Whether it is a trading training course, various trading media, or a relatively well-known trading platform, I have repeatedly emphasized to investors that we must choose a regulated platform.
Although there are various regulations in the margin industry, no matter which country the regulations are in, they will at least have a certain degree of binding force on brokers. If investors have higher requirements for capital security, they should choose strict supervision. If there are no special requirements for leverage, forced liquidation standards and various flexibility, it is best to choose a platform under the supervision of FCA.
However, despite repeated emphasis and emphasis, black platforms are still alive and well, and there are still many investors who are willing to invest in those unregulated platforms. Why?
To sum up, there are roughly several main reasons why investors choose black platforms, namely decks, information asymmetry, effects similar to pyramid schemes, and failure to resist the temptation of huge benefits, or a combination of these reasons. Today, let's take a look at some of these situations.
===Information Asymmetry===
Black platforms are able to attract customers, often by taking advantage of the information asymmetry between each other.
Specifically, there is a serious lack of knowledge about the platform among investors. Not all investors on the platform are very familiar with transactions. They can't find a formal platform, or they don't know how to identify a black platform at all, and they won't be suspicious even if the deposit method is a private account. These investors may have just heard of the investment method of margin, and they started to try it. Just like stock trading, you may not know anything when you first enter the market, but you are very confident in your own judgment or luck, and want to "buy, buy and see".
This is not a big problem in stock trading, because stock trading is to open an account with a regular brokerage. Even if a loss occurs, the loss can be stopped in time without losing the principal. However, the trading platform is completely different. With this mentality, investors are easily attracted by the propaganda that can be seen everywhere on some unregulated black platforms, and they never expect that there will be a situation where they cannot withdraw money after depositing. This lack of relevant knowledge and unequal information are not only in the foreign exchange market, but also in all walks of life, an important reason why scams full of loopholes can succeed.
=== MLM-like effect ===
There are some unregulated platforms. The reason why there are many "loyal" customers is that they adopt a method similar to pyramid schemes.
These platforms may have some very fixed partners, such as some small-scale asset management companies, or an extensive and loyal social platform network, and even their own owners or spokespersons are very famous in the industry. For example, the great god you have heard of before established an asset management company, and the analyst you have always admired said that he is on a certain platform. These famous people have a great driving effect, just like fans will buy celebrity endorsements. Attract a large number of fans for the platform.
"My friend is on a certain platform", "My teacher is on a certain platform", "the god I follow on Weibo is on a certain platform", "I know an investment manager who suggested that I go to a certain platform"... none of these can be your choice A platform for a reason. It is difficult for one person to understand another person, even if he is your friend or teacher, let alone someone you have never met on the Internet. You must know that the easiest target for MLM is the people around you.
Therefore, no matter who recommends the platform to you, no matter how reliable you think this person is, you cannot omit the steps of your own investigation. Investors should use a prudent attitude to check the platforms they are interested in on the official website of the regulatory agency, and compare the various information of the platforms in detail, so as not to be misled by decked platforms. Investors, especially novices, should try their best to choose platforms with a long history, good reputation, and high popularity. The risks hidden in small platforms or small asset management companies are not directly proportional to the possible returns.
===Deck===
Next, let’s talk about the deck platform. The deck means that the deck of the trading platform is to use fraudulent means to fraudulently use, embezzle or imitate the license of a trading platform operator that is operating legally, and imitate the name and service of the platform operator. And websites, and use the license to conduct illegal operations, and use the existing reputation of the regulated entity to make profits, that is to say, it is a "high imitation" and "copycat" of the industry.
Deck is the most difficult type to guard against. Now many deck brokers can do a very similar level, such as buying an old domain name, then go to the regulatory website to find a broker with a similar name, and imitate all the information of the broker. They even post a direct link to the regulatory website on the official website, and their pirated MT4 is only allowed to be downloaded by official customers to avoid other people's inquiries. Investors who are deceived by deck brokers generally have a certain knowledge of broker identification, but "the magic is as high as one foot and the road is as high as ten feet", the scammers will always do their best for money.
Therefore, when investors choose a platform, they have to be more careful and careful. Investors can choose a large platform with a long history and high reputation. In addition, investors need to pay attention to the corresponding regulatory agencies. They should not listen to the platform's one-sided words and carefully check the corresponding information. Regulatory agencies such as FCA in the UK and SFC in Hong Kong will often publish information on licensed companies. Investors should keep an eye on the announcements issued by each regulatory agency to learn about the latest information to avoid being cheated.
When checking relevant information, investors should pay special attention to details. They can enter the official website from the website provided by the regulatory agency. Sometimes there may be only a slight difference of one or two letters in the domain name between the owner and the deck. When contacting a broker, try to choose the contact method provided by the regulatory agency, and you can confirm the identity of the broker by sending an email or making a phone call.
===The temptation of huge benefits===
Finally, what we want to talk about is the situation of "knowing that there are tigers in the mountains, but traveling to the mountains with tigers".
Some investors fall into the black platform trap not because they are completely ignorant of the problem with the platform, but because they clearly feel that something is wrong, but they still want to take a risk.
Because the unregulated small platforms, or black platforms, are far less famous and credible than the big platforms in the industry, if they want to attract customers, the only powerful means of competition are various preferential policies. A large number of bonuses or rebates, extremely low transaction costs, high-amount capital allocation on the platform (clients pay 200,000, and the platform pays 100,000), capital preservation and even a return guarantee of more than 10%, and all kinds of things that seem to be lucrative. Profitable "feedback activities" and so on.
It is not just newcomers who will be deceived by similar means. Sometimes veterans who have been trading for several years can hardly resist this temptation. It is not that I believe that the platform will be honest and keep its promise, but that I am confident that I will flee with the fruits of victory before the scam collapses. I believe that based on my own experience and judgment, I will not fall into the language trap of the platform, I can find the loopholes of the platform, and I can negotiate with the platform Normal withdrawal.
For a compliant platform, its income is definitely not enough to cover the cost of such high preferential policies. Even if it is considered a big platform like IronFX (the IronFX incident has also widely questioned the reliability of the license in Cyprus), a wrong marketing policy can kill it. Therefore, the platform supported by preferential policies will inevitably collapse. When it collapses, most of the people who hit it may be smart people.
===Summary===
Unsupervised black platforms will take advantage of every opportunity, including investors' lack of knowledge, careless character, and occasional greed to take advantage of loopholes, so black platforms have not been able to be driven out. As investors, we can't wait until we are fooled to regret it, but we must choose carefully from the very beginning, no matter how fancy their packaging is, don't even look at it. Choosing a broker that is strictly regulated is not only responsible for yourself, but also for the money in your own pocket.
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