With the development and advancement of the internet, online forex trading has increased exponentially. Forex scams have also evolved targeting the unsuspecting forex traders, especially beginners and naive.
Consequently, traders are faced with the challenge of distinguishing scam forex traders from honest ones. This article aims to provide practical ways on how to detect and avoid being scammed in forex trading.
The Forex Scams
Forex trading scams take advantage of traders’ greed, fears, optimism, and lack of knowledge to swindle their money.
Losing money to fake forex trading scams is painful, often leaving you with a big question – is forex trading legit? While many have lost their many, spotting the forex scams after your money is never difficult.
A promise of guaranteed large profits with minimal or without financial risk is one of the telltale signs of forex trading scams. Fake forex trading usually has very lucrative offers that easily entrap the new beginners or naive in the forex market.
A 100% guaranteed profit is one of their common phrases in advertisements as they seek to lure innocent financial traders. There is no way a person could share such profitable ideas but instead use it to enrich themselves.
Scam brokers in forex are never registered with any Financial Conduct Authority – a big giveaway sign. Legitimate forex brokers can always avail evidence of their legitimacy, while unregulated brokers forex cannot.
What Are The Types of Forex Scams?
Every day, scammers in forex trading come up with new ways to steal your hard-earned money. Knowing and understanding them is your first line of defense against losing your money to forex fraud.
These forex trading scams fall under one of the three categories below.
1. Signal Seller Forex Scams
Forex signal sellers mostly portray themselves as having the best winning signals to make you rich. These signals include fx pairs, entry point, stop loss, and exit point.
Identifying this forex signals scams is very easy:
The first sign is a subscription fee to access the signals. Scam brokers forex advertise excellent results that cannot be verified – then ask you for subscription fees.
Some even go a notch higher and ask for your bank and credit details. One often wonders if the signals are effective, why not use them instead.
Unverifiable results is another red flag to look out for to avoid being conned by forex scams. Lack of verifiable data indicates that they are not trading the excellent results that they display.
Lastly, be aware of individuals that will only avail forex signals upon registration with specific forex brokers. Such a condition implies that they are looking for kickbacks or commissions from the brokers.
Hence, they are motivated to send you any signals that may appeal to you.
2. False Trading Investment Scams
Many adverts, mostly on the internet, exist promoting fake forex investment funds and fake forex trading investment scams.
Such investment scams ask you to deposit money with them to invest on your behalf – only to disappear once they get your money.
3. Robot Scams
What is a forex robot? It is a trading program that performs technical analysis and carries forex trades automatically. Some of this automated trading has turned out to be forex fraud.
An effective way to identify and avoid the robot scams entails online searches for a forex robot scam list. Other signs to identify the robots scams include:
- Spam messages
- Abnormal returns on your investments.
- Forex robots showing very high rates of wins.
If you watch out for the above signals, you will surely avoid any financial scams, forex trading scams, or foreign exchange scams. Take efforts to control emotions arising from the exaggerated promises and dreams.
Avoiding The Scams In Forex
Now that you have known how to identify forex scams, the next point is how to avoid being scammed or conned in forex trading.
1. Patience Pays
Patience is a virtue of strong character and is highly effective in protecting your investment from online forex scams.
Give yourself ample time to identify a reliable forex broker while having trust in your trading strategies to work in your favor.
There are many legitimate forex brokers to choose from, hence patiently do your research to avoid unregulated brokers forex.
2. Use Reputable Forex Brokers
Once you have identified a broker, go to its website and check for forex trading reviews. Should you find no forex reviews or comments, then most likely it is a fake forex trading broker.
Reputable forex brokers are commonly known, transparent, trustworthy and have been in existence for some time with a proven track record.
3. Background Checks
School teachers always emphasize doing homework properly – do due diligence and do a proper background check on your potential forex broker.
Checks such as About Us page, contacts, business registration details, financial reports, and trading history are essential and will help minimize risks to fake forex trading.
Do not work with individuals or companies that do not avail of their background information. You can do a quick search on the internet to ascertain legitimate forex brokers.
4. Avoid The “Too Good To Be True” Offers
Profitable forex trading – achievable over a period- requires patience, dedication, discipline, and strategies.
You are better off from individuals peddling quick and easy money plans as they are after your money. Follow your trading plans diligently.
5. Knowledge Is Power
Find time to educate yourself on ways to minimize losses and to avoid gambling syndrome. Forex trading knowledge is a highly effective way to avoid online scams in forex trading.
According to consistent forex traders, an informed forex trader has higher chances of avoiding unregulated brokers forex.
An enlightened trader is not an easy target for forex fraud, and that’s why scam forex traders target uneducated and beginners in forex trading.
6. Use Regulated Forex Brokers
To filter out, scam forex traders get a list of the regulated brokers from the Financial Conduct Authority.
This will save you the pain of losing your money as it is straightforward to hold regulated brokers accountable for any misconduct.
To further safeguard your interest, the financial conduct authority provides a list of the regulated brokers with pending cases.
7. Demo Account
Another sign of an unscrupulous or honest forex broker is the availability of a free demo account.
Lack of it or discouragement from using the demo account strongly suggests a fake forex trading.
Conclusion
Forex scams have learned to use the allure of easy money to their advantage. To avoid being victimized by such scammers: learn forex trading properly and use regulated brokers.
As you sit down in front of your computer developing your trading plans, the online scams are also busy perfecting their tricks and crafts towards stealing your money.
But whenever you are in doubt, do not hesitate to conduct a licensed Financial Advisor or Financial Conduct Authority.
Recommended Readings:
Consider 10 key factors while choosing an online forex broker
Top Golden Rules of Trading Discipline
What are the traits of a successful trader
Top 13 consistent forex trading tips
