A report from the Bank for National Settlements (BIS) stated that the trading volume in the foreign exchange market or forex market in April 2019 reached more than 6.6 trillion US dollars per day. The large volume of transactions has made many parties involved in this industry. Before you decide to trade or invest, recognize the characteristics of fraudulent brokers in the following review so that you can still make a profit.

What are the characteristics of a fraudulent broker?

In Indonesia, forex trading business is legal. Supervision is carried out by the Commodity Futures Trading Supervisory Agency (Bappebti). All futures trading activities including forex transactions are regulated in Law Number 10 of 2011 concerning Commodity Futures Trading. Although there are clear rules, fraud cases are still rampant today. In order not to become a victim of fraud, first you can see a list of trusted forex brokers on the official Bappbeti page. Second, recognize the characteristics of fraudulent brokers as below.

1. Promises big profits in a short time without risk

Who doesn't want to make a profit? When investing or trading, profit is definitely your main goal. However, if there is a forex broker who promises high returns without risk, you should be wary. The forex trading business is a high-risk investment activity but with the potential for high returns, this is in accordance with the principle of high risk high return investment. Fraudulent brokers will usually promise high returns but do not mention the risks and will say there is no risk at all. The main goal of fraudulent forex brokers is to get your money as quickly as possible. Therefore, the characteristics of fraudulent brokers are promising high returns but not talking about the risks at all.

2. Does not have permission from the regulator

Bappebti as a regulator will actually release a list of fraudulent brokers within a certain period of time. This list usually contains illegal and fake forex brokers, or forex brokers whose licenses have been revoked. In fact, the legality of a forex broker is mandatory, one of the characteristics of a fraudulent broker is that it does not have a license from the regulator. A trusted and regulated forex broker requires a long time and strict requirements from the regulator to obtain legality. Illegal forex brokers will definitely avoid this process because it requires transparency. In addition, the capital to establish a broker is also quite large, with the requirement of a deposit of funds as a business guarantee. While illegal brokers will try to minimize the capital to establish a company as little as possible in order to extract as much customer funds as possible. Before opening a trading account, make sure the forex broker of your choice is registered on the regulator's website. What about foreign forex brokers? Make sure the forex broker has a license from the regulator of its country of origin. However, because it does not have a license from the regulator in Indonesia and does not have an office in Indonesia, you must still be prepared for the risk.

3. Does not have a clear office

Although forex trading can now be done online, the existence of a physical office of a forex broker is still important. If the office does not exist or is fictitious, how can you trust to place funds in that forex broker? One of the characteristics of a fraudulent broker is that they do not have a clear office address. Even if it is a foreign forex broker that does not have an office in Indonesia, you can track the broker's address on the website of the broker's country of origin's futures trading authority. If the futures trading authority does not list the broker's name and office address, you must avoid that broker.

4. Customer service is difficult to contact

The next characteristic of a fraudulent broker that you should know is that it is easy to register and deposit funds, but difficult to withdraw funds. Avoid forex brokers that do not provide customer service, because this will make it difficult for you if you ever encounter problems while investing or trading. Responsive customer service is mandatory for a brokerage company. Before making a deposit, try contacting customer service available via chat, email, and telephone. With the rapid development of digital technology today, companies are not only supported by customer service staff in the form of human resources, but also robots that are ready to reply to your chat on the company portal. Even though it looks sophisticated, you still have to be vigilant if customer service is difficult to contact when you want to withdraw funds.

5. Unprofessional portal page

Establishing a brokerage company requires a lot of capital, is it impossible if the forex broker is trusted and regulated but is unable to have a professional website appearance? If the appearance of the portal page looks unclear, messy, and unprofessional, you should be suspicious because this usually indicates the characteristics of a fraudulent broker. Moreover, if you only use a blogspot domain or other free blog, this shows a lack of seriousness as an official business actor. A legal broker website must at least contain the company background, history of its establishment, and executive team, and a complete address that can be confirmed.

6. No separate accounts

A segregated account is a mandatory requirement that must be owned by a trusted forex broker. A segregated account will maintain the integrity of the forex broker, this aims to separate customer funds from the operational funds of the forex broker company, thus ensuring security in the implementation of forex trading transactions. This is regulated in Law Number 32 of 1997 Article 51 concerning the Implementation of Futures Trading. If a forex broker regulated by Bappebti commits a violation due to misusing the function of a segregated account, then the forex broker's license is at risk of being revoked and being subject to a prison sentence of five years. In addition, the brokerage company must pay a maximum fine of 1.5 billion rupiah. So, if there is a forex broker who asks you to transfer money to an account in the name of the company, cancel your intention to trade with that broker, because this is one of the characteristics of a fraudulent broker. Well, now you can recognize the characteristics of a fraudulent broker. Remember, the risk of becoming a victim of fraud in the trading world can be minimized by conducting more thorough research and observation before investing or trading.

Where is safe forex trading?

After recognizing the characteristics of fraudulent forex brokers, the next step is to make a list of potential forex brokers for you. However, if you are still hesitant to choose a trading place, you can try creating a demo trading account at GICTrade as a means of practice before opening a real live trading account. This is useful for beginners or experienced traders who want to experience trading at GICTrade. For those of you who don't know, GICTrade is a forex trading platform owned by GIC. The advantages of trading at GIC, you will not be charged fees such as commission and swap fees, and also have low spreads, and are transparent. You can also join the trader community on Telegram GICtrade to ask fellow traders directly about trading experiences such as choosing the right forex broker, recognizing the characteristics of fraudulent brokers, and learning trading indicators. Not only that, in this community there are many master traders who will provide daily and weekly analysis to help you make decisions and get information on trading classes and event that are often held by GIC.