.
  • Dukascopy: Trades here it is a broker from Switzerland. There is therefore no EU regulation, which complicates the legal process in the event of problems. In addition, hidden costs may arise during trading.

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