The 'Side Channels' into the FX Trading Market

With the ever-expanding Forex market, more and more individuals are becoming traders. Some even forming small groups. However, with not every trader being market savvy or not having the skills to delve directly into the Forex market themselves, there has been a rise of account managers, binary option traders, signal providers and all those that just offer an easier way to enter without you really doing the trading. This “branch” in the Forex industry is much riskier and is majorly the reason why many people especially in South Africa believe that Forex trading is a scam today.

These options have one dangerous aspect in common; they are not regulated. It simply involves the two parties, investor and service provider. If it happens that say you pay a certain amount to someone offering to trade on your behalf and promised a certain amount daily or weekly, the agreement is verbal which of course can help you in a court case. However, most likely the you'd have met the service provider online and know very little about the person apart from their social media page. From word of mouth, there are more scammers than legit providers in that particular service. They normally 'guarantee' the payouts but even with the most experienced of traders there is a possibility that the funds may be lost. So when dealing with the scammers, there isn't much you could do after they have your money. They can easily delete their page or simply ignore you. The name they provided would likely be fake too.

With signal providers being scammed is more damaging. It may not be accurate to call it scamming because anyone can offer signals whether good or bad. The false information that could be provided is in the accuracy of the signals where it is self-proclaimed and can be said to be anything most commonly 80-90% accurate. New traders might be unaware that these are unconfirmed figures that anyone can award themselves so they pay for signals. In some cases after paying they realise that the signal provider does not even exist, well somewhat that would be a lesser evil than the following. Some signal providers would be just inexperienced traders looking to make money from proving signals at random. So in actuality there signals could be even below 50%. With the right trades being profitable purely on luck. That type of signal provider is even more damaging in the sense that the ignorant trader pays for the signals, then loses more money if not all their Forex investments due to the poor signals.

It is advised therefore that in these unregulated individual agreements, the investor uses extreme caution and scrutiny. Do a proper background research on service providers before handing them money because at the very least if you at least get the legal name of the service provider, there is a possibility that if things go wrong you could get your money back. It is an even better option to actually learn a few things about the market so that you could use your own discretion when entering trades that are provided through signals. That way your losses are minimised.