It is important they have people to work with that they trust, traders and brokers alike. There are always risks in depending on forex trading as the sole source of income. In the last several years while forex trading has become more and more popular, so have people trying to gain by playing on the risk taking mentality with scams and fraudulent investments. It’s much easier to scam people in remote countries with language barriers as well as those new to the system and trying to get used to the unstable environment.
For many reasons, forex is susceptible to many types of illegal or unscrupulous behavior. Working on a global level with every language represented, there are many people who may not understand some details and are forced to rely on their personal relationships or business contacts to help them invest wisely. With such a large scale market, regulation and enforcement are nearly impossible to implement. Between the geographical and language and currency differentials, there are many spaces or gaps where criminals can slip in and perpetrate various scams and fraud upon unsuspecting traders.
Most Popular Scams
The most popular fraud or scam perpetrated against forex traders is with false brokers, people convince traders they have a chance to gain a high profit with a certain trade. They actively recruit traders with false information and the promise of not only a big windfall, but also bonuses to entice them to sign up with an account. Then the trader, especially those new to forex, start an account, deposit funds and never hear another word as their money is gone and no investments are made. It is estimated the average trader loses about $15,000 in these scams. Traders are constantly reminded that they must take risks to make any money in forex, so they are often susceptible to these scams that expert con artists model after real forex broker pitches. They study the market and broker behavior and position themselves to appear just as knowledgeable and persistent. Since many times gains take some time in the forex market, the scammer can put off the trader until they are long gone, never having put any of the trader’s money into any type of currency.
How to Trade Securely
This is one of the many reasons it pays to take as much time as needed to research every aspect of a broker or brokerage firm and to actually contact the people that write reviews of brokers online until they feel 100% secure that their broker is legitimate and so is every single deal they are proposed.
There are whole websites dedicated to keeping track of the current and past forex frauds and scams that have been detected. Traders and brokers alike should stay up to date on several of these sites so they know what to be on the lookout for. The only real way to truly protect as many people as possible is to participate in the self-policing of the international currency market. Everyone involved in forex trading should report any suspicious behavior, to both the authority in their country and to the sites that are legitimately indexing these perpetrators and their methods so that other traders and brokers do not fall victim to what can be a very damaging fraud or scam.