Beware! GarnetTrade 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.
Garnettrade is one of the many fraudulent forex brokers trying to entice potential traders with the empty promise that their funds will be safe and covered by an insurance policy. However, joining this broker will be a huge mistake. Here are the facts.
GarnetTrade Regulation and safety of funds
This broker claims to be registered and regulated in many jurisdictions among which are Australia, St. Vincent and the Grenadines and as per the email for verifying the registration of the trading account, Canada.
First of all, let us tell you that St. Vincent and the Grenadines (SVG) is an offshore zone for forex trade and there is no official body that regulates forex brokers in this jurisdiction. Therefore claiming such registration is a lie!
The claim that the company is registered with the Australian Securities and Investments Commission (ASIC), the official body that regulates forex brokers is also a lie. The registration number provided on GarnetTrade for registration with ASIC is for a totally different and unrelated company.
Although in the email sent to us for the account verification the address of the company appears to be in Toronto, Canada, after checking the register of the Investment Industry Regulatory Organization of Canada (IIROC), the official body that regulates forex brokers in Canada, the name of GarnetTrade did not appear in it. So, another lie from this broker about its registration.
We hope that it is plenty understandable why trading with this broker is risky and advise you to stay as far away from it as possible. After all, there are so many legit and reliable brokers to trade with from some of the well-established jurisdictions around the world that provide strict regulatory guidelines for brokers. For example, in the EU and the UK exist the best conditions for traders because, in order to get their license, forex brokers must invest no less than 730,000 EUR initial capital which among other things serves as protection against scammers who will never invest so much money just to look legit. The other conditions include keeping clients’ funds segregated from the broker’s, provide protection against negative balance and report transactions on a regular basis for the sake of transparency. One of the biggest perks in trading with regulated EU and UK brokers is that they must participate in a local compensation fund or scheme which provides means to reimburse the clients of a broker gone bankrupt. If the broker is regulated by FCA in the UK and participates in the local Financial Services Compensation Scheme, then its clients will be repaid up to 85,000 GBP per person in case of bankruptcy. In the EU, if the broker deducts funds towards a local investor compensation fund, then its clients will be reimbursed up to 20,000 EUR per client.
In the US and Australia, regulated brokers must abide by similar regulation. The major difference between them and their counterparts in the EU and the UK is that there are no compensation funds or schemes. However, by being well-capitalised, brokers in the US and Australia will still be able to protect their clients from unfavourable events given the fact that they must maintain $20 million and 1 million AUD respectively working capital.
GarnetTrade Trading software
GarnetTrade trades in forex, stocks, indices, cryptocurrencies and commodities. The trading software that is offered to the clients is the MetaTrader 5 trading platform which is considered to be one of the best in forex trade. The platform offers many advantages to its traders, including an auto trading option, code base with customs scripts, an app market, a financial calendar, trading signals, VPS, as well as many charting options and technical analysis indicators that help traders predict the future direction of exchange rates and make a profit. In 2016, the hedging option was added to the platform’s features and it made it even more popular with brokers and traders alike.
However, a trading platform is as good as its broker is reliable. In the case of GarnetTrade, we did not open a live account which requires funds to be deposited. Instead, we opened a demo account which also gives a good idea about what the platform looks like (image below). The main functions of the platform are arranged around the chart(s) displayed in the middle of the screen which shows a trading product with the fluctuation in its price in a given time frame. Here, you see the chart of the EUR/USD currency pair. The number of charts can vary according to the trader’s needs. On the left of the chart are shown the trading products with their bid/ask price and beneath is the navigator for the accounts, indicators, expert advisors, scripts and services. In the top horizontal bar are the charting options, the algo trading and the option for placing orders. The bottom horizontal bar is for navigating the trading signals, VPS, the app market, the financial calendar, etc.
The value of the spread is provided on the company website under different trading products. If you look at the section for forex trade, you will see that the lowest spread for the EUR/USD currency pair is 0.4 pips and the highest spread is 1.1 pips. This spread is below the industry average and is beneficial to traders as the cost of transactions will be low.
What worries us, however, is the fact that the leverage is very high – 1:300 as shown in the account types information (last image). High leverage may lead to a substantial financial loss in unsuccessful transactions and this is why regulated brokers in the EU and the UK have leverage that is capped at 1:30 and in the US, is capped at 1:50. Only in Australia, the leverage will reign unlimited until March 2021 when changes in the regulations will align it to mirror the leverage in the EU and the UK.
GarnetTrade Deposit/Withdrawal methods and fees
From the image below it is visible that the trading accounts offered by GarnetTrade are 4 – Standard, Prime and ECN. The minimum initial deposit for the Standard account is $100. For the Prime account, it is $5,000 and for the ECN, it is $20,000.
There is no information available on this broker’s website regarding the minimum withdrawal amount. The broker states that there are fees on deposit and withdrawal, international remittance, etc., and that they can be found in the Product Schedule. However, such Product Schedule is not available on the website.
The fact that such important information is missing does not inspire confidence in this broker and is another reason why you should not trade with it.
How does scam work?
No one wants to be duped by scammers, but it happens all the time because they know how to manipulate people. As they say in one popular song “sweet dreams are made of this” and this is what scammers rely on – creating in people’s mind a sweet dream of being rich! Scams usually start by unsolicited telephone calls or ads on the Internet or social media promising quick and easy profit. It is easy to fall into scammers’ trap and once you make a deposit, you are done for! Scammers won’t let you get away easily even if you realise that you are being scammed. They will try to delay you when you try to withdraw your funds by asking you to provide this document or fill out this form, etc., in order to make you miss the deadline when you can file for a chargeback.
What to do if scammed?
You need to act very quickly. First of all, if you have made a deposit using a credit card, you must immediately file for a chargeback. Fortunately, VISA and MasterCard allow for 540 day period in which you can file for a chargeback. This is the good news. The bad news is that if you have made a deposit using bank wire or Bitcoin, the chances of you getting your funds back are nil!
Another thing you can do is cancel your credit card if the scammers have your CVV code. Check your PC and erase the software that gives scammers access to your personal data.
Be careful, because even doing all that we recommended, your unfortunate experience with scammers may not be over. There are so-called recovery agents. One of those may approach you offering to recover your funds for a fee. Do not trust them and always check the legitimacy of the recovery agent and the agency.
Also, be aware that some “victims” of scam may post comments after the review, saying how they lost money and how a recovery agent helped them retrieve their funds. They will even put the contact info for this so-called recovery agent. Do not trust them either as it is another case of scam!
