Beware! 500pips 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, the interface of 500pips looks like any run of the mill forex broker with all the suitable graphic design appropriate to online trading. However, instead of judging a book by its cover, we prefer to check out some main points which will tell us whether it is beneficial to trade with this broker or not.
500pips Regulation and safety of funds
500pips is owned and operated by Pepper Group LLC. The whereabouts of the company are unknown. The only indication of a geographic location is on the Contact Us and it is in Luxembourg. We checked the register of the Commission de Surveillance du Secteur Financier (CSSF) which is the official body that regulates forex brokers in this jurisdiction but the name of the company did not appear to be in it. This is an indication that 500pips is a non-registered and non-licensed broker, therefore should be considered as scammer and we do not advise potential traders to engage in any trading activities with it.
As Luxembourg is a member of the EU, Luxembourg brokers must abide by the regulations imposed by ESMA which means that they should maintain a minimum of 730,000 EUR operational capital, provide negative balance protection, keep clients’ funds segregated from their own, offer leverage not higher than 1:30 for forex currencies, report transactions on a regular basis for the sake of transparency, allow external audits, etc. In addition to that Luxembourg brokers must participate and deduct funds towards the local investor compensation fund which in case of bankruptcy will repay clients with up to 20,000 EUR per person.
500pips Trading software
500pips trades in forex, commodities, indices and stocks and the trading software offered to the traders consist of a web trader which as you can see from the image below is a rather cheap and simplistic platform with limited functionalities. On the left-hand side, you can see the trading products menu with their bid/ask price. In the middle is displayed the chart of a chosen trading product which in this case shows the EUR/USD currency pair with the fluctuation in its price in a given time frame. From the bid/ask price, we can find out that the spread is 4 pips which is rather wide and above the industry average of 1.5 pips. This means that the cost of transactions will be too high and traders won’t be able to make a sustainable profit. On the other hand, the broker who derives revenue from the spread will get richer at its clients’ expense.
From the data available on the web trader, we also found out that the leverage is 1:200. This is another proof that this broker is fraudulent because the maximum leverage EU brokers can offer is 1:300. High leverage may look attractive as it seems to be increasing the potential for making a big win. However, the reality is usually quite different given the fact that 70% of traders lose in transactions. The implications are that traders may suffer a significant financial loss amplified by the high leverage.
Before we move on, let us tell you that there are trading platform far more superior to a web trader and better equipped to enhance clients’ trading experience. We are talking about the two top-notch trading platforms, namely the MetaTrader 4 and MetaTrader 5 trading platforms. Thanks to the excellent package of trading tools and instruments that they offer to the traders, these platforms are choice number one for around 80% of the brokers. Among the many advantages of MT4 and MT5, we can mention the auto trading option, VPS, trading signals, code base with customs scripts, the app market, the financial calendar, etc. Some of the main key features for these platforms are the charting options that offer a variety of charts, time frames, colours and even the option of creating customised templates, as well as the technical analysis indicators which help traders predict the future direction of exchange rates and make a profit.
500pips Deposit/Withdrawal methods and fees
500pips offers 5 trading accounts to its clients – Basic, Bronze, Gold, Platinum and Black. The minimum initial deposit for the Basic account is $250. The other accounts start at $1,000, $2,500, $10,000 and $25,000 respectively.
The minimum withdrawal amount for a bank wire is $100 and for all other withdrawal methods – $50. It is interesting to know that clients who have opened a Gold or Black account do not have to pay withdrawal fees for their first withdrawal, otherwise, the withdrawal fee is 3.5%. The maximum fee for a single withdrawal is capped at $3,500 which we consider to be a substantial amount of money.
If a trading account stays inactive over a calendar quarter, then an inactivity fee of 30 EUR/USD/GBP or 1% of the deposit amount will be charged.
If you make the effort to look at the trading accounts section on 500pips website, you will notice that for each account this broker offers a welcome bonus. The percentage of the bonus is proportioned to the amount of the deposit – the bigger the deposit, the higher the bonus. For example, for the Basic account the welcome bonus is 20% whereas for the Platinum account, it is 100%. You should be aware that bonuses are not free gifts and they are funds that belong to the broker, not the trader. Bonuses are usually accompanied by some hard to fulfil requirements. In this case, to be able to withdraw the bonus amount, the client must execute a minimum trading volume equal to 40 times the sum of the bonus and the deposit. This is not something easily achievable even for experienced brokers. On the other hand, if you choose to accept a bonus and are not able to meet the conditions, it will create a big mess for your funds and withdrawal options, so we ask you to exercise utmost caution. Also, you should be aware that legit EU brokers are banned from offering bonuses or any other incentives.
How does scam work?
A lot of people get scammed in different scammers’ schemes not because they are naive but because scammers are masters of persuasion and manipulation. It all starts with unsolicited telephone calls or a flashy ad on the Internet or social media. Sometimes people give up to temptation and invest money in shady schemes made to look legit and attractive and always promising quick and easy money fall. Once you deposit money into any of these schemes, you reach a point of no return! Your money is gone down the scammers’ food chain and you’ll have a lot of trouble recovering it. Scammers will do anything in their power to delay you, so you miss the opportunity to file for a chargeback. They will ask you for this and that document and will find hundreds of reasons not to let you retrieve your money. The trick with offering bonuses in forex trading is one of those as your funds are mixed with the bonus money and it takes a lot of hassle to fulfil the broker’s requirements before you are able to withdraw any funds.
What to do if scammed?
Speed does it! You need to act very quickly if you want to recover your money. Immediately apply for a chargeback if you have made your deposit via credit card. Fortunately, VISA and MasterCard give you 540 days within which to apply for a chargeback.
If you have paid via wire transfer or Bitcoin, chances of retrieving your fund are grim. Anyway, we want to warn you that some of the so-called recovery agents may approach you and offer to retrieve your funds. For a fee, of course! Be cautious when dealing with them as it may be another form of scam! Always check if the recovery agency is legitimate and visible to the public!
Another thing we advise you to do is to immediately cancel any credit cards if the scammers have your CVV code. Also, make sure to erase any programs on your computer that give scammers access to your personal data on your PC.