Forex trading is like a huge, dangerous ocean full of swirling sharks ready to swallow up inexperienced investors. It’s dog-eat-dog, everyone out to make as much money as possible with as little effort as possible, and if it means a dishonest individual can make money out of you, then so be it. But how can you avoid Forex scams?
1. Be informed
It’s your money and so it’s your responsibility to be up with all the how’s, why’s and what’s involved in Forex trading. You wouldn’t willingly hand over your money to a person who walks up to you in the street and says he’ll make you famous, would you? No, you would ask for his identification and qualifications.
2. Remember the golden rule
You’ve almost surely heard someone say: "If it seems too good to be true, then it probably is." This is a very good saying to live by. Don’t be talked into giving up your hard-earned money by brokers who try to convince you that you can turn a small amount of money into an enormous one by using their services.
3. Listen to your suspicions
If you feel as though someone is trying to rip you off, then don’t allow them to take your money. Always run checks on people you are considering dealing with. You can contact your country’s consumer affairs authorities or the office that registers brokers and dealers in the shares and currency exchange markets. Find out which company the person works for and contact the company to find out if they are telling the truth.
4. Don’t allow yourself to be pressured
There is no rush. The more quickly a dishonest broker can make you part with your money, the more risk there is that you will lose it. Don’t listen to stories about "the next big thing" to happen in Forex trading. He might tell you that there is about to be an opportunity to make huge profits but you must act now or you’ll miss out. Refuse to go along with his time frame and you’ll soon see if he is applying unnecessary pressure or if he is willing to wait for you to be comfortable.
5. Avoid companies that guarantee no risk
The fact is, there is risk in any kind of stocks or shares trading, as well as Forex trading. Stay well away from companies making the following kinds of claims: "We promise we will recover any losses you experience.", "Nothing to lose; your investment is always secure. Even with a $5,000 deposit, you will never lose more than $200 a day." No one can guarantee these statements so never deal with anyone who tries to make unrealistic promises to you. It’s your money at risk.
6. Avoid companies that predict or guarantee big profits
Don’t be tempted by companies who claim that they can guarantee huge profits for you. They will usually make statements such as: "Take $1,000 per week, every single week.", "Our company offers the most successful Forex trading in the state.", "We guarantee a minimum 30% rate of return on your investment within your first two months." These statements are likely to be fraudulent and you will lose your money very quickly.
7. Find your broker, don’t let them find you
Brokers and companies who come looking for your business are usually out to make a quick dollar. The best way to find a company who is reputable and safe is to contact the authorities who deal with licensing and ask for a list of companies in your area. Never respond to emails that promise huge returns for small investments or that require you to sign up for "free" documents, "free" accounts or "free"courses in trading. Reputable Forex traders will be there when you need them and there will be no strings attached.
The best way to avoid losing your savings is to realize that nothing comes for free. Understand that you need to invest your time as well as your money and you need to know what Forex trading is about before you go ahead and invest in it.
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