So you want to make legit money trading in the FOREX market! But before, you should understand how to avoid a FOREX scam. It can bring you a considerable profit, but remember that this will not happen overnight!
Many newbies in this business often consider forex a way to earn easy money, but profitable results take time. Many inexperienced forex traders are impatient and don‘t know this, so they are easily exploited. Forex trading can be a good opportunity for the scams to profit, but you can learn to avoid being suckered into a scam.
You should know that If the offer looks too good to be true, be sure that it‘s almost certainly a fraud! Before you take a risk and walk away empty-handed, you should read a few useful things about forex. Try understanding the basic ideas of forex exchange trading and how it works.
What is Forex (Foreign Exchange Trading)?
Forex or foreign exchange trading, is one of the most liquid and accessible markets in the world, trading $5 trillion every day. Forex market facilitates the currency exchange for the easier exchange of goods and services in this market. Prices change rapidly, therefore creating many opportunities for Forex traders.
These rapid changes reflect on currencies that can weaken or strengthen over time, allowing you to estimate when to buy or sell them. Profit lies in fluctuations in the exchange rates between the currencies. Also, it's essential to correctly estimate whether a particular currency will go up or down about some other. Participants trade through electronic or phone communication networks across the globe, 5 days a week.
How does forex trading work?
It works, more or less, like any other market – a trader sells and buys the currencies at the current rate. US dollar is the currency that dominates in the financial markets and the exchange rates are mostly expressed in US dollars.
Many factors can influence the exchange rate - economic situation, local or international policy, future perceptions. Forex trading occurs in different time zones, in 3 major regions – North America, Europe, and Australasia. There is no central regulatory body that controls the forex market, and that‘s why it gets hard when scams take place.
Is Forex a pyramid scheme?
Forex is not a pyramid scheme, and you should avoid all kinds of HYIP funds (High Yield Investment Program) that started appearing everywhere. These programs guarantee a great level of return if you temporarily use your investment in their forex fund. This Ponzi scheme shouldn't be trusted 'cause once the funds run out of prospects, it closes down and takes all the money.
What is a Forex Scam?
A scam in forex means that somebody wants to deceive you on purpose in order to take the money from you unsuspectingly. A potential forex trader must learn how to separate fact from fiction to avoid forex trading frauds.
Most of the forex complaints related to scams involve commissions, selling guide software to teach newbies to gain profit, managed accounts, false advertising pyramid schemes, and promises that involve low risk and high profit.
However, many people think that forex is a scam since they have been trading forex for a while but not making any money. You should know that some people don‘t understand the currency market fluctuations. Not gaining profit is their failure. Also, many traders spend a relatively short period in demo trading and develop no reliable methods and strategies in forex trading. Then, they discover that things are different in the real market with real money. If you only deal with worries about losing money, you better not enter the forex market adventure.
How to protect yourself from getting scammed in forex?
There are a few simple methods to help you survive in the harsh forex trading system and these are just a few strategies of hedging against risk:
Compare price feeds
You cannot rely only on the price feed of only one trading platform. Minimizing forex exchange risk means having a broad idea of what‘s happening in the rest of the forex world. If you want to become a smart and profitable trader you must learn how to avoid the risk of losing money. This means that you should be able to notice if your broker widens spreads, manipulates rates or runs stops. You should be able to see the general changes in the forex market and to know if the chosen broker‘s actions are justified.
Remember to keep track of all your transactions. Take a screenshot of each trade you take; by doing this, you‘ll avoid being manipulated and scammed. Always have ready evidence to support a possible case of fraud or any other suspicious activity.
Take legal action
If you cannot resolve the issue with your broker, a logical thing to do is to take legal action. Most of the suspicious brokers capitulate when threatened with legal action. But if they don‘t, you should, by all means, contact CFTC or NFA which devotedly handle customers' complaints and unresolved issues with questionable brokers.
As you can see, if you want to succeed in forex trading, you must learn to protect yourself against problematic brokers and train yourself to be a better trader. Finding a reliable broker and discovering how the forex system works is essential. But more important is to learn as much as possible and build trading experience daily.
Before choosing a proper forex broker, do all the necessary research. Check the broker's background and ensure it owns all the licenses and certificates that put it on the positive broker list. Always keep in mind that forex scams exist! To keep your blood-sweat-and-tears-earned-money, you must always be very cautious.
The best defence against fraud is - education! Don‘t let a lawbreaker destroy your dreams of success and prosperity. Disciplined and safe trading is the only way to succeed in the forex market. So, you better look closely at all potential bumps on the road before you start the forex ride.