Beware! This is an offshore broker! Your investment may be at risk.
Don’t put all your eggs in one basket. Open trading accounts with at least two brokers.
Trade Principal is an offshore Forex brokerage registered in St. Vincent and the Grenadines. It provides a generous leverage of 1:400 but the required minimum deposit is excessively high at $1000. Further trading conditions remain undisclosed.
Trade Principal regulation and safety
On the brokers website we read that the broker brand is owned and operated by a SVG-based company with the name Trade Principal LTD. Saint Vincent and the Grenadines is a well-known offshore zone and a preferred location for shady brokerage.
However, we further learn that the clearing services of the brokerage are handled by Zeni Management LTD registered in the UK. Without being much surprised through a quick check on the website of the regulatory agency we understand that the brokerage does not fall under regulatory oversight in the UK. We remind readers that the government of Saint Vincent and the Grenadines has multiple times stated that it does not regulated Forex trading.
On top of all this, we also came upon an official warning issued by the Spanish regulatory agency CNMV regarding the brokerage. It reads that Capital Principal has been targeting Spanish traders without proper authorization and that furthermore it is suspected in being involved with scam operations.
Overall, the lack of regulation and the regulatory warning 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.
Trade Principal trading software
Putting all this aside – the brokerage does not give information regarding the trading platform it supposedly provides clients and neither were we able to register for a demo account. Furthermore, when it comes to the trading conditions we are only able to discover that the leverage offered by the broker goes up to 1:400 but nothing more. The spread remains undisclosed which we view as a big disadvantage since it is among the most crucial information in Forex trading.
Trade Principal deposit/withdrawal methods and fees
Going through the terms and conditions of the brokerage we did not discover any troublesome provisions. However, without proper information on the website we cannot be certain whether clients won’t be charged with any unexpected withdrawal or deposit fees once they invest. 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?
Even though the Forex trading world is extremely large and encompasses millions of people around the globe, the most common scamming is pretty simple and straightforward and as such – it’s not particularly daring to avoid. Here is a quick overview of how it is done:
Through clicking an ad with promises for fast money, you will be redirected to a website such as DaxRobot or CryptoContracts 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 angle here is pretty blunt – traders have a limited time period for filing a chargeback with their bank and get their money back. The “recovery department” will simply want to mislead you into missing thе crucial period and, along the way, losing any chance you might have of getting the money back.
It is important here to take notice that both Visa and MasterCard are taking measures to combat unregulated forex brokerages by classifying all forex transactions as high risk. And with the case Traderia – they are correct in doing so. Furthermore, supporting their intention with clear actions – MasterCard has increased the previous time period of six months for filing a chargeback to a year and a half.
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.
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!