Beware! Extmarkets 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.
Extmarkets lists 6 reasons why you should trade with them and obviously is trying to entice potential clients into joining in by claiming that it is being regulated in many jurisdictions. But is this trying to pull the wool over our eyes? How otherwise to explain the fact that the website looks just like a carbon copy of another shady broker? We look at the facts.
Extmarkets Regulation and safety of funds
The company that owns and operates Extmarkets website is EM Ltd. which claims to be regulated by the UK Financial Services Authority and even provides a license number on its website. Well, we are not trying to nitpick here, but the official regulator for forex brokers in the UK is called the Financial Conduct Authority (FCA). We checked its register to see if the name or the registration number of the company exist in it. They don’t!
To be thorough, we also tried to verify the claim that the company is registered in the US. So, we checked the register of the National Futures Association (NFA) which is a self-regulatory organisation for forex trade in the US. Again, our search came back blank.
This is sufficient proof that this broker is non-registered and non-licensed, therefore engaging in any trading activities with it won’t be safe for your precious money.
Luckily, UK and US brokers are among the most rigidly regulated in the forex trade and a simple search in the register of their regulatory body can easily verify their legitimacy. Both, in the UK and the US, all necessary precautions are set in place to ensure that clients’ funds are protected and scammers are kept at bay. First of all, forex brokers in these two jurisdictions must be well-capitalised. The operational capital that US brokers must maintain is the staggering amount of $20 million. This is really necessary as in the US there are no compensation funds or schemes to reimburse the clients in case the broker goes bankrupt. However, by being well-capitalised, US brokers still have the means to protect their clients in case of unfavourable events.
On the other hand, UK brokers are required to invest only 730,000 EUR in the form of an initial capital. However, they must also participate in the local Financial Services Compensation Scheme from which in case of insolvency, clients can be repaid up to 85,000 GBP per person.
There are also other measures aiming at protecting clients funds. For example, brokers must keep their clients’ funds segregated from their own with tier-1 bank establishments, provide negative balance protection, report transactions on a regular basis for the sake of transparency, allow external audits and keep a cap on leverage which in the UK cannot exceed 1:30 for forex currencies, and in the US, the cap for forex currencies is set at 1:50.
Extmarkets Trading software
Extmarkets trades in forex, metals, indices, energies and cryptocurrencies. The trading software offered to the clients is the MetaTrader 5 trading platform. This is an excellent choice of a trading software, however, to register an account, clients must provide personal information which made us reluctant to open an account with this dodgy broker.
We can still find out the parameters set up by the broker regarding spread and leverage which are crucial data in showing how beneficial it is to trade with Extmarkets. From the image below, you can see from the bid/ask price for the EUR/USD currency pair that the spread is 5.5 pips. This spread is extremely wide and way above the industry average of 1.5 pips. The implications for the traders are that the cost of transactions will be too high and they 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’ expenses. As you can see, this is another reason why we don’t recommend trading with Extmarkets.
From Extmarkets website, we found out that the leverage for the same pair is 1:30. Such leverage is not too high and is in accordance with ESMA guidelines. Low leverage means that clients’ funds won’t be exposed to too much risk of suffering great financial loss in case of unsuccessful transactions.
As we mentioned already, the MetaTrader 5 trading platform is an excellent choice of trading software as it is equipped with excellent trading tools and instruments to facilitate the trade and help clients make a profit. The platform comes with an algo trading option, VPS, code base with customs scripts, trading signals, an app market, a financial calendar, etc. In 2016, when the hedging option was added to MT5, it made it even more popular with brokers and clients alike.
However, as we always say, a platform is as good as its broker is reliable and as we could already see, this is not the case with the non-registered and non-licensed Extmarkets.
Extmarkets Deposit/Withdrawal methods and fees
Extmarkets offers 5 trading accounts – Starter, Platinum, Bronze, Gold and Diamond. The minimum initial deposit for the Starter account is $500. This amount looks high compared to what legit brokers would ask for, i.e., $1-5. The other accounts start at $1,000, $5,000, $10,000 and $25,000 respectively.
There is no information what the minimum withdrawal amount is. However, we find out that there are no withdrawal fees and that it takes up to 1 business day for the withdrawal request to be processed.
If you peruse the account types information provided on the company’s website, you will see that for every account there is a daily profit which increases proportionately to the amount of the deposit. For example, the daily profit for the Starter account is 4% and for the Diamond account is 40%. This is a scammer scheme par excellence as it looks lucrative and unrealistic at the same time. This is a mousetrap for unsuspecting potential clients and we hope you won’t fall into it.
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.