Many rookies frequently ask that is forex legit Or trading forex is nothing but a scam? The answer is absolutely not. Forex trading is a profession is not a scamming profession. If the forex market is legitimate, then why do newbies get confused about currency trading with scamming? Because these market regulations are less strict, the financial market is the most liquid and most traded. Currency trading is operated 24 hours and five days a week, making it decentralized as there is no centralized body, so it’s very difficult to regulate the fx market. So scammers target this easily to fraud investors in different cunning ways.
There are different types of scams associated with the foreign exchange market, and today we will focus on all of them.
Types of forex scam
Forex broker scam
I stated above that this market’s regulations are less strict, but the fact is that this market is not fully unregulated. Some bad forex brokerage firms take advantage of this. A common form of forex trading scam is bid-ask spread scam. The unauthorized firms with no regulations or having weak regulations offer wide bid-ask spreads on many minor and exotic currency pairs. They practice a devil game with retail investors’ mindset by widening the spread. So traders find it very difficult to profit from the spot forex market and eventually raise a question is forex legit?
Now I will present some examples to make it more sensible. EUR/USD and GBP/USD is the most traded major currency pairs in the spot forex market. What’s the difference of bid and ask price of this pair? Not more than ⅔ pips, .and most of the well-regulated brokers will offer you 2 / 3 pips tighter spread in this pair. But the offshore and unregulated brokers will increase the spread to 7/8 pips .they add 4/5 additional pips on every single trade to kick you out from the trade easily.
Suppose if you place a successful trade having the potential to gain huge profits. They will eat away your profit by composing some commissions also. And thus, weakly regulated brokers always break the mindset of a good foreign exchange trader. and most of cases, individual traders get confused that is forex worth it, and at the end of the day, they conclude that foreign currencies are a losing game
Although this scamming has lessened down over the last few years as some trusted forex brokers come forward to grow this industry, many brokers are not regulated by the CFTC, NFA. And the worst scenario is that many brokers are not regulated even from their own country, so it’s very easy for them to disappear with traders’ money. many of them also get punishment and are sent to jail for these fraudulent activities.
Some brokers offer stock trading platforms also. These brokers are regulated by the securities and exchange commission (SEC) & the financial industry regulatory authority (FINRA). These brokers who handle stocks with sport forex are good at brokers who are subject to SEC and FINRA doesn’t want to lose its license for other securities by doing fraudulent and unfair activities with spot fx market traders.
Forex broker’s regulatory bodies
- FCA Regulated – Financial Conduct Authority
- ASIC Regulated – Australian Securities & Investment Commission
- SFC Authorized – Securities Futures Commission
- MAS Authorized – Monetary Authority of Singapore
- FSA Authorized – Financial Services Agency
- IIROC Authorized – Investment Industry Regulatory Organization of Canada
- FINMA Authorized – Swiss Financial Market Supervisory Authority
- FMA Authorized – Financial Markets Authority
Forex signal sellers potential scam
Nowadays, a popular form of scam is the forex signal-sellers scams. Basically, signal sellers are individuals or small retail firms that offer signals daily. Signal sellers charge fees for weekly, monthly, yearly, and lifetime subscriptions. Signal sellers do a lot of things simultaneously. They analyze the market to find out some trade set up, which have potential gains. Then they identify the favorable time to take a long or short position to different currency pairs according to the client’s demand.
They promise these setups can make anyone wealthy easily. They find out the entry point and profit-taking point of any trade and send that to their customers, .when their trade set up goes against their prediction. They sent stop-loss points to their clients. If the price hits this point, and the customer lost any particular amount of pips, then the customer can close that particular trade with a small loss.
Some sellers send entry points, stop loss points, and take profit points altogether.
Signal sellers loudly show off their huge trading experience and trading ability to make every trade profitable. Signal sellers call themselves the lion of forex. They hire some tout who proclaims how great a trader that signal seller is. Those tout vow that this signal provider has earned a lot of money for them and made them wealthy.
After getting convinced with so many lucrative offers, the innocent traders buy signal service from them. When fx trader loses a huge amount of money, they totally get confused about whether is forex legal.
The worst scenario is that many signal sellers don’t even do this hard work to fool the fx trader. They take the money from many foolish fx traders and disappear. Although you can make a small amount of money now and then from 5/6 signals in a weak at the end of the day, you will lose all of your money following these scammers recommendations .” is forex legit ?” has become a big question nowadays because of this modern way scamming method.
Forex robot scam
Technology is developed in every sector. Today’s age is the modern age, so scammers also take advantage of artificial intelligence (AI) .forex scammers nowadays scamming in a new way, called the forex robot scam. These newest types of forex account scams involve individuals who proclaim that their automatic forex trading systems (robot) can generate a huge amount of money, placing automatic trades. The innocent and unsuspecting average investor gets fooled by these foreign exchange scammers.
The traders even don’t think that placing random trades automatically and without analyzing the market condition is nothing but gambling. Foreign exchange traders who often ask is forex legit, don’t understand how a robot works for the human being. The simple answer is robots are a trading program. This artificial intelligence uses some computer codes. These computer codes sent a technical confirmation for opening and closing any trades.
The scamming artists allure the potential investors by showing their robot’s ability to make enormous pips even while a trader sleep. The process is fully automated with personal computers. All you need to do is open your computers all time or take VPS (virtual private service) help. The robot sellers demand their robot to instantly make a lot of cash by applying a pyramid get-rich-quick scheme in forex pairs.
Although there are some legitimate forex robots that’s the story of another day.
Phony forex trading investment scams
You can find many small firms with phony forex trading. They attract you by saying that all you need to do is sit back at your home after handing your money to them. When they earn a lot of cash for you, you will enjoy them, nothing more. Although many professional traders who send their hard-earned dollars never get it back, the scammers are making a vast amount of money by opening such types of forex investments management funds services. When you charge them about your money or why your money gets vanished, they will say that they don’t know you or don’t take any cash from you.
Of course, there are some experienced traders who don’t hand over money to them. So they chose another way of forex fraud. They open an account with an unregulated offshore ill-reputed broker for those smart traders. And lastly, after five to six profitable trades, they blow away those smart traders’ accounts swiftly. Now the question is, don’t you blame those brokers for any authority? It is very difficult to charge them and get your money back as the regulations of those brokers are very poor.
Although forex fund management scammers commit investors their spot forex trades carried out by nifty and skilled forex analysts who can make distinguished results but the reality if their performance is very poor and most of the cases, these analysts are not well trained, at first, they claim they can make your investment double or triple in exchange of 50/50 profit-sharing system. But when you step forward to do business with them your all money will be wiped out. You will end your account by giving them not 50 percent but 100 percent.
On their websites, You may find many false records of success or luxury screenshots of profit, which are actually displayed to prove them authentic. But when you convinced yourself by seeing just the website’s record and hand over the controlling power of your money, you will fall into their trap. Actually; all those records are false records that are only collected to fool the investors. The success records shown on their websites and brochures are also available on the internet, and anyone can use those records. Although these fund management scammers live very expensive lives, the poor and innocent investors get nothing.
So when any salesman of any investment management service calls you and promises you to make annual returns of more than 100 percent, understand that it’s definitely a scam. Although their sweet voice loud promise may sound good but be careful about your hard-earned money before handover anybody.
How to avoid common forex scams
It is observed that, in most cases, scammers target new traders who have little or no knowledge regarding trading. So don’t rush. Take your time. First, you should know all the pros and cons of forex trading. Newcomers ask to reveal the fake forex broker’s lists. But this is not an easy task. Remember finding a reliable forex broker is not just a piece of cake. No one but only you have to help yourself find a good broker. If you can find a reliable forex broker, it will help you in the long run. Just follow some simple steps, and you can find a reliable forex broker.
Firstly you need to search the internet about the broker you are choosing to invest in. look for their existing customer’s reviews on various forex forums and renowned websites. There are many websites that are sitting with all the information about all the brokers on the planet. All you need to do is search properly and deeply. If you find so many bad reviews or your choosing broker sounds fake, then avoid that company and try the next one. This way, you can sort out good brokers from the fake forex brokers list.
While you google about any broker, check ten things
- Is your broker well regulated?
- Is your broker an offshore broker
- Are there any lethal actions against the broker
- Visit some popular forex forums like babypips,fxstreet,dailyfx, forex, forex factory, forex peace army, and search there about your broker’s reviews.
- Check whether there are any complaints regarding fund withdrawals.
- Do they list a physical address?
- How easy it is to contact them when you face any problem or how good their customers’ service is
- Do your broker stock trading also? If so, then it’s a good broker.
- If your broker offers stock trading, also then check whether they are registered from securities and exchange commissions (SEC) or not. If they are registered with the SEC, then choose that broker.
- When choosing a broker, check whether they are 100 % transparent in their investment companies’ policies or not. If not, then avoid that broker.
Don’t believe in easy money. If anyone or any firm promises you to make 100% gain per month, avoid them. They are all nonsense. Remember, there is no easy money here in spot forex & CFD as trading here needs a lot of time, education, patience, and hard work. The best way to protect yourself from scammers is to educate yourself properly than just depending on signal service providers. And then, when you learn how to trade properly, you can trade yourself with your hard-earned money and add an extra source of income.
Before starting live trading, first practice in a demo for several months. When you start live trading, always risk a small amount of total capital in every trade. after making a profit, try to withdraw that money and see how your broker reacts with you. If they let you withdraw your profit, you trust your broker, .and you are safe to deposit more funds with this broker.
Don’t rely on the robot or automatic trading if you don’t have deep and proper knowledge about automatic trading. Robot trading can be profitable if you know the system behind it. If you know all the pros and cons of a robot and how to use them properly, only trade with it.
Signal sellers may attract you with their sweet talks but remember that you can make a profit by taking signals, but for that, you will have to use it properly. If you know why placing any trade and a signal provider, let you know that you can try that service. But before investing any real money, first, test that signal in the demo account. If you make money placing forex signal providers’ trades, you can also make money with it in a real account.
If you lose money in demo-taking signals, then don’t invest real money no matter how loudly they claim their signal service is 100% profitable.
Don’t ask yourself is forex legit? Because it’s always a legit business, but here the risk is very high .remember all business does not suit everyone. Every trader makes losses in forex but if you educate yourself properly, gain correct expertise, give enough time practicing technical and fundamental analysis, then there is a high chance that you can make a living trading forex.
it’s a good market to invest your money in. Still, you will have a strong understanding of the market condition. Remember, the temptation of huge money in a short time will always emerge nifty and aristocratic scammers who can fool with the newest forms of scamming, even the smart trader, .so you should always keep up to date yourself about what’s happening in this industry.
The temptation of quick and easy money in a short time was present ten years back and will always be present in the future. That’s why you should understand the requirement to survive in this market. Instead of searching for the answer “is forex legit” accept the whole scenario with a transparent eye. If you follow all the steps I stated above, you can stay away from currency exchange rate scams and become successful in the forex trading industry.
What Professional traders say about forex legitness and scam
” The scam occurs when spreads differ widely among brokers “Basia Hellwig
” Forex brokers that are regulated in a major hub are always more trustworthy”Steven Hatzakis, Blain Reinkensmeyer
“There are three types of scams to watch out for in forex”Ian Bezek
“It may be hard to identify signal sellers as scammers”Fo Alexander
” Fraud exists in any commercial sphere, and the Forex market is no exception”Andrey Mastykin