Forex trading is a legal, legitimate activity that involves purchasing and selling currencies on the global market, but can be risky for newcomers. Therefore, when engaging in forex trading it’s essential to conduct extensive research before engaging in this activity and choosing only regulated brokers as part of any strategy. There are various scams targeting forex traders including fraudulent brokers and signal providers which must also be avoided in order to enjoy success trading successfully. Here are some tips that will help avoid these scams:
One of the most prevalent scams in forex involves fake trading systems that promise automatic trades that produce guaranteed profits, often sold via affiliate marketing or spam emails. Unfortunately, no automated trading system can produce consistent profits; successful traders need years of practice before becoming proficient traders.
Unregulated forex scams involve unregulated brokers offering risky bonuses with unrealistic rewards, often using misleading advertising tactics such as false awards from untrustworthy sources like Bloomberg or The New York Times; 12Trader was an example of such an unreliable broker which claimed it won awards from these major news sources while in reality these “awards” displayed were all forgeries on its website.
Thirdly, managed accounts constitute another common forex scam. Marketed as an opportunity for large returns with little effort required, these investments often end up being scams with victims losing all their investment money. Both the Commodity Futures Trading Commission and North American Securities Administrators Association warn investors to refrain from engaging in off-exchange forex trading since it can be both risky and fraudulent.
Are You Wondering If Forex Trading Is Real or a Scam?
In short, yes; however there are numerous variables which could impede your success in forex trading. With markets constantly shifting and fluctuating, no broker – experienced or not – can guarantee that you will always make money; one currency could gain strength one minute only to decrease another the next, so always do your research prior to investing any funds.
Good news is there are reliable brokers and educational resources to assist in your forex trading adventure. However, remembering that forex trading is a skill which takes practice to develop into profitable trading is also key. Education and practice on a demo account before investing any real money are the best ways to avoid being scammed in the forex market. Any broker or system promising guaranteed profits is likely a scam. Most successful traders make more on winning trades than they lose on losing ones, while most will never break even. It is therefore critical that traders only trade with capital they can afford to lose; otherwise, you could find yourself facing an unpleasant trading experience.