Is forex trading scam? Is forex legit? Is forex gambling? Is forex trading profitable? The list is endless.
The number of times I have seen these questions or heard them from beginners in forex trading is countless. I understand when someone asks such questions since they relate to forex scams most of the time.
There is a lot of information about forex trading out there, and most of it is conflicting hence bringing about confusion to newbie traders. There are a lot of people out there also talking about forex scamming.
Some of the people talking about trading forex scams might have experienced them first hand, others it is all about heresy, while there are those that talk about forex scams since they are losing money in the forex market.
So I understand when someone comes to me with the question “is forex trading scam” or “is forex legit?”
The forex market is the biggest financial market globally, where over $5 trillion is traded each day.
Such a volume makes it possible for central banks and other corporations to trade amongst each other and allows holidaymakers to tour new destinations at will.
It also gives speculators a platform to maximize on a market that actively trades all day, five days a week.
The financial benefits of forex trading may appear enticing, but then this form of trading ought not to be taken to be easy.
To indulge in forex trading, you need formidable forex trading education/ training, hours of practicing on the charts while backtesting your trading strategy, a well-funded trading account as well as a good understanding of trading risk management techniques.
Like in any other market, this market has many dishonest individuals who trick people using varied forex trading scams.
Many companies and sole proprietor entities say they have accumulated significant wealth from forex trading when reaching out to potential customers.
They even give seminars and show off their wealth on different online platforms.
Nevertheless, some of these entities have been uncovered as being fraudsters and unscrupulous. This leads to questioning the validity of forex trading as an investment vehicle.
Are you the kind of person that gets easily excited when people screenshot their earnings and show them to the world?
If that’s the case, then you are in a lot of trouble on matters to do with forex trading scams.
With the advancement in technology, people can fake a lot of things and make them look as if they are a true reflection of reality.
There is a time a read from a certain blog (I can’t remember the name of the blog), that “flossing with your account trading balance is like flushing your dick, yet there will always be someone with one that is bigger than yours.”
I couldn’t agree more. This is just spot on. The moment you come across a forex trading “guru” who uses this as his/her main selling point, you should be cautious in your dealings.
It is an easy way of eliciting emotions since it creates a desire in you, given your objective in forex trading.
Why many people fail in forex trading or any other business is focusing on the amount of money they want to make instead of focusing on the process of making this money.
This aspect leaves many traders vulnerable to forex scams.
So, is forex legit?
Continue reading to find out….
Is Forex Trading Scam?
Forex trading is NOT a scam.
Forex trading is legit as it offers legitimate markets where good and honest traders are offered an opportunity to conduct business.
Trading may be tarnished because of some forex scams that have been experienced in the past, but it is as legit as any other business out there.
Many of the forex scams that happen can be attributed to the lack of tough laws and measures on the forex market, making it easy for scammers to con traders.
It is not easy to regulate the forex market as it is the largest, most liquid market. This market is traded 24 hours a day, with no centralized body that governs currency trading.
During the time when the forex market became open to retail traders in 1999, scamming mainly consisted of brokers collecting fees from clients and then vanishing without aiding them to indulge in the market.
Most of these brokers were in countries where forex trading was not regulated, and thus, it was not possible to have them face the law.
Things have changed, though, as forex trading is now regulated in most countries. There are consequences likely to accrue for those brokers that try to circumvent the stipulated regulations.
Are you still struggling with the question if forex trading scam?
Let me outline some of the forex trading scams so that you can be vigilant at all times.
Existing Forex Scams
The moment you are asking is forex trading scam, you need to put it into perspective.
The foreign exchange market generates the largest turnover compared to the other markets, with over $5 trillion being traded on a daily basis.
However, so as to accumulate that much wealth in a short time, traders end up risking a lot.
During the time when large sums of money are flowing in the market, it is possible that some culprits knowingly plan to misguide you and cheat you out of your money.
Below I have outlined some of the common forex scams you should try to avoid.
The current forex trading trend entails using “expert advisors” and automated algorithms
These are robotic systems that tend to scan the data for the given currency pairs as well as their previous performances to help identify and set profitable entry and exit signals on your behalf.
The majority of these bot-based organizations do a lot, including stellar websites and fake testimonials, to try and influence you into thinking that you can accumulate wealth on autopilot without necessarily logging into your trading account for a while.
The tech boom is very common that some bots have lured beginners in forex trading who desire to make wealth without lifting a finger, only for them to realize that they were conned when it’s too late.
There are bots that are tried and tested in the market, and such have successfully proved to be good in what they do. But they are very few, and took years of backtesting and reconfiguring.
As a forex trader, you are always on the lookout for the best forex brokers as you want to get the most returns from your investment.
However, be wary of forex brokers who are not straight forward with their clients.
Newbie forex traders, for instance, mainly complain of registering with brokers that have clearly declined withdrawals from their forex accounts.
Read: Trading Mistakes Made by Beginner Forex Traders
Ensure you research well on brokers and their ratings. You could begin by checking out the footer of the forex broker’s website.
Take note of whether the footer contains information on regulatory bodies or any disclaimers and their corporate addresses.
If this vital information is missing, then such a broker cannot be trusted.
Most of the companies that end up scamming people even in other industries use the disclaimer or terms of service to “hide” information that they know you will not read while opening an account.
Always ensure to read the fine prints entailed in these sections.
Nevertheless, should there be a Securities and Exchange Commission (SEC) regulations listed – though with the other information missing- then it is a favorable sign that the broker can be trusted.
At no time should you forget that a good broker should always have your best interest as a priority, and this should be reflected in their way of doing business.
By now do you have an answer to the question of is forex trading scam?
Continue reading to see other relevant forex scams.
Signal Seller Scams
Signals or paid information are what some forex traders or brokers depend on to predict how currencies move and the value of the currencies.
You can buy this content from asset managers, firms, or other seasoned traders that are known as signal sellers.
It is possible to subscribe to signal sellers for a fee either on a weekly or monthly basis. There are brokers who normally refer traders to such sources to convince them about a trade.
When trying to convince you about a trade, ask the broker to make available a historical performance chart of their signals.
Use these to confirm the legitimacy of their claims. You should also know that majority of signal sellers have a mixed record of bad and good tips, and this can make it hard for you to arrive at a decision.
Brokers have the ability to alter such key areas so that they appear good and prevent traders from doubting them, thus influencing them to trade in a certain way.
In case the trade fails to go as expected, brokers place the blame on the signal sellers for all the losses and do not take any responsibility.
This scam is one of the oldest forms in the history of forex trading.
Since the start of forex trading, brokers have always used computer-manipulated bid together with ask spread to trick traders.
Basically, forex currency pairs are shown with four decimals.
Unscrupulous brokers manually input a certain bid and ask spread with a huge variation in the 4th decimal points so as to earn higher commissions, thus getting a huge part of your gains without you knowing.
The moment you come across the “zero commission” or “no commission” brokers, you should not get overly excited since they make their money through spreads.
As a result, there are some unscrupulous brokers that will be working to increases their spreads unfairly in order to increase their gains.
Recently, the point-spread scam has been reduced although it is not totally inexistent.
To get a quick insight on point-spread scams, you can compare bid to ask spreads from other brokers. Most of the time they are not the same.
Going with the information above on different forex scams, I know now you can answer the question “is forex legit?” or “is forex trading scam?”
There are some inherent scams just like any other business, but they can be avoided. As a result, forex trading is legit on how it operates.
Read: Trading Tricks: 14 Practical Trading Tips to Dominate the Market
Ways of Spotting a Forex Trading Scam
The best way to identify a forex scammer is to know that most of them give you an assurance of big profits with very little or zero financial risk.
It is important to note that forex trading does not offer a 100% guarantee for gains.
If this guarantee existed, then traders would not share that with fellow market players.
Some of the forex trading offers out there may be tempting, especially for new traders, but then the offers are not legit for this market.
When the deal is too good, then as a trader, think again before you fall into a scamming trap.
So as to avoid forex scams, consider the following tips.
- Be cautious of traders that are quick to show you screenshots of how much they are making. This can easily sway your psychology and blind you.
- Take great caution on software that claims to have a winning ‘secret formula.’
- Run away if someone is telling you that you will be investing your money risk-free. Have you ever had of a business that is risk-free yet has high returns? Everyone would be doing it.
- Avoid falling for false promises traps. Those promises that guarantee to make you a millionaire quickly with little to no effort.
- Avoid the installation of programs unless you are certain that they will not destroy your computer.
- Always aspire for someone to teach you how to trade, but not sell you signals. It is better you gain the skills and benefit from them for the rest of your life.
To avoid being conned, also know that those who scam people in the forex market are not involved with any regulatory authority or body.
In forex, legitimate brokers will always make known their legitimacy and will do this with evidence upon request.
Brokers who hide and lie about their legitimacy are most probably scammers.
You can prove a trader’s legitimacy by contacting any regulatory authority that can offer you names of regulated companies and a list of cases against some of these companies.
Forex traders’ legitimacy will help you know the forex brokers to avoid at all costs.
Now that you have answers to the questions “is forex trading scam,” or “is forex legit,” among others, you can take the necessary measures to steer clear of possible forex scams.