As the world’s most liquid financial market, the foreign exchange offers traders opportunities to achieve gains. The growth of online trading platforms has made currency trading accessible like never before, resulting in one of the biggest surges in retail forex trading ever. Unfortunately, the massive popularity of forex has also spawned a litany of scams that have cost the trading community untold sums of money. The following article will help new and existing traders identify ten of the biggest forex scams in the market. With proper knowledge and guidance, you can quickly identify and avoid fraudulent activities and help others do the same.
In forex trading, a robot is a program that uses technical signals to enter trades on behalf of the trader, allowing them to make money while away from their trading screen. Although these robots are programed to run mathematical algorithms, they are incredibly poor at identifying and responding to ever-changing market conditions. As a result, many traders have blown out their accounts using robots. While the robot itself may not be a scam, the way it is marketed sure is. Be extra wary of marketers promising instant success simply by using their robot.
If you’ve ever come across a high yield investment program (HYIP), you have likely been faced with a scam. These con artists promise investors a ridiculous return on investment (returns that would put people like Warren Buffett to shame). If it sounds too good to be true, it probably is. Forex trading is an incredibly challenging endeavor, and anyone promising you XX% returns per day/week/month is out to defraud you.
Ponzi schemes – operations that generate returns for investors by acquiring capital from new investors – are alive and well in the forex industry. Like the HYIP program, these fraudsters promise incredible returns with little risk. The more outlandish the promise, the more likely the operation is a Ponzi scheme.
Fraudulent brokers come in many shapes and sizes, but many of them operate as a Ponzi scheme or simply fail to pay out to clients when they request a withdrawal. The good news is there are several websites that feature client reviews of all the major forex brokers, helping you separate the frauds from the legitimate ones.
One of the great things about online forex trading is all the great bonus programs to choose from. However, some of the bonuses are there just to lure new traders to deposit money. It’s important to note that not all bonus offers are scams, but many are simply set up to take advantage of novice traders. That’s why it’s extremely important to read all of the fine print before you accept any bonus program.
What you should look for in a forex broker
Now that we’ve identified some of the scams, it’s equally important to talk about what to look for in a forex broker. Every reputable broker has a few qualities in common: they are regulated by a recognized financial authority, have an established track record in the forex industry, offer a solid trading platform and provide strong, responsive customer service.
When deciding on a broker, it’s also important to read each company’s account details for things like leverage, commissions and spreads, initial deposit requirements and ease of deposits and withdrawals. These details will help you choose the broker that’s right for you.
If you’re still hesitant about choosing a broker, there are a small handful of companies that have been around for more than ten years. In a market that is in a constant state of flux, longevity is extremely important. Well established brokers also have popular affiliate programs and partnership opportunities that have paid out millions of dollars in commissions to their business partners. This likely means the company is in good financial standing and has ethical business standards.
Given that the forex market is in a constant state of evolution and change, it may be a while still before these scams disappear. This article should get you thinking twice about the forex marketing strategies you see every day. At the end of the day, there’s no substitute for hard work. This certainly applies to forex.
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