Beware! LuxisTrade is an offshore broker! Your investment may be at risk.
RECOMMENDED FOREX BROKERS
Don’t put all your eggs in one basket. Open trading accounts with at least two brokers.
LuxisTrade is an offshore broker that offers trading in forex, indices, stocks and commodities. They have different account types depending on minimum deposit required, bonus percentage and something they call “account protection” measured in percentage – we will try to find out more about that protection, but if it is not guaranteed by some regulatory organization, it may be simply an empty statement.
The registration form asked only for names, email address and phone number. After successfully signing up, there was no confirmation of any kind but the website navigated directly to the trading area. Although we received an email with an activation link in our mailbox, there was no need to click the link at all.
The trading area follows a very simple design, quite deficient concerning design and features, which we often see with scam brokers and suspect it is probably a service provided by an outside company.
LuxisTrade regulation & safety of funds
LuxisTrade is owned and operated by Mitz Holdings Ltd, a company registered in St. Vincent and the Grenadines. SVG is a well-known offshore zone, notorious for scam brokerages, which does not regulated Forex trading. A quick search on the internet revealed that the Commission de Surveillance du Secteur Financier (CSSF), the public institution that supervises the professionals and products of the Luxembourg financial sector has issued a warning against LuxisTrade back in August.
The warning mentions an address in Luxembourg, so we suspect after it was issued the broker changed their address on the website to an SVG one. The other entity, Mitz Holdings, has not been spared too – the Spanish government agency responsible for the financial regulation of the securities markets, Comisión Nacional del Mercado de Valores (CNMV), warns the public that it is not authorised to provide investment services. Although it is in regards to a different website, it is quite common that one company stands behind multiple scam websites.
The broker claims to provide funds security to its clients because they “work with the most respected institutional banks in the world”, but this statement is not substantiated by anything. Austere regulatory agencies, such as the FCA in the UK and CySEC in the EU impose strict rules and guidelines concerning forex trading. Among these are Minimum Capital Requirements (€730 000) in order to prove their good financial standing, Client Account Segregation (clients’ money is kept separate from the broker’s operating funds) and Compensation Schemes providing additional guarantee to clients’ funds up to a certain amount (85,000 GBP in the UK and 20,000 EUR in the EU).
LuxisTrade, however, is not licensed or regulated by any watchdog organization, so we can safely conclude that investing funds with them entails significant risk.
LuxisTrade Trading Software
The broker advertises the MetaTrader 4 (MT4) trading platform on their website. It is available to download as a Desktop and Mobile (iOS and Android) applications, in the trading area. MT4 is considered the leading platform worldwide, preferred by more than 80% of users. It features an intuitive, user-friendly interface, advanced charting and analysis tools, as well as copy- and auto-trading options. It can be further customized to create different trading strategies using its proprietary MQL4 programming language.
The other software, Status Webtrader, is of much poorer quality and design. It is more famous as a platform used by many con artist websites.
LuxisTrade Trading Conditions
With the MT4 demo account we see a 2 pip spread for EURUSD. In the other platform, however, the spread for the same currency pair is 3 pips. It is a common practice of shady brokerages to flaunt fake demo accounts in order to mislead investors about their trading conditions. Respected brokers usually offer a spread of 1 to 1.5 pips for EURUSD.
The leverage that was extended by LuxisTrade is 1:100. Non-regulated brokers enjoy no restrictions on leverage, although we have seen much bigger ratios. High leverage provides huge profit potential, butit also presents great risks to the traders because any losses incurred will be multiplied. That’s why the EU and the US impose leverage caps for retail brokers of 1:30 and 1:50 respectively.
LuxisTrade Deposit/Withdrawal Methods And Fees
At the website we see a number of payment provider logos, including VISA, MasterCard and Wire Transfer. The Terms and Conditions also contain credit / debit cards and bank accounts clauses, misleading investors that such methods would be available for deposit or withdrawal.
The situation in the trading area is quite different, however. The only option in the cashier page is cryptocurrencies. Unlike credit card transactions, where you can file for a chargeback with your financial institution, Bitcoin is a preferred method of scam brokers as it is completely anonymous and untraceable. Also, popular methods, such as PayPal and other preferred by traders e-wallets, eg. Skrill and Neteller, are not supported.
The minimum deposit amount is $250. Although not that high, respected brokers rarely have minimum deposit requirements of more than $50 to $100. With regards to the fees, the broker is quite vague. First we read a statement in broken English that they take 20% commission in advance:
It is not clear what the commission is for or if the 20% is on the profits or the balance of the account. In any way 20% is extremely high, and should immediately raise a red flag with anyone considering investing with LuxisTrade. There are also withdrawals processing and handling fees, which are supposedly described in a “fee schedule.” Of course, there was no such document on the broker’s website.
There is a Dormant Account fee too – traders’ accounts will be subject to a deduction of 10% each month if they have not traded within six (6) months. Respected brokers usually charge a flat fee of no more than $20, if they have such fee at all. Last but not least, LuxisTrade has a non-deposited funds clause relating to bonuses – they may only be withdrawn subject to execution of a minimum trading volume of 30 times the deposit amount plus the bonus issued. This is a standard practice of scam brokerages, since forex regulations in the UK and the EU strictly prohibit any bonuses or incentives.
To conclude, LuxisTrade is an unlicensed and unregulated broker and we would not advise the investing with them.
How does the scam work?
The most common scams are quite simple and straightforward and involve a multi-level scheme that usually goes by the following scenario. Internet users are lured by the numerous ads promising quick and easy fortunes by trading in the Forex world. When they click on such an ad they are redirected to a website tailored to the continuation of these false pledges, which asks them to register with their personal information. This data is then used by the scam brokers who immediately start to work on getting them to make an initial deposit of $200 – $300 by making even greater promises of big profits.
Once the users make their first deposit, the scam brokers get a fat commission on it. Now the senior scammers enter the scene. They are smooth talkers who will not stop at anything to convince traders that they are on their way to become very rich, if only they follow their advice and deposit more money to trade with.
Sooner or later the users will start suspecting something is not right and will want to withdraw their funds. This will not prove very easy, however. The scammer will do everything to delay their requests, by persuading them now is not the right time, asking for additional documents, or referring to specific withdrawal clauses. This is also part of the scam since the con-artists are trying to delay the users from filing for chargeback with their financial institution, and they miss the time frame for such chargeback, traders will lose their money without a chance of getting it back.
What to do if scammed?
If you’re scammed you should immediately file for a chargeback with your credit card provider. Good news is that VISA and MasterCard recently extended the chargeback period to a year and a half in an effort to combat online fraud. If you deposited with bitcoin or bank wire there is not much chance.
If you provided the scammers with any bank account or credit card details, such as security codes or passwords, make sure to cancel the card and talk to your bank. Also, if you are being approached by any “recovery agencies” promising to get your money back for a fee, do not fall for that. This is a piggyback scam, using the vulnerability of recently defrauded people and their hope the fraud may be reversed, and it will not recover your funds. These so-called agents will collect their fee and you will never hear from them again.