When you’re searching for a good forex broker, it can be challenging to sort the wheat from the chaff. This is mostly because of three factors.

Firstly, forex is an inherently dangerous market. The payoffs are potentially huge, but like any high reward investment, forex is very high risk. Beginners – and even experienced investors – can easily lose their entire investment if the market goes sideways. This is why there are still plenty of people online complaining about legitimate businesses, bemoaning the decision that made them lose their money.

Secondly, most retail forex trades are done online. This makes it easy for scammers to masquerade as legitimate brokers. It also makes it easy for them to disappear once they’ve taken your payment.

Finally, there are many ways for legitimate businesses to separate you from your money. Opaque fees, unclear terms of use, and hidden conflicts of interest all make this marketplace one of the hairier places to be an investor.

Today, we’re going to be looking at EuropeFX. Is it a scam, or is it legitimate?

What is EuropeFX?

EuropeFX is a trading company that’s regulated by the Cyprus Securities and Exchange Commission (CySEC). This regulator is acknowledged throughout the European Economic Zone (EEZ), which means that they’re authorized to do business within the entire zone.

This company serves as a broker for foreign exchange trades, stock trades, bonds, and even precious metals. They offer self-serve training through their MT4 trading platform. Alternatively, you can speak directly with one of their brokers. They put a lot of emphasis on phone communication, and their brokers will contact you regularly with trading advice.

Opening an account is easy for anyone in the EEZ. The minimum investment is only €1,000, so virtually anyone can afford to open an account and start trading.

In addition to its trading services, EuropeFX also offers investment advice. Unfortunately, this is one major reason people are concerned that they may be a scam.

EuropeFX and Signal Selling

One of EuropeFX’s most popular features is the fact that it gives you access to Trading Central. This is a popular online system that analyzes trading trends, identifies opportunities, and offers recommendations – called “signals” – to traders.

So you get a forex broker along with an investment advisor. What could go wrong with that?

The problem with that kind of business is that it involves what economists call a “moral hazard”. That means it creates a financial incentive for a person or a business to do things they shouldn’t.

In this case, a signal seller’s product is the advice itself. If they sell you good advice, you’ll presumably stick along and continue paying for more of it.

On the other side of the fence, a broker’s business is in trades. If you invest $5,000 to buy Euros and let that money sit in Euros for a year and a half, the broker doesn’t make a dime. Meanwhile, a savvy investment advisor may very well tell you to keep sitting on those Euros, anticipating a long-term payoff.

When that investment advisor is also your broker, things get hairy. If they do their job as an advisor, their business as a broker will suffer; you won’t be making as many trades for them to earn a commission on. On the other hand, if they do their job as a broker and try to encourage you to trade, they’ll be failing you as a good advisor.

This is a shady practice, but it’s not illegal.

That said, we strongly recommend getting your advice from someone other than your broker. This is true whether your broker is EuropeFX or any other company.

Pushy Brokers

One thing we’ve heard from several EuropeFX customers is that their brokers are constantly encouraging them to invest more money. Now, this isn’t always indicative of a scam. To some extent, brokers should be enthusiastic. After all, someone is trying to get you to put your money in an investment, it should be an opportunity they genuinely believe in and are excited about.

That said, there’s a difference between an enthusiastic investment advisor and a predatory one. No forex broker should be calling you multiple times a week or trying to get you to invest another $1,000 at the end of the day in order to take advantage of some late afternoon market movement.

Multiple users have reported this type of behavior. And while it’s not enough to say that EuropeFX is a scam, it’s certainly annoying for their customers, and it’s a matter for concern.

EuropeFX Spreads and Other Details

Impressively, EuropeFX is one of the better brokers on the market when it comes to being transparent about their spreads. Trades are charged at a rate of two pips per lot. That’s it. There are no hidden rates for special trades, no upcharges for small trades, and no upcharges for trading in particular currencies.

Another thing we appreciate is that they maximize leverage at 1:30, or 1:200 for highly-qualified business accounts. This may seem like a high ratio to an investor who’s accustomed to trading in just about any other market, but it’s relatively low for a forex broker. This provides some protection for inexperienced investors who are liable to get in over their heads.

All investor accounts are insured up to €20,000. This is in compliance with European regulations covering financial institutions.

From a regulatory perspective, we need to be clear. While we’ve been critical of some of EuropeFX’s business practices, they’re 100 percent legitimate in terms of being a legal, registered business that adheres to the letter of the law.

EuropeFX and Fake Brokers

One way people end up writing negative EuropeFX reviews is if they end up doing business with somebody who’s not even EuropeFX. Sadly, this is a commonplace occurrence with forex brokers. Since the business is entirely online, organized crime outfits in Eastern Europe, South America, and Africa set up fake websites to lure unwary customers into handing over their money. When investors go to withdraw their money, nobody answers their emails, and it turns out that the customer service phone number is fake.

One way to avoid these scams is to pay attention to what website you’re actually visiting. EuropeFX will only do business through their website or through the MT4 trading platform. If you’re on a third-party site, you’re handing over your money to a EuropeFX scam.

There’s another, more obvious way for Americans and Canadians to know they’re dealing with a scammer. EuropeFX is regulated in Cyprus, which means they’re only licensed to conduct foreign exchange transactions inside the European Union. If you’re an American, Canadian, or any other non-European and someone claiming to be EuropeFX is willing to take your money, you’re dealing with a criminal.

Is EuropeFX a Scam?

EuropeFX is not a scam. They’re a legally regulated business, and they broker forex trades for thousands of customers every day. They even offer a conservative leverage limit, and they’re transparent about their spreads, which is more than many other legitimate brokers can say.

That said, there are two practices in particular that investors should be aware of if they want to do business with this company.

The first, as we mentioned, is their pushy brokers. This company touts its practice of building a “personal relationship” with their customers. They certainly achieve this. Unfortunately, this “relationship” usually comes in the form of brokers calling at odd times of day asking you to invest more money to take advantage of some hot trade.

The other is their practice of signal selling. Again, we should stress that this isn’t a scam in and of itself. But we’d be leery of any business that sells you signals why simultaneously brokering your trades. This is a tactic commonly used by scammers, and it’s definitely shady.

We’re not saying that EuropeFX is a scam. But we are saying you should do your own independent research before trading any foreign currency.

What Can I Do Now?

If you’re a EuropeFX customer and you’re simply unhappy about your trading results, we’re afraid there’s not much we can do to help you get your money back from EuropeFX. While their sales tactics are on the pushy side and their signal market is both shady and unhelpful, they’re running a legal business.

That said, if you’ve been a victim of a fake broker who was impersonating EuropeFX, it may be possible to recover some of your funds. Through methods like credit card chargebacks and bank judgments, it’s often possible to recover some or all of your money.

We understand that this process can be confusing. For the average person, this is an unfamiliar and byzantine process. Scammers can be hard to track down. And even if you can track them down, they may live in a country whose legal systems are built to protect them, not you.

MoneyBackHero has helped many people like you. Contact us for a free consultation. We recover your money, and you pay us a percentage of whatever we recover. It doesn’t get any easier than that.