Most Forex traders – especially those who traded for the first time or have no trading experience before – easily get burnt financially by frauds and scams circulating online for some time now. Their sites may look so perfectly legitimate but are actually copied via photoshop. Here are tips on how to avoid them like plague.
1. Geographical Location Of Broker
The first thing you should find out is the geographical location of the broker.
If they are based in countries where economy and security are unstable, chances are I will not choose any of them. The same goes for countries where most scams originated from like Nigeria, Ivory Coast and Ghana.
This will certainly be bad news for so-called brokers or scammers there. But protection of my money as well as yours is absolutely critical.
If I want to trade, I will choose a local broker as my country Singapore has strict laws concerning financial industry.
2. Registered With Regulatory Bodies
The second thing you should look for is whether they are registered with regulatory bodies.
Take note of any licence numbers they may have with those bodies that served as watchdogs overseeing all financial and investment activities.
To make sure they are who they claimed to be, you should also contact those regulatory bodies before believing their words.
3. Ignore Opportunities That Sound Too Good To Be True
If the opportunity sounds too good to be true, it certainly is.
If you traded in Forex online, you probably received emails from so-called government officials, ministers, CEOs and bank managers.
In those mails, they claimed to have acquired a huge sum of money and needed to invest with you or your country as their safe investment vehicles. If you seen their emails to be from Gmail, Hotmail or Yahoo, they are definitely scammers.
People who fall victim are those who want to get rich quick with little or no work involved and retirees with no knowledge of investment at all. Henceforth, it is not surprisingly that they ended up losing all their hard-earned money in a short space of time.
The same goes for mails you received in letterboxes and ads you saw in magazines and papers.
4. Be Wary Of Companies Claiming To Trade In Interbank Market
Do not believe companies claiming to have access to interbank market where bargain prices can be obtained.
This is not true. The interbank market is neither a site nor a physical office but simply a loose network of currency transactions negotiated between big financial institutions and other large companies.
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