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How to Identify and Avoid Forex Scams

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The Forex market is the biggest financial market worldwide, with $5 trillion being traded in a single day. Thanks to the wonders of the internet, it's never been simpler to gain access to this lucrative marketplace.

In seconds you can trade virtually any currencies of your choosing, and with hundreds of currency pairs to pick from, you'll have no difficulty in finding ones to interest you

Yet, even though Forex trading may appear to offer huge financial gains, it certainly isn't easy. You need to put in the necessary time and effort into learning the basics of trading and developing an understanding of how to manage risk before you get started, and unfortunately, you also need to know how to spot a potential forex scam.

There are many forms of investment scams, but almost all will target uneducated traders and beginners in the market. Therefore, the best thing you can do to avoid being scammed is to learn as much as possible about forex trading so you can be well aware of possible problems before entering the markets. If you lack experience in trading, scammers will try to exploit your fears and also your optimism, stepping in to make offers that sound too good to be true because they are.

With this in mind, let's look at how you can spot a forex scam.

Some Simple Rules

There are a few rules you should always follow to avoid being scammed.`

  • Never chase an empty promise
  • Be very wary of any software claiming to have a secret trading formula
  • Never install a program to your PC unless you're sure it won't cause any damage
  • Always check that your broker is regulated – you can contact the regulatory authorities to find out if they're on their list

There are three main kinds of forex scams you need to be aware of. Here, we'll look more closely at each of them.

Forex Robots

Forex robots are trading programs that use algorithms as technical signals for entering and exiting trades. Not every forex robot is a scam, of course. This is why it's important to do your research before choosing one. Here are a few things to look for:

  • Unrealistic marketing messages
  • Extremely high percentage growth returns
  • An undiversified scalping strategy
  • Use of an unregulated broker

Make sure that, if you're thinking of using forex robots, to treat the decision as a business one, not an emotional one. Search online for forex robot scams then weigh up the evidence before choosing.

Forex Signal Sellers

A forex signal seller is an individual who sends out trade ideas including currency pairs, directions, entry prices, stop losses, and target levels. To avoid being scammed in this way, here are a few things to watch out for:

  • High subscription fees
  • Signals that are tied to signing up with a certain broker
  • Their results are unverified

Again, if you're thinking of using a forex signal seller, make the decision wisely and not emotionally.

Phony Forex Investment Scams

You may see adverts that promote forex funds, trying to sell you on their unverified results and telling you, in a carefully crafted marketing message, that all you have to do is send your investment then sit back to reap the returns. It isn't too surprising that most people who decide to send money to these scammers never get it back. All-too-often, the company denies ever having heard your name or receiving funds from you. Or perhaps they'll open you an account with an unregulated broker then, after a couple of trades, your account will get wiped out. Since the broker is unregulated, there's no way of getting your money back.

Protecting Yourself from Scammers

The top way of avoiding these common forex scams is to simply take enough time to make decisions before jumping into an investment. Weigh up the advantages and disadvantages and do your research. Read reviews on trustworthy websites. Check for known forex scams online. Visit forex online forums to see if any complaints have been made about brokers and, most of all, steer clear of opportunities that sound far too good to be true. Remember, there's no such thing as easy money, so take your time to learn how to trade forex properly, and you'll be able to reap the benefits successfully.

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