Forex trading is a risky and serious financial endeavor, one which can be very rewarding if you are smart enough to use some cautionary measures. Just like it can earn you a fortune, it can also lead to significant losses, if you are not careful. This means that you have to ensure everything is under your control and you are not making any decisions without doing your due diligence. If you don’t do so, your financial security will be undermined and you will be worse off. Is that what you want? Of course not. One of the most important decisions that you have to make is choosing the right broker.
There is a myriad of Forex brokers to be found, which makes it difficult to find one with legitimate market signals and conditions and is also licensed and regulated. Many people don’t know how to go about it and so they choose the wrong broker, which can set them back significantly. One broker that you need to avoid for keeping your investment safe is TheGreenFX. This is an offshore broker that boasts the popular MetaTrader4 platform and claims to offer a total of four account types, along with a swap-free account for Muslim investors.
If this broker is a scam, why do people choose it for trading? This is mostly because there are certain features of the broker that can be very attractive and cloud judgements. Some of these features of TheGreenFX are:
The chance of trading on MetaTrader4
One of the easiest ways of spotting a scam broker is the lack of the MT4 platform. But, when it comes to TheGreenFX, you can trade through the industry leading software, MetaTrader4. Since this platform has gained a lot of attention and praise for its top notch professional features and tools, reliability and ease of use, many people think that any broker offering this option is a reliable one. The MT4 also comes with an excellent charting package that includes a variety of technical indicators and you can also come across a plethora of automated trading robots (EAs). The issue is that two thirds of all forex brokers in the market offer this trading platform, which means you can certainly find a number of other brokers who are providing it instead of signing up with TheGreenFX.
High leverage and reasonable deposit requirements
The initial deposit requirement by TheGreenFX is just $100, which may not be the lowest in the market, but it is certainly not the highest either. This works in favor of the broker because anyone who has made up their mind about to trade don’t have a problem in investing this much. Another feature that could be seen as a possible advantage is that the broker offers high leverage ratios. They can go as high as 1:500, which will work for traders with different preferences. Nonetheless, it should not be forgotten that leverage is a double-edged sword, which means that it can amplify both profits and losses. If you use excessive leverage, your winning trades will be set off by losing ones.
Some people may see these as good reasons to sign up with TheGreenFX, but there are many reasons to avoid the broker and they are much more convincing. The top ones are highlighted below:
It is an offshore broker
According to TheGreenFX, it is owned and operated by a company called Green Trade Holdings Limited. This company is registered in the Marshall Islands, which fall in an offshore zone where no licenses are issued to forex brokers and there is no oversight by any government agency either. This means that anyone who chooses TheGreenFX or any other offshore broker will be subjected to different kinds of risks, the most prominent one being losing your whole investment to scammers.
The demo spreads are not the same as the actual ones
If you go through the information that TheGreenFX has provided on its website, you will find out that spreads offered by the broker are as low as 0.5 pips for the popular EUR/USD pair. There is a small amount of commission also applicable. When combined, this comes off as attractive pricing. This may convince you to choose the broker for your trading needs, but when you do open an account with them, you will realize things are really different. This will show you that the actual EUR/USD spreads that the broker offers are close to 1.9 pips and no commission is charged. These inconsistencies are worrisome because they indicate that the broker is not transparent and clear about their trading costs and is misleading its traders.
You will find limited CFD offering
When you have decided to trade in the market, you would want to diversify as much as possible because it can help in balancing your risks. Here again, TheGreenFX is misleading because it claims to offer you a lot more than it really does. According to their website, they offer more than 140 financial instruments, but when you start trading, you will notice that there are only 20 plus forex currency pairs that you can trade, and a handful of silver and gold via its demo MT4 platform. This means that you will miss out on the opportunity of trading cryptocurrencies, stocks as well as indices CFDs.
Scams like TheGreenFX can be very hard to identify because they have done a wonderful job at presenting themselves. It cannot be denied that the broker has some strong aspects that give it some edge, but these pros are heavily overshadowed by the fact that it is an unregulated one. If it is committed to providing financial services, it should have gone through the effort of registering itself. Not only does it not have a legitimate license, TheGreenFX is also not transparent about its costs. As a matter of fact, it seems to be misleading people about the costs so it is best to look for a different broker, preferably one that’s regulated by a renowned entity.