While recently visiting Reddit (Yes, we here at DrinkForex are active Redditors) someone posed the question about the credibility of Forex review websites. We engaged in the conversation, but felt we should also do a blog post on this topic so that everyone who visits our site can be well informed.
Forex review websites have been industry standard dating back to the beginning. Popular ones such Forex Peace Army, ForexReviews, and Myfxbook, have dedicated sections of their website to providing information about brokers and allowing others to chime in about their experience with brokers.
In the beginning people really did not question the credibility of these reviews, but overtime as rumors spread about possible false reviews and corruption behind the scenes people gradually begin to question the legitimacy of these websites. So, this week DrinkForex is going to address some of the items to consider when reading reviews on websites such as Forex Peace Army.
1. How do these website make money?
Websites such as Forex Peace Army make money through Advertisements, Affiliate deals, and Introducing Broker partnerships. This automatically places an inherent conflict of interest as those deals are done with the exact companies who are being reviewed on their website. Their slogan is "Unbiased Forex Broker Experts", but how can this be the case if they are being funded by the brokers? The obvious answer is they cannot be unbiased.
Hypothetically speaking, imagine you are a broker spending $5000 a month to advertise on Forex Peace Army and you came across a lot of negative reviews of your company. Obviously, you would not like this very much and you would call Forex Peace Army to complain, because what are you spending the $5000 for if not to promote your brand in a positive light. As a result you threaten to pull your advertising dollars. But, Forex Peace Army does not want to lose $5000 a month so they advise you of a few possible solutions. They will begin posting "fake" positive reviews of your company to help hide the negative ones and give your company a higher rating. Also, they will stop publishing the negative reviews until you have enough positive reviews to outweigh the negative ones. Lastly, if all else fails, they will simply begin deleting negative reviews from your review section. After you hear this solution, and it is implemented you as the broker continue to pay the $5000 and advertise on their site, because you are now receiving the positive reviews you signed up for.
Well, if that doesn't sound very unbiased it is because it is not. Review websites are directly tied with brokers, and as the old saying goes, "Don't bite the hand that feeds you."
2. Introducing Brokers and Affiliates
There are literally tens of thousands of Forex introducing brokers and affiliates in this industry that earn their living from introducing clients to brokers. It is in these individuals and companies best interest for the brokers they work with to have positive reviews. During the sales cycle many of these companies will advise their clients to take a look at popular review websites to receive an "unbiased opinion" of the brokers popularity. "Don't take our word for it, do research on the broker", they say. Well obviously they are not going to suggest this if the broker has negative reviews about them on the internet. So, what do they do? They post positive reviews about the brokers across all the popular Forex review sites. They also instruct all of their employees and other to post positive reviews. This will ensure that the potential clients only sees positive things about the broker, which will help lock in the client.
3. How do brokers use review websites?
Over the past several years there has been an increase in brokers using Forex review websites in their marketing. They publish their Forex Peace Army rating in their email footer and on their website. They highly encourage their clients to go leave positive reviews. Some even go as far as providing bonuses if clients post a positive review. Let's say you are a new trader to a particular broker, and that broker offers you $50 no strings attached to post a positive review, would you do it? Of course you would, you would go write a great review about that broker! But, can that review be trusted by others? Absolutely not, you did not write that review out of the goodness of your heart, you wrote that review because they gave you $50 free for writing only positive things about the broker.
These are three possible scenarios that can cause one to not trust Forex review sites. There are more out there, but these should give all readers something to stop and think about.
In full disclosure, we at DrinkForex do believe there are 100% real reviews on Forex review websites. But, that those reviews are few and far between. And, for a new trader it is almost impossible for them to decipher the real ones from the fake ones.
It is our opinion that new traders should steer clear of these review websites, and in turn find an active community where they can speak with real people about certain brokers they are considering. Places like Reddit/r/Forex, Group Skype chats, and Slack rooms, are an excellent place to pose questions and get real answers. You may still come across people promoting certain brokers, but you will be able to ask that person in real time why they suggest that broker and who they are.
Until next time!
Cheers and Beers,
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