A reader asks: In November, I started trading for the first time via an offshore CFD broker after seeing an advert. I deposited $250 initially and ultimately was persuaded to partwith various amounts until i had deposited $10,000.
I done very well and on Monday had a balance of 170,000 but then lost it all in space of 4 hours…. my fault.
Now the account manager has offered to help get me a return but not with me trading…. he says trading isnt for me (i agree) and now he wants me to make an another deposit and trades on my behalf via a (fen account I think he called it which would be linked to his own trading account ?
Should I do this ?
I am already traumatised.
I would need to borrow further credit and I am working on sorting out a debt recovery plan.
He says this new suggestion would gaurantee me a return in 2 months.
The short answer is no, you should not do this. The CFD broker you are using, is not regulated in the UK and even though they state on their website that they are “authorized and regulated by the St. Vincent and the Grenadines Financial Services Authority”, this is not the case. A search of the St. Vincent & The Grenadines Company Name Search tool does not show any results for their name.
You stated that you made profits, but it is highly likely that this is a scam designed to extract more money from victims. This particular sort of CFD trading scam works by producing fake trades that suggest you are making profits, but when you try and withdraw funds you will be unable.
You asked if you should allow your account executive to trade on your behalf, and that he has guaranteed returns in two months.
This is again sounds like a lie, it is also quite common for these scammers to use the promise of future gains to try and encourage you to deposit more funds.
There is absolutely no way to guarantee any investment returns, especially when trading CFDs. CFDs are a high-risk investment product and really only suitable for experienced investors or those with a very high risk appetite. In the UK, CFD trading is highly regulated, and CFD trading platforms are required to state what percentage of their customers lose money. We keep track of which brokers have profitable CFD clients here and as you will be able to see, the majority lose money.
I have also covered in the past whether you should use an advisory CFD broker as a retail customer, and the answer is an unequivocal no. CFD brokers are not allowed to provide advice or trading ideas to retail customers. They can provide market analysis and online trading signals, but only professionally qualified customers who can answer yes to two of these three questions are allowed to be given personal advice from dealers.
- Has your trading averaged 10 significantly sized leverage transactions per quarter over the last 4 quarters?
- Do you have a financial instrument portfolio, including cash deposits, exceeding €500,000?
- Have you worked in the financial sector in a professional position, requiring knowledge of derivatives trading, for at least a year?
You also mentioned that you may borrow money to trade. You should absolutely not do this. Trading is high risk and, you should not trade with money you cannot afford to lose.
The FCA has recently launched a campaign, trying to raise awareness of financial scams. You can use the FCA Firm Checker, to check whether a firm is regulated to provide financial services in the UK. However, because the broker is not regulated by the FCA it is unlikely they will be able to help recover any of your lost funds.
My suggestion would be that you report this as a financial scam, and cease all communication with them.
To avoid CFD scams you should:
- Always check to see if a CFD trading platform is regualted by the FCA
- If you are going to trade CFDs in the UK, you should use an FCA-regulated CFD broker, as regulation ensures that customers are treated fairly and your funds are protected by the FSCS. Plus, there are official procedures for filing complaints, which if not resolved by the company, can be filed with the Financial Ombudsman Service.
- Never trust anyone offering returns that sound to good to be true.
- Always read reviews of providers before using them. But make sure those sources are reliable.
- And finally, check, check and check again.
Scams are rife, and even the FCA register has been cloned. So check the domain name carefully, check that emails are legitimate, avoid whatsapp groups and telegram chanels.
A final thing to be mindful of is fake loss recovery firms, this is a common scam perpetuated after a scam such as the one you described. You may be contacted by a firm offering to help you recover your losses. They will try and charge you an upfront fee for this, or even say they have recovered your losses, but you need to pay them first before they can release the funds to you. Which they will not.
If you are going to try and recover your losses, double check that you are not being scammed again.
You can read our guide on recovery room scams here.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
To contact Richard, please see his Invesdaq profile.
