Beware! CapitalEU 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.
At first glance, there is nothing suspicious about CapitalEU interface. It looks professional enough with an abundance of information and reassurance for potential clients that trading with this broker will be a positive experience. However, if you are considering joining this broker, we would like you to make an informed decision by analysing some of the information available on the website.
CapitalEU Regulation and safety of funds
CapitalEU claims to have a registered address in London, UK. In addition to that, it states that clients’ funds are kept separately from broker’s and clients will get full compensation in the unlikely event of bankruptcy.
To verify these claims, we firstly checked its registration as all legit brokers in the UK are regulated by the Financial Conduct Authority (FCA) which keeps a register of licensed brokers. However, from the image below, you can see that CapitalEU does not appear to be in the FCA register. This means that this broker is not licensed and is not legit, therefore, no matter what it claims about the safety of clients’ funds, the truth is that they won’t be safe.
Fortunately, FCA is a strict regulator and it is very hard for scammers to sneak in as there are many conditions that brokers must meet in order to get their license. First of all, they must invest 730,000 EUR initial capital which also serves to prevent scammers from infiltrating the ranks of legit brokers. You can’t imagine a scammer investing this considerable amount of money for the benefit of looking legit. Other measures to guarantee the safety of clients’ funds include keeping them separately from broker’s with tier-1 bank establishments, provide negative balance protection, report transactions on regular basis, keep leverage for forex currencies below 1:30. Also, licensed UK brokers are banned from offering bonuses and other incentives. By participating in the local Financial Services Compensation Scheme and deducting funds towards it, UK brokers have the potential to provide compensation of up to 85,000 GBP per client in case of bankruptcy.
As you can see, the conditions for forex trade in the UK are excellent when the broker is legit and licensed. EU forex brokers are regulated and licensed under similar conditions. The biggest difference between them and their UK counterparts is that EU brokers participate in local investor compensation funds from which clients can be reimbursed up to 20,000 EUR per client if the broker becomes insolvent.
CapitalEU Trading software
We must say that CapitalEU has made an excellent choice in offering one of the best trading platforms which is MetaTrader 4. Despite having been launched 15 years ago, this platform still reigns supreme thanks to the excellent package of trading tools and instruments it offers. They include the auto trading option, VPS, trading signals, code base with customs scripts, an app market, etc. A key feature of this platform that makes it so popular is the charting options that offer many charts, time frames, colours and even the option of creating customised templates. When singing our praises, we can’t omit to mention the array of technical analysis indicators, such as Fibonacci retracement, Bollinger Bands, moving averages, etc., that help traders predict the future direction of exchange rates and make a profit.
The image below shows what MetaTrader 4 looks like. On the left-hand side is the menu of trading products given with their bid/ask price ad beneath is the navigator for accounts, indicators, expert advisors and scripts. In the middle of the screen are displayed the charts of trading products with the fluctuation in price in a given time frame. The number of charts may vary as per the trader’s needs. In this instance, you see displayed 4 charts of 4 currency pairs. If we look at the top-left chart, we see that it shows the EUR/USD currency pair. From the bid/ask price we can calculate that the spread is 1.2 pips. This spread is tight and below the industry average of 1.5 pips which means that the cost of transactions won’t be too high and traders will be able to achieve sustainable profit.
The last image in this review which contains the information about the trading accounts gives us also the parameters for the leverage. The lowest leverage is 1:10 and the highest is 1:40. Although the leverage of 1:40 is not too high and won’t present a high risk for clients’ funds in case of unsuccessful transactions, it is another sign that CapitalEU is not legit. In the EU and the UK, there are limitations on leverage and it cannot exceed 1:30 for forex currencies. That fact that CapitalEU offers leverage that is higher than the capped one shows that this broker is not legit.
CapitalEU Deposit/Withdrawal methods and fees
The image below shows that CapitalEU offers 5 trading accounts – Basic, Silver, Gold, VIP and Diamond. The minimum initial deposit for the Basic account is $250. Although it is not too high, we must mention that some legit brokers will ask for as little as $1-5.
The payment methods that are provided for deposit and withdrawals are Sepa, Bitcoin and credit card.
There is no information on the website about what the minimum withdrawal amount is, only that it may take up to 3 business days for a withdrawal request to be processed.
Similarly to other unlicensed brokers, this one too offers bonuses which range between 50% and 150% depending on the trading account. As we mentioned above, licensed brokers in the EU and the UK are banned from offering bonuses or other incentives. The reason why bonuses should be considered with great caution is that the brokers to whom the funds belong usually sets some hard to fulfil conditions attached to them. In this case, to be eligible to submit any withdrawal request, the trader who has accepted the bonus must trade 3.3 lots in real money for each $10 of the granted bonus. Imagine what mess this will create with trader’s funds and withdrawal options. Our advice is to stay well away from brokers offering bonuses because, firstly, they are mostly non-legit and secondly, the bonus conditions are hard or impossible to fulfil.
How does scam work?
A lot of people get scammed every day, not because they are naive or stupid, but because scammers are inventive and they are masters of manipulation. Often, as you scroll up and down on the Internet or social media, you come across ads for a quick and easy profit which sometimes sound too tempting not to fall into their traps. So you deposit some money into the account and what happens next is the incessant calls of the scammers. First, they congratulate you for taking the first steps towards becoming rich and next, they try to convince you to invest even more money into their ‘profitable’ business. What you probably don’t know is that your money has just gone as a commission to some scammers. And so, you wait and build the sandcastles of your dreams for a better and ‘richer’ future. And you wait, and you wait, for the money to come. But where is it? Now is your turn to call the scammers and to ask what’s going on. They try to placate you and ask you to be more patient. But have had enough and all you want is to get your money back. The scammers kind of promise, but now they are asking you to provide this document or fill out that form, etc., etc., all done in an attempt to delay you from filing for a chargeback.
What to do if scammed?
If this happens to you, our advice is to act immediately and if you have paid your deposit via credit/debit card, to file for chargeback which is retroactive cancellation and refund of your previous transaction. Visa and MasterCard give you 540 days time limit to file for chargeback which gives you a fighting chance to recover your money.
However, if you have used bitcoin or bank wire for your payment, the chances of you recovering your money are really slim.
Whatever you do to recover your funds, beware of the so-called recovery agents. Please make sure that you are dealing with a genuine one by checking their credentials and company’s information transparency. Otherwise, you may fall victim to another form of scam.
Cancelling your credit/debit card in case you have given the scammers your CVV code may be another good idea. Also, make sure to remove from your PC any software that my give scammers access to your private data stored on your computer.