In just a small span, Forex market has become the hottest financial trading market in the world with over 3.2 trillion US dollar daily turnover.
What makes this market a hot favourite among people is that it is open 24/7, 5 days a week which enables traders to engage in trading any time they spot a money multiplying opportunity. In addition to this, it offers good leverage that helps investors to turn their small deposits into large total contract value immediately.
The Forex market is not just getting attention from the experienced traditional market investors who previously invested in equities like stocks and bonds but it also becoming popular among first time investors. Looking at the booming popularity of currency trading and the soaring increase in the number of investors, many scam brokers have also mushroomed. With so many online Forex brokers, determining whether the broker you have selected is a scam or genuine is extremely difficult especially for first time traders who have never traded before.
Due to the massive increase in scam brokers, it has raised many eyebrows to whether Forex trading is a scam or not?
Is Forex Trade Really a Scam?
The impressive amount of every day Forex turnover which by the way is expected to hit US$4 trillion this year and the ever-increasing number of advance foreign exchange traders, can’t be a fraud. Therefore, the question whether currency trading is a scam is totally bogus, however the real question that needs to be clarified is whether or not all brokerage services offering foreign exchange trade platforms are genuine?
Unfortunately no, not all brokerage services are genuine. Many are just in this business to prey on new investors and fly away with their investments over night.
Therefore, if you are a novice trader, you should arm yourself with the basic knowledge of how to identify a Forex scammer before you lose your investments to one.
Here are some tips to help you spot a fraudulent online foreign exchange brokerage service:
Not Regulated or Registered
This is the best way to ensure if the broker you have selected for foreign exchange trading is a fraud or not. Genuine brokerage firms are registered and regulated by a trusted and a renowned regulatory body. When regulated by a renowned regulator, the broker has to abide by and align with the strict industry regulations. A non-regulated broker does not follow such regulations and is not answerable to any regulatory body, which gives the broker a chance to take away your investments and swindle your profits, leaving you with nothing.
Poor Customer Support Service
Another quick way to identify a scammer is through the quality of the customer support service. Reliable foreign exchange brokers offer unbeatable 24/7 customer support through various contact modes including email, phone, live chat and even VIP phone numbers to VIP clients. Their representatives are available round the clock to answer your queries, solve your troubleshoot platform problems and provide you with more information on foreign exchange trades. On the other hand, you can never expect this from a fraudulent service provider who is just in the business to rip of traders. Though fraudulent brokers claim to offer unmatched customer service but when contacted, they are never available. Therefore a good tip for you is, before you choose a foreign exchange platform, create a demo account and shoot an email to the broker and see the response time. If the broker get backs to you immediately and answers your query appropriately, then the broker is reliable; if not, then skip that one and look for another.
Too Good To Be True Leverage
Fraudulent brokers have several gimmicks up their sleeves to trick novice traders. They bank on the leverage factor to attract traders in their trap. Therefore, if you spot a broker who is offering too good to be true leverage ratio, say goodbye to the broker before the leverage ratio entices you. 1:200 or 1:400 leverage ratio in foreign exchange trade is acceptable but if the broker offers 1:800 margin ratio, then this is definitely a fraud.
This is something which is not always possible. Since foreign exchange trading involves speculation of currency prices, there is a certain level of risk involved so how can a broker guarantee profits. If this was possible then every trader in this arena would have become a billionaire by now!
So beware of such scams and research properly before you choose a Forex broker!