Risk warning. CFDs and leveraged FX carry a high risk of rapid loss; a majority of retail investor accounts lose money. Even a well-regulated broker cannot make a losing strategy profitable. General information, not financial advice.
The dangerous brokers are not the obvious ones. Nobody loses money to a website with a stock photo of a Lamborghini and three spelling mistakes.
The ones that cost people money look completely professional, hold *a* licence, and are subtly wrong in ways you can check in about twenty minutes — if you know where to look.
Here is the list, in the order I run it.
1. The licence exists — but check it in the regulator's register
Every broker displays a licence number. Verifying it takes two minutes and almost nobody does it.
Go to the regulator's own public register — FCA register, CySEC, ASIC — and search the entity name. Confirm three things: the firm exists, the permissions cover what you are being sold, and the status is current.
2. The entity you onboard to is not the entity in the advert
This is the big one, and it is completely legal.
A broker group can hold an FCA licence, a CySEC licence and an offshore licence. The marketing shows the strongest. Depending on your country of residence, you may be onboarded to the offshore entity — with different protections, different leverage, and a different compensation scheme, or none.
Find the client agreement for your country and read which entity signs it. The difference between an FSCS-covered UK entity and an offshore one is the difference between an inconvenience and a total loss if the firm fails. Context in what FCA regulation means and ESMA rules explained.
3. Withdrawal terms are harder to find than deposit terms
Deposits are always one click. Withdrawals should be too.
Red flags: withdrawal minimums that exceed typical account sizes; fees that scale with amount; "verification" requested only at withdrawal, never at deposit; processing windows measured in weeks; or a bonus whose terms lock the whole balance until a volume target is met.
Read the withdrawal section first. It is the single most informative page on any broker's site.
4. The bonus has a volume condition
A deposit bonus that requires trading X lots before *any* withdrawal effectively converts your own deposit into locked capital. Retail bonuses of this kind are restricted in several jurisdictions for exactly this reason.
If a bonus is the headline offer, ask what it is compensating for.
5. Leverage that is illegal where you live
Retail leverage caps exist in the EU/UK — ESMA's product intervention measures cap major FX pairs at 30:1 for retail clients (ESMA).
A firm offering 500:1 to a retail client in a capped jurisdiction is telling you which entity you are dealing with. That is useful information, delivered free.
6. No negative balance protection
Retail clients in the EU/UK have negative balance protection: you cannot lose more than your account balance. Outside those regimes, you can owe money after a gap.
Check whether it applies to your entity, not to the group. See how leverage works and understanding leverage and margin.
7. Client money is not described as segregated
Segregation of client funds from operational funds is the mechanism that makes a broker failure survivable. If the client agreement does not describe it clearly, that is the answer.
8. The spread claim has no conditions attached
"From 0.0 pips" is a floor, not an average. A broker unwilling to publish typical spreads and commission per lot, or an execution policy, is competing on a number that describes its quietest hour. See spread vs commission and what slippage actually costs.
9. No demo, or a demo that behaves nothing like live
A demo that fills perfectly at all times is not a preview of the product; it is a sales tool. What you want is a demo on the same server infrastructure, so that spreads and fills at least resemble live. Demo accounts and how to use them — and a genuinely useful one, AvaTrade's demo, costs nothing to open.
10. Pressure from a human
A phone call encouraging a larger deposit, a "manager" offering to trade for you, or urgency framing around a promotion are the oldest signals in the industry. Regulated brokers in top-tier jurisdictions have compliance departments that do not permit this. Our fuller guide: how to spot a forex scam. The same caution applies to paid trading communities whose hosts cite backgrounds you cannot check; our Full Port University review shows how to read such a listing before you pay.
11. The complaints route does not exist
Every regulated firm has one: a complaints procedure, a timescale, and an external ombudsman or ADR body afterwards. If you cannot find the escalation path *before* depositing, you will not find it when you need it. Published complaint data and filed accounts are the other half of this check: see how to compare forex broker reviews and customer service and which forex brokers publish audited financial statements.
The short version
Brokers we cover and have written up in detail: AvaTrade (review), Pepperstone (review), Eightcap and Vantage. Start with how to choose a forex broker and best forex brokers 2026, and if you are new, best forex brokers for beginners.
Frequently asked
How do I check if a forex broker is regulated?
Search the entity name in the regulator's own public register — the FCA, CySEC or ASIC register, for example — and confirm the firm exists, its permissions match what you are being offered, and its status is current. Do not rely on a licence number printed on the broker's website.
Why does it matter which entity I sign with?
Because protections attach to the entity, not the brand. An FCA-regulated entity brings client-money segregation, negative balance protection and FSCS cover; an offshore entity in the same group may bring none of those.
Is a deposit bonus a red flag?
It depends on the conditions. A bonus with a trading-volume requirement before any withdrawal effectively locks your own deposit, which is why several regulators restrict them for retail clients.
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Written by Thomas Lovas Lokoy — researched and drafted with AI assistance from published sources; edited and published by NorwegianSpark SA. NorwegianSpark SA, org. 834 984 172. Some links are affiliate links; see our disclosure. Trading involves substantial risk of loss.
Sources
- FCA — Financial Services Register: register.fca.org.uk
- CySEC — Cyprus Securities and Exchange Commission: cysec.gov.cy
- ASIC — Australian Securities and Investments Commission: asic.gov.au
- ESMA — Product intervention measures on CFDs for retail clients: esma.europa.eu
- EU — Directive 2014/65/EU (MiFID II): eur-lex.europa.eu
Frequently Asked Questions
How do I check if a forex broker is regulated?
Search the entity name in the regulator's own public register, such as the FCA, CySEC, or ASIC register. Confirm the firm actually exists, that its permissions match what you are being sold, and that its regulatory status is current. Do not rely solely on licence numbers printed directly on the broker website.
Why does the entity I sign with matter?
Legal protections attach directly to the specific entity rather than the overall brand. An FCA-regulated entity provides client-money segregation, negative balance protection, and compensation scheme cover, whereas an offshore entity within that same corporate group may offer none of those vital protections for your funds.
Is a deposit bonus a red flag?
It depends entirely on the associated conditions. A deposit bonus that requires hitting a specific trading-volume target before any withdrawal is allowed effectively locks your own deposited capital. This practice is precisely why several regulators choose to restrict retail deposit bonuses in their jurisdictions.
