How to avoid forex trading scams 

Avoid forex trading scams 

The foreign exchange market or what is commonly referred to as FX or forex is a network of major banks and financial institutions that exchange currencies daily – according to a constantly fluctuating exchange rate.  

The financial market is always changing, and currency exchange is in constant demand. Currency, stocks as well as commodities, and cryptocurrencies can be traded through the foreign exchange markets.  

It is important to note that many scams have been emerging in the forex industry, as foreign companies and people are setting up online to take advantage of people who don’t realize that online trading must take place through a broker or a company with direct connection to a major bank for the provision of liquidity.  

In short, you probably already participated in a forex transaction. For example, think about a trip you may have taken to a foreign country. If you needed to exchange your national currency for the local currency of your destination, then you may have benefited from a positive exchange rate and got more value out of the exchange. This is the basis of forex speculation, and how retail traders can make money by exchanging massive amounts of currency units through a forex brokerage.   

Small businesses and individuals often looking to make big money, are the victims of scams when it comes to learning about forex and other financial markets available through online trading. As forex trading is usually considered an easy way to make a quick profit, people don’t usually think twice about joining an unregulated forex broker, and more often than not, they end up losing their money due to illegitimate business practices.  

Scams to be wary of  

Some scammers that tend to target beginner investors usually promise high returns through reliable trading advice that will eventually translate to consistent monthly results. However, as soon as they invest their money, they never hear from these people again.  

If you were to invest money with a company stating they are involved in forex trading, you need to make sure that they are licensed to provide investment services in your country or region. Several companies have also lost their license, as they have defrauded investors before.  

In the last five years, with the help of the internet, forex trading and the awareness of forex trading have skyrocketed. A regulated forex broker is going to have a license from a reputable financial authority and will ensure a safe and secure trading experience.  

Another type of scam that is prevalent in the forex markets is the promotion of revolutionary software that will aid you in making trades, and help you achieve unprecedented returns in just a short amount of time. A common rule of thumb is if it sounds unrealistic it probably is a scam.  

You want to be able to rely on a program or software that is going to make a difference. Always check the broker’s license number and if this is still valid with the financial authorities to ensure that it is safe to invest your money with them.  

Always consult your financial broker if you need more information about trading, or if you come across third-party software that promises unrealistic returns.   

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