Tips to Find Genuine Forex Broker to avoid the Forex Trading Scams

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EnclaveFX
Oct 01, 2022
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Are you aware of the fact that the largest financial market in the world—the Forex market—sees daily trades worth more than $5 trillion? It not only makes it possible for businesses to trade with central banks and for tourists to travel to new locations, but it also gives the liberty to speculators to make a profit from a market that is open five days a week, twenty-four hours a day.

The ability to enter the global currency market has never been more straightforward. You may trade in the direction of the Euro, British pound, Japanese yen, US dollar, or even the Russian Ruble with only the touch of a button! Countless currency combinations are available for trading, giving you a wide range of options.

Many people wonder if they can become wealthy through trading with Forex. Despite appearing attractive, trading with the forex market cannot be considered. Simple. A strong trading foundation, a fully funded trading account, and an understanding of risk management are essential.

Unfortunately, many dishonest persons attempt to con others through Forex trading broker scams. As long as a forex trading broker is in the market, there will be trading with forex scams. Scammers are constantly Stealing your money as schemes evolve. But is there a solution to this problem?

There are many distinct types of investment fraud. Some schemes have even been given their inventors' names, like the classic Charles Ponzi-inspired Ponzi scheme. Trading with Forex scammers sometimes preys on inexperienced or untrained traders. Getting a solid education in Forex trading broker before you trade is the most fantastic way to avoid becoming a victim and being conned.

Forex trading broker scammers frequently present "too good to be true investment opportunities" to con you out of your money. When you don't have any trading experience, con artists will try to use your optimism, worries, and inexperience. Being informed about the markets reduces your risk of being attacked.

How to Spot a Scam

Because there are so many different types of fraud, many individuals wonder if trading with Forex is a pyramid scheme. No, forex trading is not in and of itself a pyramid scheme. Nevertheless, there are numerous scams in the forex trading broker sector. When someone guarantees they will make tremendous gains with little to no danger to their money, that is the telltale sign that they are a Forex trading broker con artist.

To begin with, there is no such thing as a 100% guarantee. Dealers would never share information with other market participants if there were. Some of these deals could sound rather appealing, especially to traders who are just starting. But as the saying goes, the only free cheese is in the mousetrap. If something seems too good to be true, it probably is.

Follow these simple rules to stay away from scam artists

  • Maintain your security and refrain from following false promises.
  • Pay attention to software that claims to have found a "secret formula" in particular.
  • Only install software after being certain it won't damage your computer.

Another red flag is that con artists never register with any regulatory body. Always remember that trustworthy brokers like EnclaveFX always offer proof of their legitimacy. You can contact a regulatory body to ask for a list of regulated companies and charges filed against regulated organizations if you think a Forex trading broker is lying about their regulatory status. You can learn which Forex trading brokers to avoid from this.

Three Major trading with Forex Scam Types to Avert

People who engage in trading with Forex, money, and other trading scams are constantly looking for fresh, inventive ways to con novice traders. However, there are three main categories of trading with forex scams to which customers are frequently exposed. To prevent them, it is essential to understand how they operate. Thus, we will go into further detail below.

1) Robotic fraud

Trading with Forex robot is a trading program that opens and closes transactions using algorithms, or lines of computer code, as technical indications. Trading with Forex robots is not all fraud. For instance, the popular MetaTrader suite of trading platforms' Expert Advisors (EAs) can be used to create trading with Forex robots.

You might be able to avoid some well-known con artists by searching online for a Forex robot fraud list. To avoid any trading with Forex robot scams you may encounter, you should also be aware of the following:

Unrealistic marketing messages. It's unlikely that the creator of a Forex robot will have the evidence to back up their claims if they have to "pitch" you on the idea of what it could do for you. After all, statistics aren't lies, are they?

Very high growth returns as a percentage. Some trading with Forex robots promote strategies that produce more than 4,000% returns in just a few years. Although this may sound amazing, it's crucial to consider the numbers. The return might only reflect completed trades.

Lack of variety in scalping tactics. Several trading with Forex robots uses a scalping strategy to trade for minimal earnings. This demonstrates a high victory rate and can inflate the results in a favorable market environment. However, market conditions can change, and if the system consistently loses more deals than it wins, a few losing trades will be enough to wipe out any gains.

Using unlicensed brokers Using unregulated brokers that no one has ever heard of, specific trading with Forex robots demonstrates incredibly positive outcomes. If you open an account with them, your spreads and commissions will be bigger and will eat up much of the profit even though the results, in this case, may be favorable on their interbank spreads.

In the end, if you're considering trading with Forex robot, approach the decision as a business rather than an emotional one. Do your research after looking for a list of trading with forex robot scams online.

2) Fraudulent Signal Sellers

The people that send out trade ideas via forex trading broker signals often provide a currency pair, direction, entry price, stop loss and target levels. There are some things to watch out for to avoid being a victim of these forex trading broker scams:

Subscription fees: Without any proof, anybody can promote spectacular results. You frequently have to pay exorbitant subscription fees to access the trades, or they start low and steal your credit or banking information to commit various types of financial fraud. Why even sell them if their trade signals are so good?

Broker-tied signals: Some signal vendors will only provide you with trading signals if you open an account with their preferred broker. This indicates that they might receive a kickback from the broker and are therefore encouraged to suggest any trades for you to take, whether they are profitable or not. Some will want to maintain your profitability so they may continue to get their broker commissions, which serve as compensation.

Results that have not been validated: It's one thing to claim that your trading with forex signals has generated a high % return, but if they cannot provide a verifiable track record, it is apparent that they are not trading the signals themselves. This is a significant warning indicator.

The secret to avoiding any trading, money, or currency exchange frauds is to behave rationally and cautioned rather than acting emotionally in response to exaggerated promises and dreams.

3) Investment and Ponzi Schemes

Nowadays, numerous advertisements exist for phony trading with forex investment scams and fraudulent trading with forex investment funds. Some traders have previously claimed that trading with Forex Kings and trading with Forex Paradise are frauds. We don't, however, have any complex data to back up these statements. A persuasive salesperson or marketing message will persuade you to invest in a forex trading broker fund based on phantom or unconfirmed results. Send them your money, then sit back and take advantage of the gains.

Of course, many people who contribute money do not get anything in return. The company asserts that you have never done business with them or given them money. What at first glance seems to be a forex investment scam.

Another outcome is that they open an unregulated, suspicious broker account for you. However, after one or two trades, they deplete your budget. They blamed the market, but their brokerage firm took it all. Furthermore, it is complicated to get your money back because it is unregulated.

Why Education Is Important To Avoid Trading Scams

Due to the risk involved, losses are unavoidable while using forex trading brokers. Retail traders frequently deal with minimal capital, risk becoming dependent on gambling, and abuse leverage.

Trading without skill is just gambling for any speculator

A substantial amount of the allegations of money being stolen by brokers are caused by poor trading rather than dishonest brokers. If novice traders took the time to create a proper trading method, they might advance much more quickly and possibly avoid trading with Forex con artists. They would be more knowledgeable about the risks and what to avoid.

Ask These Questions to Avoid Trading Investment Scams

Don't forget that you have the right to ask inquiries. By asking a few crucial questions, you can determine if you are working with a trustworthy broker or a Forex trading broker scam artist. Know your rights, research the contacts, and establish the authenticity of the business by checking its registration and previous dealings. Never forget to request written communication from any possible new brokers. Never rely on guarantees offered over the phone or verbally.

Think about the following

  • What can you do when you realize a broker's offer is unsuitable for you?
  • How enforceably is the agreement?
  • How simple and convenient is it to contact customer support?
  • Can you contact the broker by phone, email, or Skype?
  • Do they provide a street address?
  • Do they use names?
  • Are they legitimate businesses?
  • Can they provide a history of performance?

Conclusion

Always use a well-established registered broker who has positive internet reviews and is 100 percent upfront about its costs and compliance standards if you want to avoid being a victim of fraud. The draw of quick income and easy money will always be there, so you should be sure that you fully comprehend what it takes to succeed in a forex trading broker without relying on risky quick-fix methods.

Trading on a practice account

With a demo trading account, traders can also trade without any risk. As a result, traders can decide whether to switch to the live markets and avoid putting their money in danger. For instance, traders can access the most recent real-time market data, trade with virtual currency, and receive the most recent trading tips from experienced traders using EnclaveFX's trial trading account.