Steps to Identify Potential Forex
The Forex market is highly lucrative due to its volatility. It presents a window of opportunity for those with patience and general awareness of the Forex market. Unfortunately, many people are drawn to it, so it is a perfect breeding ground for scammers. However, it is not always easy to spot the Forex scams when you come across it.
You can indeed make good money in a short amount of time. All you need is patience, hard work, and the capability to learn from your mistakes. Those who think Forex trading is easy and does not require hard work are sadly mistaken. It is unwise to compare gambing with Forex trading.
Since the Forex market is a perfect breeding ground for scams, many fall victim, as they are unaware of its working. To avoid such unforeseen financial disasters, we will look at some signs of a potential scam in this article.
Scammers are like fishers; they lure their victims like fishes to their bait of fake promises. However, scammers are quite smart and have a lot of patience, and they know that people who wish to make easy and substantial money will surely catch their bait.
Below are the signs and tricks used by these scammers; these signs and tricks will allow you to identify and avoid a potential scam if you ever get approached by them.
When a Forex broker or a firm contacts you, then research them. Although you might find it time-consuming, it will save you a lot of trouble in the future. Here is what you need to do while researching the firm.
- Users review: Reviews make for an excellent start. You must remember that there are disgruntled customers in any business, and this is a service industry where customers are encouraged to participate in the market. Many miscalculated the trade and blamed the broker or the firm.
It would be best if you looked for reviews that speak on the company’s policies, the fees levied on deposits, cash withdrawals, and the commissions charged on the trade. You can also check if any user has been scammed or has mentioned any suspicious activity in their testimonial.
- Location: One of the most important aspects while choosing a broker or firm is the location. This is important as in the worst-case scenario, if the broker or the firm closes down, you should be able to recover your fund. It also means that their dedicated client support center should be located in a time zone that syncs with yours so you can acquire technical support at any hour. Additionally, you should also ensure that the firm or the broker is located in an area governed by the regulatory bodies.
- The Community Futures Trading Commission: An independent US Government agency formed CTFC in 1974, overlooks Forex trading and other options. Under the Commodity Exchange Act, the CFTC ensures regulation of the market and prevents fraudulent activities.
- The National Futures Association: The NFA, part of the CTFC, began self-regulating the futures trading industry in America. This body monitors Forex trading with the best practices and mandates in place. They make sure that the entire industry is governed and take necessary disciplinary measures as and when required.
- The Background Affiliation Status Information Checker: The NFA has provided a free tool-BASIC that allows investors to analyze specific companies and persons before commencing a business agreement; it is also the best place to check if the broker or firm ever committed a scam. You should always register with the NFA to use the background search facility, which allows you to find if the broker or the individual is registered with the NFA and if it is currently under scrutiny.
- Other Regulatory Bodies: Each country has its regulatory Forex trading bodies; there is no provision in the form of an international Forex regulatory body. Therefore if you are applying for a broker or a firm located in another country, check if they provide Forex trading services in your country.
One of the easiest ways to detect a scam and one of the most ignored states is that you can make a lot of money without any risk. Can it really be this good?
The answer is no.
Everything on this globe has a price tag; nothing is for free. If you happen to come across such statements that read no-risk-high-returns, they are perpetual scams. This is especially true if the broker or the firm offers you an expert advisor, a trading bot, or even an expert signal seller. In all of these scenarios, the provider is certainly a scam.
You must remember that there are no such things as guaranteed high returns or a sure-shot secret formula; if they had, they wouldn’t be selling it and would have been a zillionaire themselves by now.
It is advisable to choose a broker or a firm based in your country, as you would be assured that you won’t lose your money if the broker or the firm decides to wind up their business. Furthermore, a regulated and licensed broker or a firm wouldn’t run away by squandering your funds; instead, they can make more profit by doing a genuine business.
Not all off-shore traders are scammers, but you need to check if they are regulated and have a valid license to conduct overseas business, catering to clients from another country. These firms can run a legal business if they follow the rules and regulations passed on by their country of origin.
The best way to avoid being a victim of a Forex scam is to educate yourself with as much knowledge as possible. Reading national and international news will help you in understanding the current forex market scenario.
You can also run a search on google or any other search engine by typing in the name of the broker or the firm which has contacted you and adding words like “fraud,” “scams,” or even “disciplinary actions” next to them and run the search.
Although trading in Forex is not a scam, it is a window of opportunity for people to make quick money. You must be aware that as there is an opportunity of making a significant profit, chances of making a loss are also equally high. Thus, a cautious and patient trader has a chance of making a substantial profit with minimal capital investment.
If you follow the guidelines discussed above, then there will be a lower chance of you falling victim to the Forex scams.
Considering a foregin regulated and registered broker is essential. Further, the decision to trade with them must be your own and not based on someone else’s choice or advice.
Only invest the proportion of money which you can afford to lose.