Be careful out there – tips and guidance to avoid scams in the FX Trading World. Our tips and suggestions on avoiding Forex Trading Scams
More and more people have started forex trading in the last few years and while many of them have done very well, a few have become victims of the increasing numbers of forex scammers. Tempted by the promises of easy profits at little risk playing a market they know little about, some new forex traders have lost money to con-artists who knew an easy mark when they saw one.
Don’t be one of them. Get educated, and don’t become a scam victim.
There’s NO such thing as a FREE lunch
The easiest way to spot a forex scam is by its promises.
There’s no such thing as a high profit and low risk investment. Anyone who tells you there is is likely to be generating a few high profits for himself… and running the risk of going to jail. Really if there was an easy fool proof way to make unlimited money with no effort and no risk, then you can bet that the people doing it wouldn’t share the secret for $99.99. Why would they bother..? They could train you for free if money wasn’t an issue, or simple give out money to worthy causes, couldn’t they..
IIf a forex deal looks too good to be true — like anything — it probably is.
Steer clear too of highly leveraged margin trading, at least when you’re starting to trade forex. As you can find yourself easily wiping out completely over small market movements.
Margins are similar to deposits. They let traders commit to larger deals in the future, and allow unscrupulous traders to gamble with other people’s money without fully explaining to them what they’re risking. An investor might believe that he or she has only risked $1,000 when in fact they’ve committed to a trade several times that figure. If the trade becomes unprofitable, the victims of such forex scams could find themselves with much larger losses than they anticipated.
Another sign that a trader might be looking to take you for a ride is if they claim that they can trade in the Interbank Market. This is a network of currency transactions involving banks and other large organizations. Because the volumes are much higher, prices can be higher too. It’s not usually the sort of place where small investors tend to trade so being told by a trader that he can put your money there is a little like buying a watch from a man in a bar: there’s a good chance the person you’re dealing with isn’t the most honest.
Forex scams have become more common but they’re still pretty rare. The best protection is an understanding of the forex market and a lot of common sense.
Key Points to remember:
- Get educated – don’t be the rabbit..
- Question everything – even what I tell you (Buddhist idea)
- There’s no such thing as a free lunch
- If the sales pitch involves pictures of guys with swimming pools, cars, beaches.. it’s probably not real – just that a sales pitch
- Start with FREE demo accounts – no risk – no loss
- Check who regulates the company
- Check where the company is based
- Can you call them? if not why not? What if something goes wrong.. what would you do
- Ask your independent financial advisor
- Check the trading forums, search engines and sites like StartTradingFx.co.uk
List of FX Trading Companies
- PaddyPowerTrader.com won our 2007 Award, so check them out.