How to Avoid a Forex Trading Scam


AtoZ MarketsMany people around the world have fallen victim to Forex scammers because they were lured by the promise of huge returns. Last year, the financial regulator warned that such scams are booming. In fact, the Financial Conduct Authority (FCA) said scammers stole a total of £27 million through cryptocurrency and Forex scam in the 2018/19 financial year.

Is Forex scam? This is one of the questions we receive from some naive beginners. So if you just got started in the Forex market, we will show you how to identify and protect yourself from Forex scams. This article will also explain how you can identify reliable Forex brokers.

Is Forex a scam?

The fact that cannot be ignored: educated and experienced traders are unlikely to get cheated by scammers. The bad reputation of Forex is basically made by inexperienced traders who lost their money as a result of weak trading. They lose money and blame it on the broker and the market, and make reports of stolen funds.

Obviously, that doesn’t mean that Forex is a scam. That only means traders lack Forex education. Nevertheless, as long as Forex exists, scams will be there, because a huge number of beginners provides them with massive opportunities. Is there anything that can protect you for sure? Yes, there is.

How to spot a Forex trading scam?

Forex Trading Scam

Forex scams come in different forms. However, we’ve prepared a short checklist of the main points you need to look for to identify potential Forex fraud.

  • Trading opportunities with extraordinary high returns

The too good be true promises are often a sign that something is amiss. If a broker or platform promises a gain of 30% on your capital each month, you should be very wary of them. Trading in a contract for difference and currencies requires a lot of education, wits, experience, and screening time, to make profits. High profits are therefore not that easy to come by. Just think of it: if there’s a secret recipe for a large profit, why would anyone share it with you? The truth is that if high profits were that easy to make, the broker would probably trade with leverage and enrich themselves, instead of advertising their services.

  • Unprofessional emails

Unprofessional emails are another obvious sign of an online Forex trading scam. Email marketing is very common these days, but if the tone of the email sounds unprofessional or if the person asks for any personal information, it’s probably a scam. Forex scammers often use email lists bought on the dark web to send hundreds, or even thousands of emails to traders, offering various trading products. Again, make sure there is background information about the person sending the emails – or if it’s a company, check that it is regulated by browsing its website. If you are unable to find any of the above, and the emails ask for personal information to send you a “free e-book” or something similar, it’s probably a scam.

  • A broker without a background

If your preferred broker does not have sufficient background information, you should take your money and run for the hills. Legitimate traders, brokers, money managers, or educators in currency trading understand the value of building trust. They, therefore, have at hand proof of their professional history when requested. To ascertain all claims always perform a thorough online screening on the broker you are planning to deal with.

How to avoid Forex scams

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’ll benefit in the long run from investing your time.

What are some of the most reliable and viable Forex brokers? If you are planning to start forex trading, you can check out AtoZMarkets approved Forex brokers.

Meanwhile, 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 also minimize your risks.

Extra steps you can take to stay safe

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 judgment, 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.

To sum it up, there are questions every trader should ask before dealing with a Forex broker. What are they?

Ask questions to avoid Forex trading scams

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 to 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 phone conversations or oral statements.

Ask yourself these questions:

  • What can you do when you realize 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?

Conclusion

To avoid falling victim to a Forex trading scam, always use a regulated broker that is well established, has favorable online reviews, and is 100% transparent in their fees and compliance policies. The allure of quick money and easy cash will always be omnipresent, 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.

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