Recent Data Proves That Forex Trading is Highly Dependent on Scams…
In recent years, the forex market has taken the world by storm. Forex trading is gaining popularity, the main reason being it is the world’s most liquid market. Statistics show that more than $5.3 trillion is traded every day, dwarfing any other Stock Exchange in size. When it comes to forex trading, just about anyone can try their hand on this global trading platform. It’s not all rainbows and sunshine, though, as forex trading is ripe for scams. In the world of forex trading, there are scams happening every now and then all over the world. People are always coming up with new and innovative ways to scam people and get a hold of their money. It seems like they are not coming to an end!
Now before we get into forex trading scams, let us first understand what forex trading is all about. In this article, we are going to understand what forex trading is, the type of forex scams happening all over the world, and how you can keep yourself safe from them.
Forex Trading Explained
The word forex market is short for the foreign exchange market. Forex trading, in simple terms, means the buying and selling of global currencies. Traders, also known as currency speculators, gain profits from the difference in exchange rates and valuations. Exchange rates change by the second, and traders buy currencies, hoping to sell them at a higher price later on. Constant price fluctuations can make an individual, institutions, and companies a great deal of money.
Newcomers are encouraged to trade through brokers who are well versed in the market. In turn, these brokers make a commission from each transaction. To make money from forex trading, you require significant changes in exchange rates, which will account for commissions your broker will take from transactions. It is important to note that the forex market is a legitimate endeavor. It is not a ‘get-rich-overnight’ kind of business. Instead, you need to treat it as a real business. The forex market is volatile, which makes forex trading so attractive to traders since it can bring about greater chances of high profits. On the other hand, the volatility can also magnify losses if the market moves against you.
The forex trading market can help you earn a lot of money; however, it can make you broke as well. As long as you are making the right predictions, you are good to go. However, it is not fair to think that you will be making a profit every single time since that is highly unlikely. There will be times when your predictions won’t turn out to be the way you wanted them to be. It is best for you to stay patient and keep your game strong.
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What Are Forex Trading Scams?
As mentioned earlier, the foreign exchange market is a legitimate trading market. Without this market, it would be impossible to do cross-border business, sell exports, and buy imports. With more and more people getting into this lucrative business, more people are questioning the whole concept and mechanism of forex. Some people wonder whether the business is a scam hiding behind all the profits and successful forex advertisements.
The truth is that there have been cases on the rise about brokers who prey on less informed traders. However, you should be able to distinguish between an inexperienced broker and a fraudulent one. A poorly run brokerage will lead to more losses than profits. On the other hand, scammers take advantage of the complexities of the forex market. They maliciously withhold important information about the market. They claim that their software robot, information, or scheme will bring success. Not just this, but there are multiple other ways people can scam you in the forex trading market.
Types of Forex Trading Scams
Want to keep yourself safe from forex trading scams? Have a look at some of the most common ones happening out there!
● Ponzi or pyramid schemes
This is a common form of scam where fraudulent brokers promise high returns from a small investment that is required upfront. Initially, the investor will gain some returns, and this motivates him or her to recruit friends and family into the scheme. Usually, the investment opportunity advertised does not exist, and returns are funded by new members joining the scheme. When the number of investors starts going down, the scammers take the money and close the scheme.
● Managed accounts
This type of scam involves a fraudulent broker taking an investor’s money and using it for themselves instead of investing it. When the investor asks for their money back, the broker is not able to provide the funds.
● Software scams
These types of scammers use fake software to generate misleading figures to convince customers to invest with them. Understand that no robot is able to adapt or thrive in all environments and markets. All in all, do not trust automated computer programs. Instead, learn to make your own analysis.
Other types of forex trading scams include
- Manipulation of bid/ask spreads
- High yield investment programs
- Signal selling
- Boiler room scams
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How to Avoid Forex Trading Scams
Here are some of the ways you can avoid forex trading scams. Make sure to read everything carefully as each and every point is highly important.
Avoiding Brokers Who Promise Profits Every Time
When you are looking for a broker, you need to make sure to have a detailed and long interview with the person to set things right and understand what you are getting into. Before the meeting, make a list of some of the important questions you need to ask. Make sure the questions are not that easy to be answered. Once you ask the questions, note if the broker gives you the assurance that if you hire him, you are only going to make profits, no losses. Now, this may seem exciting to you, but you need to understand that this is not right. The forex trading market is a complex one, and profits are not always guaranteed. You can never be sure if you are going to be successful or not. The broker might have the knowledge required to make predictions, but he can never always be right. If your broker seems a bit too overconfident, you need to let go right away. A lot of people out there have been scammed using this tactic. You should always hire a person who is honest with you and tells you about their right experience. The broker needs to make you understand that he is going to try his best to help you make profits, but there are chances of making a loss as well. This is why a detailed interview is a must with the broker to understand whether you need to hire the person or not and go for someone else.
To avoid being scammed, you need to learn all about trading on the forex market. Find a broker or teacher of forex that is trustworthy. You need to be able to tell when your broker has made profits when they say they have. Don’t just rely on their word of mouth.
Do Not Work With Brokers With No Background Information
When you are searching for a broker, you must carry out your research carefully. Do not just look for a single option. Instead, you should keep your options open. The process is going to take you a bit long, which is why you need to remain patient throughout the process. There are many important points you must consider when hiring a broker, and one of the most essential ones is to go through the background information of the broker. If the broker you are going for says that he/she has worked in the forex trading world for a long time, then do not hesitate to ask for proof to back up their claim. Nowadays, anyone can call themselves an expert, which is why it is a must to check out the proof. This is one of the biggest lies fake brokers make.
When hiring a broker, do not forget to ask more questions regarding the market. If the broker is able to answer them, then it seems like he/she is experienced. However, if the answers do not look right, then the chances are high of you getting scammed. Do not hesitate at all to ask too many questions. You are doing this for yourself, and it is going to benefit you later on.
You can ask for references from people you know when looking for a broker. Keep your options open and interview a bunch of different brokers out there. This way, you will be able to choose the best one amongst all, and especially a reliable one who you know won’t just disappear with your money. In this market, you cannot afford to hire someone who seems even a little shady. Your money is at stake here, so it’s better to be careful and alert. All in all, do not forget to ask the broker for background information when hiring one.
Check The Authenticity Of The Company
When trading through a company, make sure you check its authenticity. There are hundreds of companies out there that help you trade; however, not every one of them is authentic. You need to be highly careful when hiring a company, just like you need to be alert when hiring a broker.
Check the location of the company and where the business is registered. Forex scammers often prefer operating in locations where the local law makes it hard for them to be prosecuted internationally. If the address is an authentic one and is not shady, then you are good to go. However, if that is not the case, then you need to be careful.
Another way to check the authenticity of the company is to look for reviews online. Even if there is a single review against the company, then you need to drop the idea of going with the specific company. Keep your options open and look for others. You can even ask your friends who are into the trading world and look into their recommendations.
Checking the authenticity of the company is a must when you are investing in the forex trading market!
Factors to Consider When Choosing a Forex Trader
The forex market is very competitive, and choosing a broker to trade with can be a daunting task. Let’s take a look at some of the qualities you should consider when picking a legitimate forex broker.
- Ensure that the broker is a member of a regulatory body: If the broker is not from the regulatory body, then you need to choose someone else. You cannot risk the entire thing no matter what.
- Honest brokers will allow you to deposit and withdraw your funds freely: Scammers never let you withdraw your money that easily. They will always come up with excuses and will tell you that you need to wait. They keep on doing this, and in reality, your profits are actually with them.
- The broker’s trading platform should be stable and user-friendly: If the platform is not easy to understand or use, then talk to your broker. You cannot keep up with this since you won’t be able to understand anything at all. You need to be aware at all times.
- The broker should easily be reached in case of problems: You might face many issues, and in order to solve them, you must be able to get in touch with your broker at all times. What is even the purpose of the broker if you are unable to get in touch with him/her during times of emergency?
Say Goodbye to Forex Trading Scams!
Forex trading scams are at their peak; however, if you follow the tips mentioned above, then you will be able to keep yourself safe from them. Remember, if you hire the right trader and take your steps carefully, then there is nothing that can stop you from becoming successful in this market.