Beware! LCM FX is an offshore broker! Your investment may be at risk.
RECOMMENDED FOREX BROKERS
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LCM FX is a forex brokerage registered in New Zealand. It provides the MetaTrader 4 platform and also offers a test-drive. We learn from the website of the brokerage that potential clients are extended a leverage of 1:100 and the spread on EUR/USD is at 1.8 pips which is a bit above the industry average of a pip and a half.
LCM FX regulation & safety of funds
According to the website the company – Lucror Capital Markets Co.,- behind the brokerage is registered in New Zealand with a registered address 300 Queen Street, Auckland 1010, New Zealand. Forex brokers operating on the territory of New Zealand have to be licensed by the Financial Markets Authority – the New Zealand financial regulator. However, going through the online registry of the FMA we did not find the company among the list of licensees. This means the website is offering financial services without proper authorization and illegally. Here is as screenshot:
We did not come upon any other signs of trouble going through the website, nor is there a lack of information, however, the lack of regulation inclines us to suspect that potential clients of the brokerage may be open to substantial risk.
Traders needn’t have to worry themselves with such risk if they choose to trade with a brokerage regulated and authorized by a prestigious regulatory agency. Such agencies are the FCA in the UK or CySec in Cyprus which have been leading names in Forex trading for some time now. Their regulatory framework is composed of a number of strict rules which prevent clients from falling victims to fraud. Such rules include the segregation of accounts which assures that commingling with the client’s money is not possible. Furthermore, a license by such a regulatory body entails participation in a financial mechanism by which clients may be compensated if they suffer losses due to fraud or bankruptcy. With the FCA the compensation is up to 85 000 pounds, where as with CySEC it is up to 20 000 euro per person.
LCM FX trading software
However, putting all this aside – the brokerage does provide the MetaTrader 4 trading platform which we always view favorably since it is the foremost trading terminal at the moment equipped with features such as almost a 100 market indicators, as well as customizable trading robots. It is also the preferred choice for more than 80 percent of the traders in Forex. Here is a screenshot:
However, there are a couple of problems worth pointing out. First of, according to the platform the spread on EUR/USD is the meager 0.2 pips which is absurdly low and makes us question whether it is so in fact. No brokerage may hope to yield a profit through so low a spread. Furthermore, on the website of the broker we read that the spread for the most basic account is actually 1.8 pips which is believable and a bit above the industry average. Such misleading info is a sign of trouble, but we do highlight that the required minimum deposit is quite low at $100 and much in favor for traders.
LCM FX deposit/withdrawal methods and fees
There is a staggering lack of information on the website regarding the deposit and withdrawal of funds. We could not gather the payment methods available for clients, there isn’t a mention of them even in the terms and conditions. This is quite common with scammers because they choose not to disclose such “unfavorable” details to traders and only after having received a deposit from a client do they charge some unexpected withdrawal fee or maintenance fee. With LCM FX, however, it’s worse. Here is a screenshot:
LCM FX only states that clients may have to pay withdrawal fees and other charges but does not specify the amount. This is why we advise traders to always put up only the required minimum deposit, instead of risking a bigger amount with no certainty. Afterwards, they may also try to withdraw a small amount in order to check for any unexpected fees or delays. Such fees and delays are usually the signs of a scammer.
How does the scam work?
Information is a pretty solid criteria for judging a brokers legitimacy. Scammers would not share much of their information, because precisely there inconsistencies and irregularities may appear which expose the whole set-up. A good example is this very broker and the lack of crucial information about the company behind it.
After informing themselves for the brokers trading conditions – traders should be well-versed in the way of the scam:
Through clicking an ad with promises for fast money, you will be redirected to a website such as Bitcoin Evolution or Crypto Revolt where registration will require you to give your address, email and phone number. After sharing your personal information, you will being receiving calls from brokers, compelling you to invest with them and win big. After a few minutes hearing their pitches, you decide to deposit some $200-250. And just like that – the scammers take a fat commission from this initial deposit.
After they are done with you, senior scammers begin working you into putting even more money. They say it’s the only way to profit from trading even more. After making the mistake of investing even further, you’ll begin wanting to get out of this and withdraw what you have left.
Unfortunately, the con-artists have no such thing in mind. They will now begin persuading you to wait it out and not withdraw right now. The motive here is quite straightforward – traders have a limited time window for filing a chargeback with their bank and get their money back. The “recovery department” will simply want to mislead you into missing this crucial period and, along the way, losing any chance you might have of getting the money back.
What to do when scammed?
As was mentioned above, scamming is quite the common in the trading world and, sadly, even you might suffer from it. In such an unfortunate case there still may be some available options for you.
You may contact your bank or credit card provider and file a chargeback. Furthermore, due to the high instances of fraud – both Visa and MasterCard have decided to sidestep scammers as best they can in forex trading. The first thing we have seen so far is that MasterCard has increased the previous time period of six months for filing a chargeback to a year and a half with their rival Visa expected to follow suit in December.
If, however, you have provided the broker with your credit card details, immediately cancel your credit card.
If you have given information regarding your online banking pass – you should switch it asap!
Beware of potential calls from self-described “recovery agencies”! They prey on scammed and vulnerable traders who are desperate to recover their losses. They will require an “up-front” payment to help you, but after paying them, no such help will be coming your way!