Many new traders are excited about the possibility of making a large profit on the foreign exchange market. While it is true that some savvy investors have made literal fortunes by learning how to trade forex, others have experienced extremely large losses, due to falling prey to forex scams. This is not just limited to new investors; even long-time traders can be tricked into getting involved with a fraudulent broker or software program. Here are a few tips on how to avoid forex scams.
Spotting a potentially fraudulent broker
When you are selecting a forex broker, it is important to be particularly vigilant about your qualifications. One good rule of thumb is to check the actual geographic location of broker. On the internet, a broker can represent him or herself as living in one area, when in reality they are located in another part of the world altogether. If the country where the broker lives is not financially well regulated, it might be a good idea to keep looking for a one that is based in a properly regulated country.
It is also essential to carry out a little background checking before you hire your broker. All forex brokers should be registered with both the CFTC (Commodity Futures Trading Commission) and with the financial regulatory agencies in their country of residence.
Picking out a forex trading scam
Forex trading scams are often circulated on the internet by way of advertisements. These are often disguised as software programs or education courses for new investors. A programme that promises guaranteed profits or trading with no risks is likely to be fraudulent. There is simply no way to guarantee profits in the forex market; remember that all investing comes with its fair share of risk.
Another way that scams ensnare traders is by promising job opportunities to those who graduate from these “classes” or “seminars”. These promises are mostly intended to trap people who are in desperate need of income and employment.
This article is a guest post from innovative-forex.com.