Can A Forex Broker Steal Your Money?

Category: Broker Guides | Author: Trading Brokers | Date: January 2, 2023

To trade in the financial market as a retail FX trader, you require a broker. Since it takes capital, it is almost impossible for you to trade directly in the interbank market. Your only connection to this market will be through the brokerage firm you select.

Unluckily, much like other facets of the financial sector, there are more bad actors in the forex broker industry than individuals think. It is your responsibility to be aware of this fact and perform extensive research on the broker before signing up with them.

There are unregulated brokers. Others are, but their licensing organizations lack legitimacy and are not well-known. Although not all of these brokers are bad, it is safer to work with those that have a good reputation, are regulated and who you can trust.

Without conducting adequate research, you can have additional concerns in addition to the risk associated with purchasing and selling foreign currency.

Can a forex broker take your money?

Sadly, the simple response is “yes.” As mentioned above and in our can forex brokers manipulate prices guide, there are dishonest forex brokers who prey on unwary forex traders.

Although inexperienced traders frequently lose money because they lack knowledge of good trading techniques, some of their losses may also be the consequence of a broker scam.

Let’s examine the many mechanisms through which this might occur.

How a broker might steal your money

1. Outright theft

Your account is accessible to a forex broker, who has the ability to shamelessly misappropriate or steal your money. The broker may be skilled at hiding their tracks and preventing this theft from being recognized.

This fraud occasionally affects novice traders and the elderly, mainly because they do not carefully monitor their account statements.

You must carefully control your cash as a forex trader by keeping an eye on the transactions in your account statements.

2. Churning

Some brokers rely on the commission you earn from your trade. Therefore, they get more commission the more you trade. Churning is the practice of executing trades for a trading or investing account by a salesperson or broker in order to generate commission from the account.

Your profit can go up or down depending on how much activity you have on your account. Your broker must legally carry out your requests and is not permitted to make deals without your consent. Churning is illegal and unethical. Although the broker earns commission, you run the risk of losing your money. In this situation, paying close attention to your account statements is essential if you want to look for churning. Watch out for buy and sell trades on pairs that don’t align with your goals.

3. Manipulation of spreads

The ask-bid spreads are manipulated by computers in this scam. Between the buy (ask) and the sell (bid) prices, there is a spread. It is the broker’s commission for that particular trade.

Some dishonest brokers alter this in their system because a higher spread means more profit for the broker.

Always be alert for offers from more brokers. Your broker may be manipulating the spreads if the spread on your deal is 8 or 9 pips but other brokers are providing significantly less, like 3 or 4 pips. Try to look for a broker with low spreads.

4. The broker is stop hunting

As previously noted, your broker executes trades on your behalf based on your orders. They can therefore access your accounts. They are also aware of the locations of all of your stop losses. By manipulating price movement to the level where your stop loss is set, a dishonest broker may attempt to pressure you out of your position.

This frequently occurs with market maker brokers who execute trades internally rather than placing them directly in the interbank market.

5. Detrimental slippage

When a trader’s purchase or sell orders are filled at unfavorable prices, this is known as negative slippage. Forex traders suffer as a result of bad brokers’ manipulation of their trading platforms. And one prevalent variation of this fraudulent activity is negative slippage. For instance, a buy order you made can be filled at a greater price than you anticipated, which would lower your trade’s profit.

Unfortunately, in this instance, as is the case with many broker frauds, it is challenging to determine if your broker is defrauding you.

How to stop a broker stealing your money

1. Verify the brokers permits and laws

The first thing to consider when choosing a broker is their license. They are required to follow stringent guidelines from a reputable financial organization. The broker is most likely a real one if they can satisfy the standards of a good regulating agency.

2. Verify the legitimacy of the regulatory agencies

There are numerous broker licensing organizations, however not all of them are well-known abroad. Trading with brokers who are governed by reputable financial organizations and whose information can be verified online is safer.

3. Check out online reviews of the broker

Customer reviews are an excellent tool to determine whether a broker is good or bad. Watch out in particular for reports of trouble withdrawing money. That could be a warning sign.

However, in this day and age of chatbots and technology, you shouldn’t only base your choices entirely on evaluations. Your study should include customer reviews of brokers, but not exclusively.

4. Review the broker’s website for all available information

A competent broker will have all of its details available online, including its headquarters, the history of the business, its finances, its accomplishments, etc.

5. Check any achievements and prizes mentioned

Verify the company’s claims of accolades and recognition by visiting the award page on its website. Your browser should send you to the URL for the awarding organization, which will display the award’s specifics. To find out if the assertion is true, you may Google it. I have seen brokers claim they have won awards that do not even exist.


In conclusion, there are enough hazards associated with FX trading alone. By selecting a reputable broker, you can avoid more stress and avoidable losses. In this manner, you may stop worrying about dealing with fraud and instead concentrate on growing your company and turning a profit.

Your best option is to trade with a reputed and reliable broker as a result. A reputable broker would follow the tight regulations set forth by their regulating organizations. They would be governed by certain local financial regulations that would help to protect you from fraud.

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