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- There are several signs that can help you with Forex scams identification
- In most cases, unregulated FX brokers turn out to be scammers
- The more you know about trading, the easier it is to identify Forex scams
- Checking the background of the broker can help you identify scammers
Forex Trading Scams - How Common Are They?
Forex trading Scams explained: The scams are usually unregulated service providers in the Forex market.
Forex is the biggest financial market around the world, with millions of people trading Forex every moment. While trading Forex, you are dealing with currency pairs. Although it is a very popular market, traders should consider that choosing the right broker is one of the most important decisions that they might have to make.
In recent years, it has become very hard to identify Forex trading scams. The scammers have developed their strategies and managed to blend in with regular Forex brokers. That said, there still are some signs that might help you differentiate legit Forex brokers from scammers.
In most cases, the Forex scams are not overseen by any type of financial institution or regulatory body. These companies also tend to care less about providing trading details to investors. Rather, scammers tend to display only basic information on their websites.
A very common thing that scammers do is that when they get caught they are simply changing their name and continue scamming people. Generally, there are always some tell-tale signs that the company you’re about to register with is going to scam you.
As we have already mentioned, one of the biggest signs of Forex broker scams is the regulatory status. This is especially true if the company falsely claims to be licensed. There are ways you can check the regulatory status of the broker. You can directly contact the regulatory agency and ask them for information about the broker.
Scammers are also known for offering traders services that sound too good to be true. There are many other signs of broker scams as well, which include calling out of the blue, guarantees that you will make huge profits, no license, and shady background. Let’s discuss each of them one-by-one.
Calling Out Of The Blue
There are many different types of Forex scams in the market, but one that is very easy to tell that is a scam is the one that calls you directly. This should be a huge red flag and brokers like this must be avoided. First of all, the Forex trading laws in regions such as Europe, for example, restrict Forex brokers from calling people and offering them trading services. There are many things that are wrong with such behavior. First of all, where did they get your phone number? How do they know you are interested? Why aren't they stopping?
You should make sure to avoid such brokers to make sure that you are staying safe. It is recommended to ignore their calls or simply block them completely.
There are several reasons why calling out of the blue is a sign of Forex investment scams. First of all, if the broker has to call random people directly to somehow attract customers, even if it is not a scam broker, is not something that you should trust with your funds.
If you are a Forex trader from Europe and a broker calls you directly and offers you trading services, not only is it a shady thing to do but goes against local trading laws. These types of brokers should be avoided at all costs because they are most probably not licensed locally. Even if they are, they are not following the trading rules in place, which makes trading with such brokers a very unsafe experience.
No License
When it comes to different types of Forex scams, one of the most common is unlicensed brokers. The market is full of Forex brokers and not every single one of them is licensed. Not being licensed is a huge red flag and should be a sign for traders to avoid the broker. Over the years, the Forex trading market has become very popular. There are millions of people around the world trading Forex right this moment. Such popularity of the market has made Forex a perfect place for scammers. In recent years, Forex trading scams have developed a lot, but one thing that can be the safest option is to only trust regulated Forex brokers.
There are certain things that you can do to make sure that the broker is really licensed. First of all, check the real name of the broker, which should be provided by the company at the bottom of every page of its website. Then, see which license it owns. Some of the biggest Forex scams are actually unregulated FX brokers.
There are numerous regulatory bodies around the world, most of the jurisdictions have their own one. There are some regulatory agencies that have special pages on their website where they list all the Forex brokers that they have licensed. If you can’t seem to find such a page, you can always directly contact the regulatory agency and ask them about the status of a certain broker.
This way, you can be sure that you are trading with the right broker. But, how does a license protect you? The thing is, getting licensed in most jurisdictions is quite a hard process. Forex brokers are required to go through a very strict checking where they have to provide very detailed information about the services that they provide.
In addition, they have specific requirements to meet. All of these requirements are in place to protect traders from the risks of Forex trading.
Guarantees
While trying to spot a Forex scam, a great sign to look out for is guarantees made by the broker. A legitimate broker will never guarantee that you will make money.
In fact, legit Forex brokers will remind you constantly of the risks involved in Forex trading and will make sure that you really understand the dangers that this market comes with. If a broker tells you that the profit is guaranteed, there is a huge chance for it to be a scammer.
Forex trading is a very diverse market and it is impossible to tell someone that they will generate high profits for sure. Anything can happen while trading Forex, the prices might change in a very short time, and the risks are too much to say that anyone is guaranteed anything.
While Forex is full of opportunities, the risks are too high to tell someone that they will generate huge profits. If you come up with a broker that does so, you are most probably dealing with Forex trading scams.