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Capital.com Review – is it scam or safe?
RECOMMENDED FOREX BROKERS
|Account Type||Minimum Deposit||Maximum Leverage*||Spread|
|Standard||$100||1:30||0.6 (+ commission?)|
*The leverage for professional clients can be extended up to 1:200.
Capital.com offers trading CFDs of multiple asset classes, including currencies, commodities, indices, stocks, and cryptocurrencies on its proprietary web-based platform. It provides several account types with variable spreads, leverage up to 1:30 (1:200 for pro traders) and the option to trade in micro lots.
The Company. Security of Funds
|Capital Com SV||Cyprus||CySEC|
|Capital Com (UK) Limited||UK||FCA|
There are 2 companies company behind Capital.com – Capital Com SV and Capital Com (UK) Limited, which are licensed in Cyprus and the UK, respectively. The CySEC and FCA are some of the most respectable financial regulators in Europe and on a global scale. This may not be the case if you decide to trade with an off-shore company, as we have explained here.
Both CySEC and FCA enforce strict rules on brokers, who are registered with it. From a trader’s perspective two of them are far more important than the rest – the implementation of segregated accounts and the compensation scheme. Segregated accounts, imply your broker can not spend the money you have deposited, for its own purposes. Besides, both financial watchdogs require mandatory participation in compensation schemes. This fund acts as a guarantee, in case a broker becomes insolvent and can not pay its clients. For example, if you trade with a CySEC regulated company, which happens to go under, you will be covered up to €20,000.
Minimum Initial Deposit
Capital.com has set the initial minimum deposit at $100, which is a reasonable level. Do keep in mind, this company provides CFDs on asset classes other than FX, so a bigger investment may be appropriate. On the other hand some brokers have gone out of their way, to reduce the entry barrier, like XM who require only $5.
Remember, the minimum deposit should only matter if you are a new trader, willing to experiment. The veterans will tell you, a bigger investment is needed in order to execute a long-term trading strategy.
Average spreads & Commissions
It seems that the spread on the most liquid pair, EUR/USD, at Capital.com is floating around 0.6 pips, which is very tight.
in line with ESMA’s latest requirements, Capital.com offers leverage up to 1:30, however, professional traders are allowed to user higher ratios, reaching 1:200.
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Higher leverage levels can allow you to take bigger positions, with less capital to back them up. This can be devastating, if miss-used. Be sure to fully understand the risks involved with margin trading, before participating in it.
At first, Capital.com offered trading in all kinds of CFDs, without currencies, only via an app, available for Android and iOS. Later, it launched a web-based platform, where users can also trade in forex pairs. The platform’s design feels intuitive and pleasant, and it offers a good selection of technical analysis indicators.
Also, in the Pulse section of the platform, users can access some useful information, such as the top traded instruments in each category, the biggest Risers and Fallers, the most volatile assets. There is also a news feed
Overall, we believe this is a good gateway to the world of financial markets, although it may lack some of the analytical capabilities of the desktop version of the world’s most popular forex trading platform MetaTrader4 (MT4).
Methods of Payment
A decent number of payment options are available at Capital.com. They include bank transfer, credit/debit card, Neteller, Skrill, Sofort, iDeal, Giropay, Multibanko, Przelewy24, QIWI, Webmoney, Trustly, 2c2p, or Astropay. You are pretty much covered, because some of the most popular e-wallets are added to the traditional options.
With Capital.com you can open a live account in any of the following currencies: GBP (£), EUR (€) or USD ($), PLN (zЕ‚).
Capital.com is a CFD broker, which offers trading in wide range of tradeable assets on its in-house trading interface, also available as mobile apps. The trading conditions, in terms of spreads, are rather good, and more importantly, the company is regulated by both CySEC and the FCA, which gives it a lot of credibility. The. Here are this broker’s pros and cons:
|Solid regulation||MT4 not available|
|Competitive spreads||Likely a market maker|
|Many payment methods|
|Nice web platform|
FXTM a regulated forex broker (regulated by CySEC, FCA and FSC), offering ECN trading on MT4 an MT5 platforms. Traders can start trading with as little as $10 and take advantage of tight fixed and variable spreads, flexible leverage and swap-free accounts.
XM is broker with great bonuses and promotions. Currently we are loving its $30 no deposit bonus and deposit bonus up to $5000. Add to this the fact that it’s EU-regulated and there’s nothing more you can ask for.
FXCM is one of the biggest forex brokers in the world, licensed and regulated on four continents. FXCM wins our admirations with its over 200,000 active live accounts and daily trading volumes of over $10 billion.
FxPro is a broker we are particularly keen on: it’s regulated in the UK, offers Metatrader 4 (MT4) and cTrader – where the spreads start at 0 pips, Level II Pricing and Full Market Depth. And the best part? With FxPro you get negative balance protection.
FBS is a broker with cool marketing and promotions. It runs an loyalty program, offers a $100 no-deposit bonus for all new clients outside EU willing to try out its services, and an FBS MasterCard is also available for faster deposits and withdrawals.
FxChoice is a IFSC regulated forex broker, serving clients from all over the world. It offers premium trading conditions, including high leverage, low spreads and no hedging, scalping and FIFO restrictions.
HotForex is a EU Regulated broker, offering wide variety of trading accounts, including Auto, Social and Zero spread accounts. The minimum intial deposit for a Micro account is only $50 and is combined with 1000:1 leverage – one of the highest in the industry.
Is Your Forex Broker a Scam?
If you do an internet search on forex broker scams, the number of results is staggering. While the forex market is slowly becoming more regulated, there are many unscrupulous brokers who should not be in business.
When you’re looking to trade forex, it’s important to identify brokers who are reliable and viable, and to avoid the ones that are not. In order to sort out the strong brokers from the weak and the reputable ones from those with shady dealings, we must go through a series of steps before depositing a large amount of capital with a broker.
Trading is hard enough in itself, but when a broker implements practices that work against the trader, making a profit can be nearly impossible.
Separating Forex Fact From Fiction
When researching a potential forex broker, traders must learn to separate fact from fiction. For instance, faced with all sorts of forums posts, articles, and disgruntled comments about a broker, we could assume that all traders fail and never make a profit. The traders that fail to make profits then post content online that blames the broker (or some other outside influence) for their own failed strategies.
One common complaint from traders is that a broker was intentionally trying to cause a loss in the form of statements such as, “As soon as I placed the trade, the direction of the market reversed” or “The broker stop hunted my positions,” and “I always had slippage on my orders, and never in my favor.” These types of experiences are common among traders and it is quite possible that the broker is not at fault.
It is also entirely possible that new forex traders fail to trade with a tested strategy or trading plan. Instead, they make trades based on psychology (e.g., if a trader feels the market has to move in one direction or the other) and there is essentially a 50% chance they will be correct.
When the rookie trader enters a position, they are often entering when their emotions are waning. Experienced traders are aware of these junior tendencies and step in, taking the trade the other way. This befuddles new traders and leaves them feeling that the market—or their brokers—are out to get them and take their individual profits. Most of the time, this is not the case. It is simply a failure by the trader to understand market dynamics.
On occasion, losses are the broker’s fault. This can occur when a broker attempts to rack up trading commissions at the client’s expense. There have been reports of brokers arbitrarily moving quoted rates to trigger stop orders when other brokers’ rates have not moved to that price.
Luckily for traders, this type of situation is an outlier and not likely to occur. One must remember that trading is usually not a zero-sum game, and brokers primarily make commissions with increased trading volumes. Overall, it is in the best interest of brokers to have long-term clients who trade regularly and thus, sustain capital or make a profit.
The slippage issue can often be attributed to behavioral economics. It is common practice for inexperienced traders to panic. They fear missing a move, so they hit their buy key, or they fear losing more and they hit the sell key.
In volatile exchange rate environments, the broker cannot ensure an order will be executed at the desired price. This results in sharp movements and slippage. The same is true for stop or limit orders. Some brokers guarantee stop and limit order fills, while others do not.
Even in more transparent markets, slippage happens, markets move, and we don’t always get the price we want.
Communication Is Key
Real problems can begin to develop when communication between a trader and a broker begins to break down. If a trader does not receive responses from their broker or the broker provides vague answers to a trader’s questions, these are common red flags that a broker may not be looking out for the client’s best interest.
Issues of this nature should be resolved and explained to the trader, and the broker should also be helpful and display good customer relations. One of the most detrimental issues that may arise between a broker and a trader is the trader’s inability to withdraw money from an account.
Broker Research Protects You
Protecting yourself from unscrupulous brokers in the first place is ideal. The following steps should help:
It should be pointed out that a broker’s size cannot be used to determine the level of risk involved. While larger brokers grow by providing a certain standard of service, the 2008-2009 financial crisis taught us that a big or popular firm isn’t always safe.
The Temptation to Churn
Brokers or planners who are paid commissions for buying and selling securities can sometimes succumb to the temptation to effect transactions simply for the purpose of generating a commission. Those who do this excessively can be found guilty of churning—a term coined by the Securities and Exchange Commission (SEC) that denotes when a broker places trades for a purpose other than to benefit the client. Those who are found guilty of this can face fines, reprimands, suspension, dismissal, disbarment, or even criminal sanctions in some cases.
SEC Defines Churning
The SEC defines churning in the following manner:
The key to remember here is that the trades that are placed are not increasing your account value. If you have given your broker trading authority over your account, then the possibility of churning can only exist if they are trading your account heavily, and your balance either remains the same or decreases in value over time.
Of course, it is possible that your broker may be genuinely attempting to grow your assets, but you need to find out exactly what they are doing and why. If you are calling the shots and the broker is following your instructions, then that cannot be classified as churning.
Evaluate Your Trades
One of the clearest signs of churning can be when you see buy and sell trades for securities that don’t fit your investment objectives. For example, if your objective is to generate a current stable income, then you should not be seeing buy and sell trades on your statements for small-cap equity or technology stocks or funds.
Churning with derivatives such as put and call options can be even harder to spot, as these instruments can be used to accomplish a variety of objectives. But buying and selling puts and calls should, in most cases, only be happening if you have a high-risk tolerance. Selling calls and puts can generate current income as long as it is done prudently.
How Regulators Evaluate Churning
An arbitration panel will consider several factors when they conduct hearings to determine whether a broker has been churning an account. They will examine the trades that were placed in light of the client’s level of education, experience, and sophistication as well as the nature of the client’s relationship with the broker. They will also weigh the number of solicited versus unsolicited trades and the dollar amount of commissions that have been generated as compared to the client’s gains or losses as a result of these trades.
There are times when it may seem like your broker may be churning your account, but this may not necessarily be the case. If you have questions about this and feel uneasy about what your advisor is doing with your money, then don’t hesitate to consult a securities attorney or file a complaint on the SEC’s website.
Already Stuck With a Bad Broker?
Unfortunately, options are very limited at this stage. However, there are a few things you can do. First, read through all documents to make sure your broker is actually in the wrong. If you have missed something or failed to read the documents you signed, you may have to assume the blame.
Next, discuss the course of action you will take if the broker does not adequately answer your questions or provide a withdrawal. Steps may include posting comments online or reporting the broker to FINRA or the appropriate regulatory body in your country.
The Bottom Line
While traders may blame brokers for their losses, there are times when brokers really are at fault. A trader needs to be thorough and conduct research on a broker before opening an account and if the research turns up positive for the broker, then a small deposit should be made, followed by a few trades and then a withdrawal. If this goes well, then a larger deposit can be made.
However, if you are already in a problematic situation, you should verify that the broker is conducting illegal activity (such as churning), attempt to have your questions answered, and if all else fails, and/or report the person to the SEC, FINRA, or another regulatory body that could enforce action against them.
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