The Forex market offers huge opportunity to make quick profits. Being one of the most liquid markets, traders around the globe can make trades in various currency pairs. However, there is no single international regulatory authority that monitors the activities of a forex broker. This leaves plenty of room for corrupt players.
IsYour Broker Authorized?
Before tying up with a broker the question that arises is, “how to know if a Forex broker is legit”? Though there is no regulatory authority monitoring all brokers trading in Forex, there are regulatory bodies operating locally. To safeguard the interests of investors these bodies authorize a forex broker only if they fulfil certain eligibility criteria to trade in Forex.
Before dealing with a broker, look for the regulatory authority they are associated with. This will ensure that they deal in fair practices.
Is it a High Yield Income Program?
A High Yield Investment Program (HYIP) is a form of Ponzi scheme where the broker claims to bring in high returns for a small investment. These brokers usually claim they have the required skill and knowledge to get high returns through Forex trading. They will ask for a small fund and promise high returns at the end of the investment period.
However, what they do is that they create a Forex fund where returns are given to a few investors from the money being deposited by new investors. They will also post positive reviews on their website to trap people looking to get quick returns. When no new investors are there, these sites will close down and the brokers take away all the remaining money.
Is the site using Robots?
Robots are algorithms that analyse past data and trends. Such sites will make claims that they have invented software that can predict the trends in the Forex market. Hence, they can always tell the exact moment when you should make trades.
However, this is far from the truth as these algorithms cannot adapt to changing market environment. There are unfactored technical glitches that can happen as well such as a loss of connectivity. You will need to track the software rather than trusting it to trade automatically.
Is Your Broker a SignalSeller?
These brokers will promise to provide information on trades stating that the prediction is based on a forecast by professionals. They will charge a fee for this service. The fee has to be paid either daily/weekly or monthly. However, they will never provide any information on how these decisions are made.
You will never learn anything about trading. But you will have to pay the fees whether you make a profit or not.
Forex Withdrawal Scam
There are brokers who allow you to make profits and keep investing but never allow you to withdraw money. As soon as you ask for money to be transferred into your account you will never hear from them. At best they will offer an excuse as to why they are unable to transfer your money.
Keep a check on the following:
- It’s a red signal if your broker doesn’t respond on time.
- Do your research well before investing your money with a broker and make sure to read all the fine prints in the contract document.
- Try and open a mini account and trade from that account for a while before withdrawing money from it.
- If at all, you’re stuck with Forex broker who is a scam, then review the documents before taking any drastic step.
We understand trading itself is quite hard, but when a broker practices unethical means to trade, it becomes very difficult to make a profit.
Always make sure to check the authenticity and credibility of the broker before investing your hard-earned money.