ByAlpha review – 5 things you should know about byalpha.org

Beware! ByAlpha is an offshore broker! Your investment may be at risk.

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Don’t put all your eggs in one basket. Open trading accounts with at least two brokers.

ByAlpha wants us to believe that it is an international online broker through which we can invest in the financial markets with peace of mind. But fact checking shows that it is not a licensed and established provider of financial services. Let’s take a detailed look at why it is in your best interest to stay away from ByAlpha and how you could find a credible broker through which to start trading forex and other financial instruments.

ByAlpha Regulation and safety of funds

The most important information about a financial services provider is its regulatory status. Licensed brokers provide detailed information about which company runs them, where it is based, which jurisdictions it is authorised in and which regulatory bodies oversee its activities.

According to the homepage of the website, behind this broker is a company named Compic Solutions LTD, which is based in the offshore zone of Saint Lucia.

But a check of the local Financial Services Regulatory Authority records shows that there is no registered company with that name. Even if the owner of ByAlpha  is based in this island country, this does not provide any regulatory guarantees and does not entitle the broker to offer services in international markets.

The Spanish financial regulator, the CNMV, has published a warning to investors that ByAlpha is not an authorised broker.

In addition to the above, the links to the Terms and Conditions and other legal documents on the ByAlpha website are empty. This means that you do not know what terms you are agreeing to when you register for an account.

If you have decided to invest in financial instruments, and especially if you are a novice trader, you should use the services of a licensed broker based in a jurisdiction with strong regulations.

Depending on your location, it is advisable to choose a company that is regulated by an institution such as Commodity Futures Trading Commission (CFTC) in the US, Australian Securities and Investments Commission (ASIC), UK’s Financial Conduct Authority (FCA) or some EU regulator like Cyprus Securities and Exchange Commission (CySEC).

Clients of these brokers receive protections such as negative balance protection and segregation of the client’s funds from the broker’s funds.  In the EU and the UK, brokers must also participate in guarantee schemes that cover a certain amount of the trader’s investment if the broker becomes insolvent. These guarantees amount to up to 20 000 EUR in the EU and 85 000 GBP in the UK. However, the likelihood of such a bankruptcy is low because regulators also have significant net capital requirements that companies must maintain – EUR 730 000 in UK and Cyprus, AUD 1000 000 in Australia and at least 20 million USD in the United States.

ByAlpha Trading software

ByAlpha implements web-based trading software. While this platform has the basic functionality to place orders, it cannot compare to the capabilities provided by MetaTrader 4 (MT4) and MetaTrader 5 (MT5). It is no coincidence that these platforms have established themselves as the industry standard. They offer a wide range of features, including a variety of options for customization, multiple account usage, designing and implementing custom scripts for automated trading and backtesting trade strategies.

It should be noted that the presence of some kind of trading software is no guarantee that this is a genuine broker. Financial scammers often use rigged trading platforms to fool their victims that their money is actually being invested. However, this trading is entirely fictitious and the money goes directly into the scammers’ pockets.

ByAlpha Trading instruments

In the trading software we see multiple financial instruments including currency pairs, commodities, stocks, indices and cryptocurrencies. But we have no good reason to believe that the trading offered by this unregulated website is real.

ByAlpha Spreads and cost of trading

ByAlpha promises a spread of 1.5 pips and indeed that is the level we see in the trading platform. This is within the industry standard, but many licensed and reputable brokers offer more favourable terms.

ByAlpha Maximum leverage

The maximum leverage for different ByAlpha trading accounts varies between 1:200 and 1:500.  Regulated brokers do not offer such levels to retail traders as trading with high leverage carries risks of sudden and excessive losses. Higher levels of leverage are only offered to professional clients who trade entirely at their own risk.

If you don’t qualify as a professional trader but are willing to take the risk of high-leverage trading, the most viable option is to use the services of an offshore affiliate of an established brand.

ByAlpha Deposit and withdrawal methods

ByAlpha claims to facilitate deposits and withdrawals via credit cards, cryptocurrencies and wire transfers. But on the deposit menu, the only option is a wire transfer to a UK bank account.

Legitimate brokers typically offer clients a wide choice of transparent payment methods, including established e-wallets such as PayPal, Skrill or Neteller.

ByAlpha Minimum deposit

ByAlpha specifies a minimum deposit of 250 USD, which is the industry standard. But this means that for the same amount you could open a trading account with an established and duly licensed forex broker. Some of the leading brands in the industry offer Micro and Cent accounts with a very low entry threshold that are suitable for novice investors.

ByAlpha Withdrawal requirements

The lack of a publicly available Terms and Conditions or Client Agreement means that scammers may have set many traps such as hidden fees and impossible-to-meet withdrawal terms.

ByAlpha is advertising bonuses, which is another red flag. Regulated brokers are prohibited from offering bonuses and promotions. Scammers often use promises of supposedly generous bonuses to tie their potential victims to extortionate terms.