If you’re here because you’re wondering “is forex legit?” you’re not alone. Thousands of people looking for new ways to invest their money are wondering the same thing.
The short answer to that question is yes, forex trading is a legitimate way to make money by investing in foreign currencies on the foreign exchange market.
However, as with any investment, you have to know what you’re doing in order to actually make a return on your investment. This includes knowing what illegitimate forex trading platforms and forex scams to look out for.
In this article we’ll go into more detail about what makes forex trading legit, as well as when forex trading is not legit. By the time you’re done reading, you should have all the information you need to make the decision about whether or not you want to get into forex trading yourself.
Forex is legit because…
Good second income
Since forex is based on trading currencies, it is fairly possible to make money off forex trades at any time — even during recessions. There are always going to be strong and weak currencies on the market, so there are always opportunities to buy and sell and make a good return on your investment.
This makes forex a viable option for a second income, and something that you may even be able to fall back on if your other sources of income take a hit due to job loss or a recession.
How much money you can make trading forex depends a lot on your dedication and your experience. Part-time forex traders often make enough that it’s a significant supplemental income, while full-time traders can make the equivalent of a full-time wage or even more.
Requires little startup capital
Another reason why forex trading is so popular is that you can get into it with a very small sum of money. In fact, some traders start with as little as just $100! However, keep in mind that the less money you invest, the smaller your returns will be. You’re not going to turn trading forex into your day job with just a few hundred dollars.
So, how much money should you invest in forex to get started? Well, this is really totally up to you and what kind of risks you’re willing to take. That being said, a general rule of thumb to follow is that you should never invest more than 1% of the money you have in your bank account in forex.
A big part of the reason why forex is legit is that the forex market is fully regulated by various global regulatory agencies. For example, in the United States, forex is regulated by the Commodities Futures Trade Commission (CFTC) and the National Futures Association (NFA).
Likewise, legitimate forex brokers are also regulated and licensed by various agencies in their home countries. BUT, and it’s a big but, there are unregulated brokers out there that you have to watch out for. More on that later…
There are so many forex trading platforms and brokers out there that it can be overwhelming trying to choose one. The good news is that there are several very well-known forex platforms that you can narrow your choices down to when getting started.
Here are a few examples:
- CMC Markets
- London Capital Group
- Saxo Capital Markets
- XTB Online Trading
- IG Group
- TD Ameritrade
Forex is not legit because…
One of the biggest reasons why people are always asking “is forex trading legit?” is that there are so many forex trading scams out there. There are many different types of forex scams, ranging from fake investment advice to broker scams and pyramid schemes. We’ll touch on how some of them work below.
Unregulated brokers exist
Because of the fact that there are so many forex brokers out there that they can blend in with, scammers often pose as legit brokers and make off with investors’ money. This type of scam is known as a forex broker scam and is the reason why it’s so important to always choose a regulated and licensed forex broker to do your trading with.
The majority of forex scammers operate as unregulated brokers, meaning that there are no government agencies or financial institutions holding them accountable for their actions. Because of this, these unregulated scam brokers are able to set up sites and platforms that look legit to attract new investors. Once they get ahold of your funds, they can manipulate charts and other data to make it look like you lost money, when in fact they are stealing it.
Or, these scam brokers can simply refuse to release your funds when you try to make a withdrawal, even going so far as to shut down the site and disappear into thin air.
Another common type of forex trading scam that makes people wonder whether forex is legit is that it could function like a pyramid scheme. In a forex pyramid scheme, the masterminds recruit eager, inexperienced investors to join their “investment program,” with promises that they’ll make huge returns on their forex investments.
The catch is that to join the program, you first have to pay a fee. Then, the scammers offer you incentives for recruiting others into the program, ultimately growing the number of people paying into their pockets. The reality is that these programs usually focus very little on investing, and place much more emphasis on recruiting more investors.
These pyramid schemes, or multi-level marketing schemes, usually continue to try and get you to pay for products or lessons that are supposed to make you better at trading. Even though you might be making small sums of money, you’re typically putting way more back into the scammers’ bank accounts.
Can lose money
As you can see from the examples above, forex scammers are one of the biggest risks to new traders. Because forex investors are often young and lack trading experience in general, they’re much more likely to lose money on forex by falling victim to a broker scam or a pyramid scheme.
However, even experienced and skilled traders can lose money trading forex. This is just the reality of investing — there’s always the possibility of losing big. That’s why you should never risk more than you can afford to use.
So, what if you lose money on a legit forex trade? Well, the only thing you can do is cut your losses, learn from it, and move on.
But, what if you lose money because of a forex scam? Can you get money back from forex scammers? YES! Scam fund recovery experts, like PayBack LTD, specialize in getting your money back from these types of fraudsters.
At PayBack, our team is composed of forex and cybercrime specialists who know how to hit scammers hard and will do everything in their power to retrieve your funds.
If you suspect you’ve been the victim of a forex scam, contact us today to start reviewing your case and taking steps to get your money back.
So, hopefully now you know more about why forex is legit and when it isn’t. At the end of the day, any type of investing comes with its risks and benefits, and only you can make the decision about whether forex trading is right for you.