2 Tips To Help You Avoid All Forex Trading Scams

While trading forex can be an endeavor that’s equally as exciting as it is profitable, it is also connected to a certain risk. Some of that risk is unavoidable and the reason forex trading is so exciting. Other risks can be limited and controlled by skill, stop-loss, and other practical tools and features. Then there are some risks that can and should be avoided at all costs.

Unfortunately, the forex market has been tainted with scams and unserious operators whose only goal it is to ruin and steal. The scams are often well-planned and designed to trick even experienced traders and without proper knowledge of the industry, they can be hard to avoid.

That being said, there are only two things to keep in mind when avoiding scams and if you can follow these two rules, you will most likely avoid any scam that comes your way.

Be Careful of the Platforms You Use

The number one rule when trading forex is to only use reliable brokers, platforms, and tools. The forex market is the biggest financial market in the world and there are regulatory bodies that separately oversees and regulates the market in every jurisdiction.

These regulatory bodies are also responsible for issuing licenses to companies that want to offer forex related services. For example, in Europe the CySEC and the FCA regulates the market, in the U.S. it’s the SEC and the CFTC, and in Australia, the ASIC controls the forex market.

That means that any broker operating in these areas have to be approved before they can start offering forex trading legally. Subsequently, the only brokers you should use are regulated forex brokers.

The easiest way to find out if a broker is regulated is to check with the relevant regulatory body since they all clearly state every licensed operator on their site. FCA an CySEC would be two of the leading regulatory bodies that gives out licenses. You can also double-check with reputable third party recommendation sites. For example, in this comprehensive eToro review, all of the broker’s relevant licenses are explained in detail.

It’s also important that you only use safe software to handle your trading, including graphs and trading robots, which is why it’s suggested that you only use the tools and platform offered by your prefered regulated broker.

All that being said, it’s always a good idea to examine the broker even further and go beyond just their licenses to confirm their authenticity. Are they working with other trustworthy brands? What are previous customers saying about them? Are they transparent with company information? etc.

Use Your Common Sense

Our second advice is perhaps a bit vague, but it’s also your main weapon against any forex scam you come across, as well as other dangers in life.

Your common sense, your gut feeling, sixth sense, or whatever you call it, is often right when faced with threats. That’s why you always need to listen to yourself when making important trade-related decisions.

  • If it sounds too good to be true, it probably is.
  • If someone claims they can guarantee safe investments, they’re lying.
  • If you’re offered “free money”, you’re being tricked.

Some say that offense is the best defence, but in this case, defence is the best offense.

Be sceptical to anyone that reaches out to you and offers forex related services and solutions of any kind. Make sure you carefully examine every tool and platform you use, especially when you have to submit personal information or make deposits. And never blindly listen to other peoples’ advice unless you know you can trust that person.

If you follow these two simple yet crucial tips, you will have a great forex experience and you will avoid any and all scams. Just make sure you learn the basics of trading before you get started, and never stop improving your skills.

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