How to Avoid Forex Scams
Forex Scams Explained
One of many things that the internet has brought into the reach of ordinary people is foreign exchange trading. In this, currencies are bought and sold with the aim of making a profit.
Unfortunately, this has also created a rich hunting ground for criminals of all kinds but here we’ll tell you how to avoid forex scams.
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The Foreign Exchange Market Defined
This is an expression used to describe the trading of different currencies, for example by buying euros with US dollars and hoping that the exchange rate changes act in your favor. It’s a huge global marketplace that sees over $6.5 trillion being traded each day.
The Importance of Trust
For over two decades now, forex trading has been available to virtually anyone who can go online. Over the years, this has meant that countless forex scam trading platforms have appeared with many, many people falling foul of them, with some very serious consequences.
This is because the people who operate forex scams are some of the most ruthless online criminals there are. Most will think nothing of taking a victim’s life savings in a series of pretend transactions. The situation is made even worse by the fact that the scammers are almost always impossible to trace.
Indeed they are often operating in countries in Eastern Europe and other states beyond the reach of US law. So, once one has fallen victim to a forex scam, there is a possibility that the stolen money will be recovered.
Forms of Forex Scam
There are a number of types of this scam, with new ones frequently appearing. Here are some of the most common ones already in operation:
- Signal seller scam. These are companies or individuals who make big claims about having inside knowledge about when is a good time to buy or sell. They will often be able to provide very impressive testimonials and references which are all completely false. But often they are enough to persuade people to entrust them with large sums of money – that they will never see again.
- Robotraders. While using AI to carry out all kinds of financial transactions, and even give advice, is a legitimate technique in the right hands, in the wrong ones it can be devastating. A number of rogue robotrading systems use faulty and untested algorithms which trigger sales and purchases at the wrong times, often losing investors’ money.
- Managed accounts. Despite being reassured that they are in safe hands, victims of this kind of forex scam are actually dealing with a complete stranger who may not know very much more about trading than they do. The result is that money is poorly used, if it’s even used at all, often with the trader just stealing the investment and disappearing.
Identifying a Forex Scam
As with most things, it’s mainly a matter of doing your due diligence and using your common sense. Ask around friends and co-workers to see if they use a forex broker they trust and who has a proven track record with them. You should also look for reviews online to make sure that a particular broker is trusted and legitimate.
Beware of any who seem to have a high profile on social media or are making unbelievable claims about how successful they will be for clients. Similarly, any who are offering over-generous welcome bonuses are probably best avoided.
If a broker claims to be part of a professional organization of any kind, it’s also a good idea to check with the organization question whether this is true.
But don’t let all this put you off forex trading. There are plenty of legitimate brokers out there, it’s just a question of ensuring they are as good as their word.
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