Is Forex Legit? Is Forex Trading Legal in Your Country?

Is Forex fundamentally legitimate?

Before starting to work in trading, many people ask the question “Is Forex trading legit? The answer to this question is yes, and trading in financial markets is absolutely legal. But like in any legitimate business, you still must take care not to be duped by the omnipresent fraudster and conman.

Previously, access to exchange-traded assets was available to a small number of traders who had a large budget and could conduct transactions in the offices of the exchanges. However, with the development of technology, traders have access to Forex trading even with a small budget of about $1,000.

But why do people frequently ask questions like: “Is Forex trading a Scam?” The reason lies in a large number of fraudulent projects. There are many deceptive schemes. To avoid becoming a victim, you only need to work with

A financial activity license is a document certifying that a broker is operating on a legal basis and meets all the security requirements for withdrawing funds, and ensures that the company has liquidity providers. The financial license certifies the broker's solvency, that he regularly meets his obligations, and that the quotes provided are fair. Therefore, when choosing a broker, be sure to check for a license from a reputable regulator.

Is Forex Legal in my Country?

Whether Forex is legitimate may also depend on in which country the trader resides. In most countries, exchange operations for private traders are legal. However, there are states where trading is prohibited by law.

In addition, there may be a ban on trading in countries that live according to the laws of Islam such as Iran, Saudi Arabia, Pakistan, etc. In addition, there are some peculiarities regarding trading. Trading in financial markets can be legal when using the so-called Islamic account, which implies trading without swaps (according to Sharia law, it is prohibited to receive or pay interest).

Forex trading in the US

In some countries, Forex trading is allowed, but restrictions are applied. In particular, the United States is one of those. Following the 2008 financial crisis, the United States government passed the Trading Risk Limitation Act. The main conditions on trading in the US are as follows.

Due to strict legal requirements, many brokers restrict trading for clients in the United States. If you are a US resident, make sure that the company provides services in that country before trading.

Main elements of Forex scams

There are a large number of fraudulent projects in the financial markets. The measures against Forex trading scams are undertaken regularly, but it is not possible to completely eradicate them. There are many ways to be scammed in the financial markets. Let's consider the main ones:

A type of Forex fraud is a pyramid scheme. The essence of this scheme is for new clients to finance the previous ones from their deposit. Traders who are at the “top” of the pyramid can generate income. But if the flow of users drops, the pyramid collapses. All clients who did not manage to withdraw their money lose it.

There are several signs by which you can recognize a fraudulent broker or pyramid scheme. Let's consider them in greater detail.

Lack of license

Only a broker who has a license to conduct financial activities from a reputable regulator can be considered as “legal” and legitimate. Fraudulent companies cannot obtain such a document.

If the broker is not licensed by a reputable government financial regulator, this could be a sign of a fraudulent broker.

Big profit promise

Fraudsters try to influence inexperienced and greedy traders and investors by providing them with fantastic “guarantees” of profit. Promises of profitability such as 30% per day, 100% per week, 500% per month.

These are standard bait lines for scammers. Also, the promises will never be confirmed by portfolio managers, and their identities are never revealed.

Remember, even the most successful market professionals cannot guarantee profits. They always warn about the existence of risks of fund losses or have a mechanism for compensation for losses. Scammers concentrate on assuring the client that they will receive ultra-high profits, while the scammer has nothing at risk. If you see or hear such statements, this is a Forex trading scam.

‘Cold’ calling and social media contacts

Scammers often look for new victims through contacts in free or public sources. These can be calls to a phone number that is not hidden when registering on any profile site.

Also, victims are often searched for by trolling social networks, where young and solvent audiences are found.

After the fraudster selects a victim, active persuasion begins. A person can be persuaded and promised huge profits with many assurances that there is complete safety of the victim’s investments. Also, a common persuasive scheme is not on behalf of the company representative, but on behalf of the client. A person accidentally gets to know a broker's client, and he tells him how he made a big profit and gives the target the scammer’s contacts information.

No legitimate broker will ever call a potential trader by phone or contact them on social networks, at least not until the client himself provides a phone number after registration. If they are trying to persuade you to invest in any platform, there is a 99% chance that you are facing (a team of) scammers.

Account replenishment through unknown sources

Often, scammers try to persuade customers to transfer a payment other than through the payment form on the site. For example:

Attackers also ask you to provide a comment or write them the amount and account number after you have made a payment. After that, your deposit allegedly appears on the account. However, in reality, such a deposit is no different from a demo account, the money is virtual. Real funds will go to the card or account of the scammer.

A legitimate broker will never ask a trader to transfer money in any way other than through an official payment form. An operation with a transfer to a wallet or card is a transfer to an individual, not a company. And most likely, you will never see this money again. Never transfer money by any means other than through the broker's official payment service.

Forex trading scam examples

There are many scammers in the Forex market. Most work for only a few weeks or months, attract an audience, receive a large number of negative reviews and delete the site, after which they start working under a different name. Consider a few brokers that have signs of a scam or pyramid schemes. A current list of them is maintained under the section labeled Forex trading scams – List of scam brokers 2023 on the Traders Union website.

The broker 770capital offered its clients Forex and CFD derivatives trading services. The company was registered in Saint Vincent and the Grenadines and did not have a license for financial services. The broker had an affiliate program offering 15% of the affiliate's top-up amount. The company was accused of aggressive marketing, annoying marketing, and for the withdrawal of funds. Representatives of 770capital demanded payment of "insurance". Customers complained that they lost money.

In 2023, the broker does not work, the company's website is now unavailable.

Alfatrade

Alfatrade offered traders Forex trading and CFD trading services. The company operated without a license. The broker has discredited himself by problems with the withdrawal of funds. Traders stated that the company failed to allow the withdrawal of funds and that its representatives constantly called clients with requests to deposit more money into the account or to increase the size of the deposits. In addition, traders faced a loss of funds in successful trades due to “technical failures” of the terminal.

As of January 2023, the broker has ceased operations. The official Alfatrade website is unavailable.

Atiora

Atiora positioned itself as an ECN broker. The managing organization was registered in Saint Vincent and the Grenadines and did not have a license to operate. The claims against Atiora were related to problems with the withdrawal of funds. Clients in the reviews say that company representatives justified this for various reasons, including errors with documents. Also, users paid attention to the incompetence of technical support.

As of January 2023, the company's domain is still valid, but the site is no longer there. Instead, there is an empty template.

Thanks to reviews on Traders Union, many traders have been able to avoid working with brokers showing signs of scams or pyramid schemes. If you are offered cooperation with dubious projects, leave a review on Traders Union. This will warn your colleagues of potential problems.

5 tips how to choose a legal Forex Brokers

To work on Forex without any problems, you need to choose a legal broker. You can only make a profit from trading if you choose a reliable company, scammers will not allow you to make money. We offer five tips to help you avoid cooperation with illegal and unreliable brokers.

License

01

The license is the main document for any broker. It is a guarantee that the company operates in accordance with the rules and laws. However, only those brokers that have received licenses from reputable regulators can be considered reliable, such as:

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  USA - SEC;

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  Great Britain - FCA;

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  Cyprus - CySec;

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  United Arab Emirates - DFSA (Dubai) or FRSA (Abu Dhabi);

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  Australia - ASIC;

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  Japan - JFSA and FFAJ;

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  Germany - BaFin, etc.

Offshore licenses cannot be considered reliable as there are often no formal requirements for companies. However, if the broker has a financial permit from a reputable regulator, it can be considered reliable.

Reviews

02

One of the key factors in choosing a broker is feedback on its activities. Users often share their opinions on the work of companies. If there is a lot of negative comments about the broker, it is dangerous to cooperate with it. It is also risky to work with companies that are not reviewed.

You can find reliable brokers’ reviews only on independent platforms, not on the broker’s own site. In particular, you can get information from users or share your opinion on Traders Union. Messages that are published on the websites of companies should not be trusted. First, it is difficult to confirm their reliability, and second, negative comments may be proactively deleted. In addition, social networks can be a source of objective reviews about brokers.

Longevity of the company

03

When choosing a company, you should pay attention to how long the company has been continuously operating as a broker. As a rule, scam brokers and pyramids do not work for long - from several weeks to several months. After the company discredits itself, the site is removed and registered under a new name. It is rare for a fraudulent company to operate for more than a year.

The older and more reputable the broker is, the better. However, you should not believe what is written on the site. You can check the term in the registration certificate, in the license, as well as by the date of the written reviews.

Internal documents

04

Before registering on the broker's website, be sure to study the internal documentation.

The company must provide the following documents:

• User Agreement (Terms and Conditions);

• Privacy Policy;

• Order execution policy;

• Risk warning.

The documents should not contain "risky" provisions. In particular, the broker should not reserve the right to block accounts, refuse withdrawals, cancel trades at its sole discretion, etc.

Contacts and support

05

Often, scam brokers or pyramid schemers do not provide contact information to users. These sites usually have only a contact form or callback service. Therefore, having contacts is an important factor in choosing a broker.

Also, the site must contain the following data:

• legal address and addresses of physical offices of the company;

• email address;

• phone number;

• contacts in social networks.

It is also recommended to check the work of technical support to see if it is competent and efficient. Contact the service with a question. Make sure you are answered quickly and to the point.

Top five legal and reputable brokers you may consider

By working with a reliable broker, you can be sure that you are protected. Verified and reputable companies will never commit fraud, and if any technical problem arises (for example, long processing of a withdrawal), the broker will promptly solve it. Traders Union has selected five brokers for you with a good reputation and great trading opportunities.

	Min. deposit	Markets	Regulation
	100 USD	Forex, CFDs on stocks, commodities, futures, indices	Great Britain, Cyprus, South Africa, Bahamas
	5 USD	Forex, stocks, CFDs on stocks, commodities, indices	Cyprus, Belize, Australia
	100 USD	Forex, stocks, ETFs, CFDs on stocks, commodities, indices, ETFs	UK, Cyprus, Australia
	100 USD	Forex, Crypto, options, CFDs on stocks, bonds, ETFs, indices, commodities	Ireland (EU), Australia, South Africa, Japan, Abu Dhabi, British Virgin Islands.
	10 USD	Forex, CFDs on stocks, commodities, indices	Cyprus, UK, South Africa, Mauritius

FxPro

FxPro has been offering brokerage services to traders since 2006.

FxPro Review
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The company operates under the licences of four strict regulators:

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  Great Britain - FCA # 509956

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  Cyprus - CySEC # 078/07;

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  South Africa - FSCA # 45052;

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  The Bahamas - SCB SIA-F184.

On the broker's website, 200 types of trading instruments are available to clients. Among others, clients can work with futures. The company has developed its own terminal for traders, known as the FxPro Trading Platform. There is also a choice of MetaTrader 4 and MetaTrader 5 platforms. Clients can trade using trading robots.

XM Group

The XM Group broker has been offering trading services for traders since 2009.

XM Broker Review
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The company has three licenses from government regulators, such as:

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  Cyprus - CySEC 120/10;

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  Australia - ASIC AFSL # 443670;

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  Belize - IFSC No. 000261/106.

Trading at XM.com is carried out in the MetaTrader 4 and MetaTrader 5 terminals. The company provides instant order execution. The broker provides trading without requotes. Replenishment and withdrawal of funds are made without commissions. The company has more than 1300 trading instruments available, including 55 currency pairs. Also, XM Group offers customers a large number of bonuses and other special offers.

Admiral Markets

Admiral Markets is a UK-based broker that has operated since 2001. The company has been rebranded and now operates under the Admirals brand.

Admiral Markets Review
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Admirals' financial licenses are as follows:

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  Great Britain - FCA # 595450

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  Cyprus - CySec # 201/13

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  Australia - ASIC AFSL # 410681

The company offers over 3500 assets and trading instruments. The broker is suitable for clients who plan to trade or invest in stocks. MT4 and MT5 terminals are available at Admirals. Traders are provided with free access to VPS servers. Also, Admirals is well suited for beginners, and there is an extensive training program here.

AvaTrade

The AvaTrade broker appeared in Ireland in 2006. As of 2023, the company offers services in 150 countries and has over 300,000 active accounts.

AvaTrade Review
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AvaTrade is licensed by the following regulators:

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  Ireland - Central Bank of Ireland No. C53877;

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  British Virgin Islands - SIBA / L / 13/1049;

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  Australia - ASIC AFSL # 406684;

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  South Africa - FSCA # 45984;

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  Japan - Financial Services Agency # 1662 and Financial Futures Association of Japan # 1574;

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  Abu Dhabi - FRSA # 190018.

The company offers its clients 250 types of trading instruments. You can also work with options. The broker has its own terminals - AvaTradeGO and AvaTrade Options, MT4 and MT5 are also available. AvaTrade offers good opportunities for automated trading. You can work with trading advisors, install additional indicators, analytical tools, etc.

FXTM

The FXTM (“ForexTime”) broker has been providing services to clients since 2011. During its tenure, the company has been awarded 42 awards.

FXTM Review
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The broker's activities are carried out based on the following licenses:

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  Cyprus - CySec No. 185/12

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  South Africa - FSCA No. 46614

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  UK - FCA # 600475 and FCA # 777911

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  Mauritius - C113012295

FXTM offers clients good ECN trading opportunities. The company provides 7 types of trading accounts, 4 of which are ECN. ForexTime trading is carried out using the MT4 and MT5 terminals. FXTM has also developed its own terminal for mobile devices, called FXTM Trader. The company has more than 400 assets and trading instruments available for trading, including 160 types of real stocks.