Is Forex Trading Legit? Spot Fraud and Avoid Getting Scammed

Is forex trading legit? - silhouettes of business people with the globe in background
Bill Cascade   NEW 14/04/2019 00:00:00 Guides

With millions of people entering into the Forex trading arena every month, can you be sure that your trading endeavors are legitimate? Because of the immense amount of money it involves, Forex has attracted unscrupulous people.

But does this mean that Forex trading isn’t legit? Furthermore, can you spot potential fraud and avoid becoming involved in a scam if you want to start seriously trading in this arena?

The Problematic Forex Industry

Is Forex Trading legit - Forex chart open on desktop and tablet

When anyone enters the Forex arena, they need to be aware that it’s possible to both make and lose money in trading.

The problem some people find with Forex trading is that there’s no guarantee of making money – pure and simple. As with all types of trading, investments, trust funds, and so on, no one can say for sure what the outcome will be, and it’s not 100% foolproof.

Thus, when people do lose money during the trading process, they become very skeptical. This then leads to them bad mouthing Forex, merely because they experienced a loss. The trick here is to recognize bad personal experience and separate it from fraud and scams.

This, by no means, suggests that Forex isn’t legitimate. When anyone enters the Forex arena, they need to do so with the mindset that it’s possible to both make and lose money in trading. It’s all about the individual and the work they’re prepared to put in.

Forex is indeed a legitimate industry. Millions of people deal in the Forex trading arena as real businesses and make profits – as do an equal number of individuals. Along the way, they may undoubtedly experience losses but tend to make more profits than these losses.

The reason for their success; pure hard work and dedication – which is what you would expect when running any business or venture. But what’s more important is that they have a sound knowledge and grounding before they enter this industry.

Forex Is Legitimate – but Unfortunately, Some Forex Traders Aren’t

Is Forex Trading legit - man offering a handshake

Scammers, fraudsters, tricksters, and con artists are not solely exclusive to the Forex industry. Unfortunately, they do exist everywhere.

Though Forex trading may be legit, it’s just like many other areas of life. You will come across those more unscrupulous of people who make it their life’s work to scam and con people for their hard earned money.

The point to note here is that scammers, fraudsters, tricksters, and con artists are not solely exclusive to the Forex industry. Unfortunately, they do exist everywhere. The reason why it’s discussed with more reference to the Forex Industry is simple. This is where the bigger bucks are – making it more of an impact, as well as a good news story!

The problem is that because so many people have little to no experience about this vast industry, it’s easy pickings. Those who want to pray on the more vulnerable and easily select their victims can do so with ease here. Therefore, until you master the Forex trading markets, you remain an easy target.

Those Most at Risk from Fraud and Scams in the Forex Industry:

  • Newcomers with no prior experience or relatively little knowledge of Forex trading.

  • Those looking to make a quick buck. These people are keen to try something that they believe will get them to the money without having to spend any time looking into the finer details.

  • Those with lots of money to trade with. Sometimes the more successful of scammers and long term cons artists target those they know to have high amounts of money. This can equal more benefit payments for them in just one hit.  

  • Those who don’t fact check and believe all that they’re told. Trading requires fact checking and information gathering to make the best trading decisions. If no research is done beforehand, it’s merely a case of chasing empty promises.

  • Those pushed for time to devote to Forex. These rush into easier solutions. Thus, they allow others to take care of it for them instead.

  • People who have little online or technical knowledge. They tend to believe those claiming to have produced software which offers a secret formula.

How to Spot the Forex Fraudsters and Scammers

Is Forex trading legit - "road signs- scam" on pile

The biggest fear about fraud in the Forex industry seems to lie with unscrupulous brokers.

Perhaps this is more so because most people know that to guide you through Forex trading, you have no choice other than select a broker here. Therefore, venturing into this minefield could expose you to possible fraudsters and scammers.

So, with a saturated marketplace of brokers from all walks of life, how do you ensure that you are selecting the best one, and not a scammer or con artist?

The best way to be sure you aren’t employing the services of an unscrupulous broker is to look out for certain red flags, including:

  • Unregulated brokers. If your broker isn’t regulated, consider why not? If a broker has nothing to hide and is legitimate, what have they got to lose by becoming regulated? Real and legitimate brokers can instantly provide proof of their validity and whenever they are asked for it. If your intended broker isn’t regulated, or you suspect them of lying about credentials, a quick check with regulatory authority is urged. This should offer you confirmation of whether they are a regulated broker or not, as well as if they have any cases already opened against them. Therefore, this information will give you clear confirmation of who to avoid.

  • Constant bad reviewed brokers. Almost anyone can leave a review these days. Yet, when a Forex broker has accumulated a large number of bad reviews, all saying something similar, this is a big red flag that must be addressed. At this stage, look a little bit further into such reviews and begin an investigation of your own. This will ensure that it isn’t merely a case of soreness on the trader's behalf but real-time reports of concern over the broker's credentials and methods.

  • Lack of background information. It takes a few minutes to do a quick check online to derive a small amount of background information about a potential trader. This is just one small way to discover whether they are legitimate. However, those illegitimate of traders won’t have background information readily available. Otherwise, they may just refuse to provide you with it. Be instantly wary of not being able to easily access a broker’s information, which would otherwise be readily obtainable to see if they had nothing to hide.  

  • A promise of 100% profit and no risks. Forex trading, as with all trading and investment types, carries a risk. Those most professional brokers will be sure to inform you of this. They will then endeavor to emphasize potential risks when it comes to trading with your hard earned money. Many scammers and con artists posing as Forex experts will often make unsubstantial claims. These include making you instantly profitable, suggesting you won’t make any loses as their method is 100% guaranteed. Nothing is guaranteed in the world of Forex, and any trader claiming this is most certainly lying to you.

Final Thoughts on Staying Safe in the World of Forex Trading

To conclude, when you enter the fascinating world of Forex Trading, keep yourself safe by bearing these points in mind:

1. Never come into the Forex industry expecting quick fixes. Scammers play on such people and can spot them instantly. Forex is hard work, like most things in life. But if you want the right results, you should develop the determination to work through those tougher times to get to the best results.

2. As with all investments start small and work up, never be tempted to whittle away all your life savings on the one investment. Any broker that suggests doing so should be avoided altogether. Learn your trade as you go along and invest small as you build up your knowledge. No-one should be expected to spend a considerable amount of money on something new to start. Particularly when they have relatively no experience or knowledge about it beforehand.

3. Stay aware and do your research at all times. We regularly state how Forex is an ongoing education. Keep learning the industry and improve on your initial results and experiences. But, most importantly, train yourself to keep a regular watch on the trading forums, news, and inner circles. Furthermore, read the finer print always before beginning something new and unknown.

4. Finally remember, if it looks too good to be true, it more than likely is! Develop a mantra of staying safe online and remember that claims of 100% profit without any losses have no place in this arena. Those who claim they have found the secret or magic formula should be steered clear of. Forex trading may be risky, but even risk needs to be managed intelligently.  

 

More articles

US Dollar Under Pressure On Weak Economic Data

Bill Cascade   NEW 09/10/2019 00:00:00 Forex

The US dollar is struggling for direction, having lost momentum on weak employment data. The greenback has registered impressive gains, in recent months, as other majors currencies continued to edge lower...

Buy to Open Definition, Explained in Detail with Example

Bill Cascade   NEW 08/10/2019 00:00:00 Guides

There are four types of options that are commonly used in the industry. Alongside buy to open, these include buy to close, sell to open and sell to close. Here we look at precisely what the basic definition of buy to open means, alongside offering an example of it at work. By analyzing the term further, we can provide a better understanding...

Swiss Franc Eyes Fresh Gains On Safe Haven Appeal

Bill Cascade   NEW 07/10/2019 00:00:00 Forex

The Swiss franc has lost some ground against other major currencies in recent trading sessions. For starters, it is trading at two-week lows against the Euro, which has tumbled to two-year lows in recent months. While the weakness of the Swiss franc stems from weak economic data, a bounce-back could be in the offing going forward...

Turkish Lira On The Recovery As Swedish Krona Woes Persist

Bill Cascade   NEW 06/10/2019 00:00:00 Forex

Turkey's government remains optimistic about the Lira appreciation, against the dollar, over the next three years. Economic forecasts by the finance ministry indicate the government expects the country’s economy to expand by 5% next year...

Argentines Turn To the Polls To Avert Economic Crisis And Peso Volatility

Bill Cascade   NEW 03/10/2019 00:00:00 Finance

The country is struggling with one of the highest levels of inflation at 54%. High inflation levels have affected the way of life, as prices of goods continue to rise, and small businesses struggle to remain afloat... 

Free margin - Credit