Forex trading has grown to become a multi – trillion business. Many traders are getting hooked by the day with the desire to make profits and an opportunity to invest globally. The momentous growth in the industry has seen a resultant rise in the number of forex brokers angling to have a share of the cake. While most Forex brokers are legit, be warned of scams – swindlers who convince traders by guaranteeing them high profits.
If you do an internet search on scam brokers, the number of results returned is surprising. While the forex market is gradually becoming more regulated, there are loads of unscrupulous brokers who don’t deserve to be in the business. Fortunately, there are tales – tale signs that point to trading schemes that are posit on defrauding traders.
Promise and guarantee high profits
Be aware of brokers who have promises that sound too good to be true. Brokers who guarantee and convince you to expect high profits or make forex trading look easy are, likely to be scams. Forex trading comes with risks. It’s the responsibility of a good broker to let you know of the risks associated with forex trading. Brokers who tout no - risk strategies could be swindlers after your money.
Find out if the broker is legitimately regulated
Before engaging the services of a broker, it’s advisable to find out whether the broker is regulated by the relevant regulatory authority in your region. Finding out if the body is regulated ensures your investment is adequately protected and also guards you against being mistreated by brokers. Another invaluable aspect of working with a regulated broker is that they are required to deposit money into a consumer protection fund that guarantees some degree of compensation, should anything go wrong.
Beware of fake regulatory bodies. You must counter check to find out whether the regulatory body is legit. You can do this by tracking their history. You can also check their reviews.
Seek out the company's background and physical location
A background check is a must before engaging the services of any broker. A broker should have a physical office location. You should be able to find where your brokers operations are based. The broker should also be reachable by phone so that you can call in for a one on one conversation. That way you can easily detect a fraud by asking them candid questions about their operations and evaluating their response. Geographical location is very important because it can tell you whether the region the broker is operating from is relatively regulated.
Are the brokers transparent in their operations?
Another sign of a scam broker is one that does not disclose all relevant fees. It’s prudent to find out whether the broker offers fixed and clearly stated spreads. The rationale for this is that if a broker doesn’t offer spreads, the spreads may widen when the market is volatile thus ‘‘eating’’ on your good investment. Forex scams can also be identified by refusal to return money owed to traders for instance when a trader closes an account or withdraw funds. Brokers who don’t respond to your queries are likely to be scams. Transparency of the broker is of utmost importance to every trader.
Does the broker have the necessary expertise?
How informative is the broker? Scams are known to be short of information. Is the broker’s trading platform or methods user-friendly and easy to learn? Does the broker offer resources and tools for learning or does he use reputable newsfeeds? Answers to these questions can help detect whether a broker is a scam.
Do they offer assistance in trading?
Most genuine brokers ensure their traders have a personal accounts manager tasked with initiating them in the trade and guiding them accordingly until their true potential flowers. Experienced traders also need the services of highly competent experienced dealers to sharpen their trading skills. Be wary and cautious of brokers that don’t focus on your growth, the chances are that they may be scams.
Is your broker on any known social media platforms like Facebook, Twitter or LinkedIn? How they interact with clients and the public on social media can give you a peak on their character and values. Their presence on these community platforms is an indicator of their desire to reach out and engage with their clients and the larger public. Most scammers shy away from such platforms because they have a lot hidden.
Brokers are known to target vulnerable individuals. If you have a large amount of money with no relevant experience in forex trading, it is advisable to begin by investing a small amount. Forex trading is a business associated with risks that could see you lose all your investment.