In currency trading, you can watch out for certain indicators to protect yourself from forex trading scams. Many brokers are after unsuspecting traders, especially the beginners, to cheat them out of their money. The following are promises that unscrupulous brokers make to deceive their victims:
- We offer 100% risk-free forex trading.
There is no such thing. Even if the broker promised you that there is only minimum risk, don’t take the bait. Forex trading is volatile and the only thing guaranteed is that there is no guarantee.
- We guarantee that you’ll earn huge profits on your investment.
Again, because of the unstable nature of forex trading, your earnings can never be ensured and brokers who say so would be lying to their clients.
- We’ll take care of everything. You don’t even have to contact us. Just provide us with your details and we’ll get in touch with you.
Reputable brokers have websites and even 24/7 support so you can contact them if you have questions or if you need their advice. Constant contact with your broker is also important especially when you need to make withdrawals from your account. If a firm is reluctant to give an address or contact information or if their offices are out of the country, then they may just be out for your money.
How can you avoid forex trading scams?
Always perform a background check on the brokers you plan to do business with. First, you can verify whether they are licensed trading companies if they are registered with the SEC, the NFA, and the CFTC. These regulatory bodies usually have strict guidelines that firms need to meet before they can receive their licenses.
You should also check the complaints from current and past clients. You can find some of these pieces of information in reviews and forums online. Still, you need to verify whether the complaints are valid or if they are just retaliatory acts of disgruntled individuals before you make your decision.
Make sure that you can easily withdraw your funds. Simply put, you must have access to your account if you need to. This is where you need to be especially careful because most forex brokers involved in scams receive complaints from traders who were unable to withdraw their money.