If you want to be in the foreign exchange currency industry, you need to at least know the basics. Forex trading is all about buying and also selling currency pairs of different countries from all over the world. The process is the same as those currency exchange booths in airports wherein currency of your local countries can be exchanged into another currency of your preference. You mostly exchange currency for travelling abroad since the local currency of your country won’t be accepted by the country you are travelling to.
Decades ago, currency exchange was merely for banks and other huge financial institutions. But online trading helped open the doors of FX trading to retail traders who wanted to participate in the market, hoping to get a steady source of income out of the money they invested in the Forex market.
But as the popularity of Forex soars, scams engulf the industry, creating chaos and doubt among new traders. Unfortunately, although the Forex market is a huge industry, it is not properly regulated. It is when scammers take advantage of innocent, new traders.
Steps On How To Spot A Forex Scam
The best way to spot a Forex scam is the word ‘guaranteed’. If your broker or an investment opportunity promises a ‘guaranteed’ return of investment, you should doubt its authenticity as there is no sure way of earning in the market unless you learn from experience and gain knowledge about the activity in this industry. So, if you encounter someone who sells anything that claims to make you a Forex millionaire, 100% guaranteed, then scammers are preying on you.
Red Flag Checklist
- Unbelievably high-profit claims
- No availability of live trading data only shows historical data
- No previous performance information
- Asking huge investment money or fees
- Unbelievably high win/loss ratio
- Poor reviews from previous clients
- Claims to have a secret formula in trading
- Overseas headquarters, particularly in an unregulated country
Protecting Yourself from Scammers in Forex Trading
There are few things that you can do when you spot a scammer in Forex Trading. These things will protect you from becoming their next prey.
This is more about gathering information about the broker or the person showcasing their services. Check for this information;
- Regulatory Bodies
The Offer is Too Good To Be True
Most of the time, this is the basis of identifying a scam. Although very obvious, this is mostly ignored. After all, everyone wants to take advantage of the chance to make millions even without going through a lot of effort.
You must choose a broker that’s stationed in the same country as you are. This will ensure that, if anything happens, it will be easier for you to report the scammer and seek compensation.
Reviews of Past Clients
Most of the information presented to you by the broker or a salesperson offering some Forex-related products will always appear reliable and the best. It is part of their marketing, to make their product and services appear one-of-a-kind.
But, it won’t hurt you if you seek other’s thoughts before you commit and pay something for it. Otherwise, you will fall prey to scammers and lose money even before you start trading.