How do I tell if a forex broker is a scam?
How this answer was verified
- Cross-checked against broker-published fact sheets, regulator licensing databases, and ESMA product intervention notices.
- Reviewed by our editorial team (Marcus Weber CFA, Sofia Lindgren FRM, Daniel Ferretti LLM).
- Refreshed quarterly. The most recent verification date is shown above. Read our methodology.
Related questions
What is negative balance protection and do all EU brokers offer it?
Negative balance protection guarantees that retail forex traders cannot lose more money than they deposit. ESMA rules make it mandatory for all EU-regulated brokers serving retail clients. This means extreme market events like the 2015 Swiss franc shock cannot leave you owing money to your broker.
Is forex trading legal in the EU?
Yes, forex trading is legal across all EU member states for retail and professional traders. EU-regulated brokers operate under MiFID II and ESMA rules, including mandatory leverage limits (30:1 on majors), negative balance protection, and investor compensation schemes. Spread betting is legal only in the UK and Ireland.
FSCS vs ICF — what compensation do EU and UK forex traders get?
UK clients of FCA-regulated brokers are covered by FSCS up to £85,000 per person, per institution. EU clients of CySEC-regulated brokers are covered by ICF (Investor Compensation Fund) up to EUR 20,000. Both schemes pay out only if the broker becomes insolvent — not on trading losses.