Ready to start trading in the financial markets? Given how easy it has become for anyone to get started, it is not surprising that online trading has become popular. People can trade from the comfort of their home with minimal investment and even without experience. However, just because you are eager to begin shouldn’t mean that you forget to be cautious. Signing up with the first broker you find is a common mistake, one you should learn to avoid. For instance, checking Lloyds-Capital review can save you from a lot of hassle. This is primarily because not all brokers in the market are legitimate.
You can easily find stories of scam brokers that are primarily established for the purpose of stealing money, or confidential data that can be misused. It is a given that you don’t want to have a poor trading experience that results in losses and discourages you. In order to ensure it doesn’t happen, you should avoid falling into any broker’s trap. Lloyds-Capital is an excellent example because this broker has adopted the name of a renowned industry leader to confuse and mislead people i.e. Lloyds Bank, which is actually a top collection of insurance brokers.
The reality is that Lloyds-Capital has absolutely nothing to do with them. Apart from that, their overall features and offerings may appear genuine on the surface, but things start falling open when you look closer. Some of the problems you will come across are highlighted below:
False claim of regulation
The first problem that you should immediately be able to identify in the case of Lloyds-Capital is regarding their regulation. Any legitimate brokerage would make the effort of becoming regulated, not only for attracting traders, but also because it is required by law. Every jurisdiction has their respective regulator that authorizes and licenses brokers to provide trading services in the region. In this case, Lloyds-Capital states that it is based in Hungary and is regulated by the Global Financial Authority (GFA).
However, the reality is that no such regulatory body exists anywhere, much less in Hungary. It is just an organization that scam brokers have come up with in order to appear legal, which they are not. Lloyds-Capital is certainly not the only scam broker to claim being licensed by the GFA, so it is not a new trick. Secondly, Hungary is actually an EU state, which means it has to comply with pan-European regulations. Here again, you will find that Lloyds-Capital breaks two different policies, one relating to leverage and the other relating to bonuses. Thus, it is clear that it is an unlicensed company that’s only misleading its clients.
Problems with Terms & Conditions
If it wasn’t enough that Lloyds-Capital is an unlicensed brokerage, you will find that there are other problems associated with it. A quick check of their Terms & Conditions will reveal these problems to you. They have a bonus policy, which they don’t disclose outright, probably because it comes with turnover requirements to be met. If you fail to meet these requirements, they will probably prevent you from withdrawing your money. This is an old tactic used by scam brokers and this had pushed EU regulators to ban brokerages from offering bonuses because it resulted in consumer exploitation. The fact that Lloyds-Capital is still offering them should be a warning.
Apart from bonuses, you will also discover that Lloyds-Capital also imposes a fee on inactive accounts and it is extremely high. They deduct 10% of the available balance on a monthly basis after 90 days of inactivity and this is not something any legitimate broker would charge. Sure, they do have inactivity fee, but it is never so high.
Extremely high leverage
Most people will consider this an advantage because high leverage will allow you to make bigger trades, even if you don’t have enough capital. While it is true, you shouldn’t forget that it also increases the risk. If things do go as predicted, you could end up with massive losses. It was because of this issue that EU regulators had imposed a limit on the amount of leverage that brokers can offer to their clients. Lloyds-Capital is offering its clients with leverage of 1:500, which is significantly higher than what is permitted and this is another indication that it is not a regulated firm.
No mention of minimum deposit
Another issue that you will encounter with Lloyds-Capital is that they have not made any mention of the minimum amount you will be required to deposit with them for opening an account. This is also shady because brokerages are usually upfront about it and this can help you decide if you are willing to start with the said amount or not. Here, you haven’t been given any details and this should put you on guard.
No information about payment methods
In order to start trading, you would obviously have to make a deposit with a brokerage and later also make withdrawals. This means brokers have to offer you payment methods that you can use for this purpose. The safest options are usually credit cards that enable you to file for a chargeback in case the broker turns out to be a scam. The problem with Lloyds-Capital is that they haven’t mentioned what payment methods they support. They may not give you the option of using cards and this is a problem because it means you will be taking a risk with your money. Moreover, a lot of scam brokers are now offering only cryptocurrencies for deposits and withdrawals, which is handy for them because they are difficult to trace and get back.
The opportunity of using high leverage, plus the fact that you will be able to trade via the MT4 trading platform, which Lloyd-Capital offers, are not enough for you to take the risk. This broker is a fraudulent one because they are making false claims about their regulation and have not provided any such information about their services, which means they are not transparent at all.