Forex Trading Scams: How to avoid them?
Forex trading scams could cause financial loss to traders, using fraudulent and illegal practices.
The forex world has grown massively in the past few years and is home to over 6 trillion dollars’ worth of trade on a daily basis.
Of course, if there is big money, it will also attract scams. Although there are very reliable and reputed forex traders out there, it is very common for people to fall for the wrong broker. The best way to protect yourself from such forex scams is to be informed.
What is a Forex Scam?
A forex scam is a scheme that con artists would use to convince traders to invest with them for high-profit rates in a short time period and vanish into thin air with their money.
Take note that promising high profits are not a sure shot indicator of a scam because it is actually possible; however, brokers promising that as an absolute result should be doubted.
The Most Common Forex Trading Scams
The Pyramid Scheme
It is a sketchy scheme where investors recruit new members who pay recruitment fees to the recruiter. The new members then recruit their own members who pay them. It is a complete scam because there is no sale of tangible goods involved.
The High Brokerage Commission Scheme
It is a common scam where brokers ask for unusually large bids or spreads (difference in bid price the dealer is willing to pay and the price at which the dealer is willing to sell the same currency). A high commission makes it impossible for the investor to make money off of the trade as all potential profit will go to the broker instead.
Single Seller Scheme
Many platforms offer to help traders choose the best time for trade. These brokers will charge monthly, weekly, or even daily fees from traders in exchange for advice. Many brokers vanish with the trader’s money after receiving the fee.
Personal Data Scam
Some companies might make money by selling your personal data to third parties which can lead to serious damage that extends beyond just money, like identity theft.
How to Spot a Forex Trading Scam?
When you land on a potential broker, the following are a few red flags you need to check.
Get Rich Quick Theme
You could make some money through forex trading, but it is not magic. It takes time, effort, strategy, and experience. If a platform offers you a get-rich overnight scheme, they certainly are no experts.
A reliable broker with experience knows that profit cannot be guaranteed and will never give you false hope. The forex market is highly volatile and there is no trader who can eliminate the risks completely. If someone claims to do that, it’s a bluff you shouldn’t fall for.
No Proper Customer Care
A scammer doesn’t want to be caught, so it is highly likely that they are secretive about themselves. If you don’t find any contact details, address, or background information about a broker they are likely to vanish with your money.
Read Also: 10 Tips to Keep Your Password Safe
Avoid Forex Trading Scams – Tips and Tricks
Now that you know how people out there can come for you and your money. You should know the ways in which you can avoid such scams.
Talk to people
Talk to people from the company or their previous customers to get an insider’s view. Sometimes the people in the promotional videos are paid actors, so talk to someone the company hasn’t connected you with.
Search for people in the company on LinkedIn. If they are legit, their profiles should turn up. If not, then it could be a scam, and if yes, then be sure to see who recommends them.
Google the company or broker with words like “scam”, “fraud”, etc. If too many results turn up, it’s a problem.
A serious member of the market will be regulated by at least some financial authority. The stamp from NFA, FSA, CFTC, etc should add a few points to the company’s legitimacy.
Ask for Demo Account
If the company is legit, they should allow you to build trust. Ask for a demo account to try trading without money.
Well, because tixee doesn’t check any red flags and passes all tricks mentioned above to identify the legitimacy of any company.
tixee is multi-regulated, provides 24/5 available customer service department, and provides experts and advisors who put forward the facts with the risk and the possibilities of the market.
We don’t set unrealistic ideals and are real with our clients.
Don’t just take our word for it. Test us!