Scams in financial markets comes in many shapes and sizes. Forex scam exists and is probably one of the worst in the financial world.
Forex scam is spread by people and organizations with which traders are forced to cooperate in daily Forex trading activities. Below are the tips on how to identify a forex scams:
4 Useful Ways to Avoid Forex Scams
1. How to Avoid Bad Forex Brokers
Check online broker’s reputation on Forex brokers review sites. Websites that put spotlight on dishonest Forex brokers in the spotlight can also help you identify brokers that you should completely avoid. In light of the widespread lack of regulation of the Forex market, it is preferable to work with a broker who also offers services and support for trading other financial products, such as stocks, bonds and commodities. These brokers usually have a license for other securities and do not risk losing the license by deceiving their clients.
2. Forex Signal Sellers
Forex signal sellers offer information on favorable times for trading a currency pair and charging daily, weekly or monthly fees. As a rule, they are signal generators – systems that use technical analysis, news, or the form of both combined to generate trading signals. Commercial analysts, however, criticize the suggestion of sellers of signals about the provision of favorable trading opportunities. They argue that if a system that helps win the market really exists, the creator would be more painful to use it and make incredible profits than to popularize it.
Do you still believe that the signal seller can help in trading with Forex?
At the very least, you must avoid scammers by opening a demo account for trading with a well-known broker and practice trading with the signals. After a while, you will determine if predictive signaling can work for you.
3. Automated Trading Software
The growing market for expert advisors or forex trading robots is mainly due to the activity of hypermarkets. This market has recently become fertile ground for scamsters. Many stand-alone automated forex trading software always makes incredible profitability claims as they try to sell them. Some download free EAs, they repackage them and then sell to earn huge sums of money.
4. Dodgy Forex Investment Fund Management
Forex management funds claim that they are managed by highly skilled traders on behalf of a Forex investor who cannot trade himself for various reasons. These funds promise to offer attractive returns and are offset by a pre-agreed part of the profits. The trick to Forex fund management is that, as a trader, you transfer your money to a stranger. Often these people admit to unexpected success stories, forcing them to think that they can really help. Woe to you if you fall for the bait of this kind of forex scam. You will surrender your capital and get nothing in return, because scamsters buy private jets, islands and yachts.
There are various ways to detect forex scam and prevent money loss. In addition to the above recommendations, check for warning signs such as difficulty withdrawing money from a trading account, problems with the trading station, and suspicious changes in marketing content for any Forex service provider. A general rule of thumb is that if the return on any investment sounds too good to be true, you are almost certainly dealing with scam.