Beware! NextCap 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.
NextCap is an offshore broker that offers trading in Forex, Stocks, Commodities, Indices and Bonds. They advertise Standard, Prime and Elite accounts, but it is not very clear what the difference between them is besides their names. There is also a Demo account.
To register for a Live account we had to complete a form asking for our Names, Email address, Phone number, Address and choose an Account type (3 different options here: Standard, VIP and Platinum), Currency (only one option here – US Dollar) and Leverage (from 1:100 to 1:500). The registration was successful and we received an email confirmation with our personal account details in it – not the best practice in terms of privacy and security, as an email communication can be intercepted.
NextCap Regulation and safety of funds
In the footer of the website we read that “NextCap is a registered brand of Glastrox Trade Ltd.” and that the latter is “a licensed Investment Firm regulated by the Marshall Islands Business Corporation Act with authorisation number 91438.” The Marshall Islands is an offshore jurisdiction in the Pacific, which is famous for its asset protection legislation and refusal to collaborate with the Organisation for Economic Co-operation and Development (OECD) on any tax information exchange agreements. It does not regulate forex trading however.
Searching for Glastrox Trade Ltd. We discovered it is the parent company of a number of entities / brands, some of which had warnings issued against by different governmental agencies. On May 22, 2020 Brazil’s Securities and Exchange Commission (CVM) alerted the securities market and the general public about their irregular performance, and a month later Spain’s Comisión Nacional del Mercado de Valores (National Securities Market Commission) stated the company is not authorised to provide the investment services.
This leads us to believe that this is a scam broker that operates under many names targeting different markets. In the case of NextCap, this is most probably Vietnamese investors, as it is the only language the website is translated into.
The broker claims that the safety of their clients’ accounts and funds is their top priority and that “a strict adherence to financial guidelines has been implemented both internally and externally.” We do not find any of the policies that forex brokers practising in the UK or the EU are required to adhere to. The UK’s Financial Conduct Authority (FCA) and the Cyprus Securities and Exchange Commission (CySEC) impose strict rules on their licensees: they have to maintain a minimum capital of €730 000 in order to guarantee their good financial standing, traders’ funds must be kept separate from the broker’s operating funds, and there is Negative Balance Protection policy – traders may not lose more money than their initial investment. Brokers also must participate in Compensation Schemes, which provide additional guarantee to their clients’ funds up to a certain amount (85,000 GBP in the UK and 20,000 EUR in the EU).
NextCap, however, is not a regulated broker, so they are not bound by these rules and policies. What they may claim on their website is not substantiated by any regulatory organization and we warn our readers that their money will not be safe with them.
NextCap Trading Software
The broker offers the MetaTrader 4 (MT4) trading platform as a Desktop, Web and Mobile (iOS and Android) applications on their website. MT4 is the world’s number one platform, preferred by more than 80% of users. It offers an intuitive and user-friendly interface, advanced charting and analysis tools, as well as copy and auto-trade options. It can be further customized to create different trading strategies using its proprietary MQL4 programming language.
Although we always recommend to our readers to select a forex broker that offers either MetaTrader 4 or MetaTrader 5 (MT5), what is essential is the fact that the broker must first and foremost be licensed.
NextCap Trading Conditions
NextCap claims to be a Straight through Processing (STP) broker, which would mean in their words that there is no conflict of interests between them and their clients. In the MT4 screenshot above, however, we see a 2.8 pips spread for EURUSD. Such a wide spread makes the cost of trade very high and it is not to the trader’s advantage, but guarantees good profits for the brokerage.
NextCap advertises leverage of up to 1:500. Such leverage entails significant risks, especially to inexperienced traders. Although it allows for making bigger profits, one may incur great losses too, often much greater than the invested funds. That is why, most regulatory authorities impose leverage caps for non-professional traders: in the USA it is 1:50, while for brokers licensed in the EU and the UK it is 1:30.
NextCap Deposit/Withdrawal Methods And Fees
The FAQ section of the website states that the broker “accepts a wide variety of payment options”, including Credit/ Debit card (Visa, MasterCard) and Wire Transfer. In the client area, however, CC/DC was just an image placeholder – we could not select it as an option, leaving us with a single option, Bank Transfer.
They also claim that the minimum deposit amount to open an account with them is $100/€100/£100, although when opening an account there was only one option – USD. According to the FAQ the broker does not charge any commission or trading fees on traders’ transactions, but there is no way we can be certain of that.
The Inactive and Dormant Account clause in the Terms and Conditions states that if a client has not traded, opened or closed positions, and/or made a deposit into their account for a period of 60 days, the latter will be considered Inactive and will be subject to a monthly charge of $10. Respectable brokers rarely have such a fee, and if they do they start charging it after at least 6 months.
In conclusion, we warn our readers that NextCap is an unregulated, and most probably a scam broker, and investing with them entails significant risk!
How does the scam work?
Users often fall prey of very simple but quite efficient scams. The first snare is usually an internet ad promising big profits over a short period of time, and all you need to do is provide your personal information, usually email address and phone number. If you do that, you will start getting calls from scam brokers who will continue with the pitches of quick and easy profits until you decide to make a first deposit of $200 to $300. On these funds the scammers get a fat commission and transfer you to senior “brokers”.
These expert con-artists are smooth talkers who start talking you into putting even more money in, because “now is the perfect moment” or “the more money you invest, the higher your profits will be”. Usually about this time most traders will start to feel the scam and will want to withdrawal their money and get out fast.
Unfortunately, the scammers will not give in easily. First, they will try to persuade you not to withdraw right now because you will miss on “big profits”, and if that does not work, they will find numerous reasons to deny or delay your request by asking you for additional documents or claiming that there are some other causes for not executing the withdrawal. The ultimate objective in such procrastination is to make the traders miss the crucial period in which a chargeback request can be filed, and thus lose the chance of getting their money back.
What to do if scammed?
If you used a credit card to make a deposit with the scammers you should immediately file for a chargeback. Both VISA and MasterCard have increased the time in which you can file to 540 days, in part specifically to fight such online scams.
If you used bitcoin or some other untraceable source, however, chances of recovering your funds are slim. You might get approached by so-called “recovery agents”, but don’t fall for their tricks. They will ask for payment up-front to recover your money, but this is just another scam and you will not get anything back.