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Abstract:As Forex trading carries risk, losses are inevitable. Retail speculators are almost always trading undercapitalised and can be subject to the problems of gambling addiction and improper use of leverage. Any speculator who trades without skill is essentially gambling.
In all fairness, a large number of the reports of money being stolen by brokers is a result of weak trading, and not scam brokers. If unskilled traders spent time developing a proper trading methodology they would become better traders much quicker, and would likely avoid Forex scammers altogether, as they would be better informed about potential risks and what to avoid.
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There are a lot of scammers selling trading systems and education. When you ask them to provide any proof of their trading history, they evade the question. There are also many traders who would offer their systems without a trading room or any services. These types of scammers are sometimes referred to as “snake oil merchants”. “Snake oil” is the term traders use for false traders and trading systems that have no valid proof of their trading history.
Scammers may also ask you for personal information, such as:
Your full name
Your phone number
Your home address
Don't give away your personal details to someone you don't fully trust. Be suspicious of brokers who don't provide you with a written risk disclosure statement. Even if they do, read the statements thoroughly, because the devil is in the details.
Never work with someone who refuses to provide you with their background information. Be it a broker, a trader, an educator, or a money manager. Always do a quick check online to see if the person or company is legitimate.
According to New York Magazine, a kid from Queens, New York City in the USA made tens of millions of dollars by trading stocks on his lunch breaks at Stuyvesant High School. What happened in reality, is that it turned out he never made any money, and all his profits were made in a paper trading account.
The best way to avoid investment scams is to take your time. Don't rush your decisions - and make sure to assess all the pros and cons first. Finding a reliable Forex broker is not an easy task, but you will benefit in the long run from investing your time. The first step you should take when you come across a Forex broker or agency is to google their business name.
Look for customer reviews on reputable websites. If there are none or they are sound fake, you should stay away from that service provider. Additionally, you can browse through scam reviews and see if a Forex broker is as reliable as claimed. Also, make sure to find out if there are any outstanding legal actions against the broker.
For example, you can:
Visit Forex forums and see whether there are any complaints about fund withdrawals, and if so:
Contact the user who posted the complaint and ask for more details.
Perhaps the user was mistaken or confused, but it never hurts to ask. A proper background check will minimise your risks.
Easy money? No way! Don't believe anyone who tells you it's easy to make money with something like ''20% gain per month''. It's pure nonsense because Forex & CFD (contract for difference) trading requires a lot of screening time, education, patience, and quick wits to become profitable. There is no easy money here. But if you dedicate your time and learn how to trade properly, you might achieve an additional source of income.
Make sure to compare the regulations of the regulatory authority with the terms on the broker's website to find inconsistencies and anomalies in their terms. If you don't trust your own judgement, or you simply don't have time, ask the advice of a licensed financial advisor. Additionally, you can ask for business registration proof before registering with a broker. Make sure to read through all the fine print when opening an account. Sometimes scammers use account incentives against the trader when it comes to withdrawing funds.
For example:
If you receive bonus funds and wish to withdraw them, a Forex scammer may deny you that right due to its terms and conditions.
Don't forget that when you start live trading - always trade a small volume for a short period initially, and then attempt a withdrawal. If everything goes smoothly, it's safe to deposit more funds. The availability of a Demo account is another indicator of a good or bad broker. If you don't get offered this option, or are discouraged from demo trading, this is a strong indication of a Forex scammer.
Remember that you have every right to ask questions. A few proper questions can determine whether you are dealing with a trustworthy broker or a Forex scam artist. Make sure you know your rights, research the contacts, and check the company's registration and business background. Keep in mind that all the information you receive from a potential new broker must be in written form. Never rely on promises made on phone conversations or oral statements.
Ask yourself these questions:
What can you do when you realise a broker's offer is not for you?
How binding is the contract?
How easy is it to reach customer service?
Can you contact the broker by phone, Skype or email?
Do they list a physical address?
Do they use actual names?
Are they a registered company?
Can they provide performance history?
To ensure you're not a victim of a scam, always use a regulated broker that is well established, has favourable online reviews, and is 100% transparent in its fees and compliance policies. The allure of quick money and easy cash will always be present, which is why you should make sure that you fully understand what it truly takes to become successful at currency trading, without using quick-fix schemes that put you at risk.
Traders also have the ability to trade risk-free with a demo trading account. This means that traders can avoid putting their capital at risk, and they can choose when they wish to move to the live markets. For instance, Admirals' demo trading account enables traders to gain access to the latest real-time market data, the ability to trade with virtual currency, and access to the latest trading insights from expert traders.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
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