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How to Avoid Scams in The World of Forex Trading

How to Avoid Scams in The World of Forex Trading
May 08
13:56 2014

Forex markets are one of the most active trading platforms of the world. Large banks, governments, multinational corporations, speculators and all individual professional traders stay its participants. This market is considered volatile by its nature and so many times instability foreign currency costs bring all the investors at the edge of heavy loss. However, there are many other risks related with this market that can put an investor in big hurdle. Investors actually need to focus on all the running forex scams that have become quite common today.

What do you mean by Forex scam?

Forex scam is not a small thing. Its definition is wide-ranging. Any kind of trading scheme that is used to defraud investors or traders and convince them to invest more to gain high profit in FX market can be a scam. A Scam can also be a failure to return money to the allocated traders. If any investor wants to withdraw funds or terminate his transaction and finding lack of transparency in the process then there can be a scam.

Avoid common scams while trading in Forex markets:

Forex trading is known for its highly technical nature. Its retail Forex industry, loose regulation of the market, off-exchange Forex trading left many speculators disposed to Forex frauds. Such scams are mainly done with the help of internet. Scam Forex companies easily create fake credentials and names to operate the deals. Simply by creating false customer accounts they manage to generate huge commission on every transaction. Forex scams have become a very common term today. These scams draw customers in with complicated advertisements that are placed in the newspaper, internet websites and on the radio. Forex promoters also entice many investors into several scams by giving them many assurances. Sometimes they give promises to claim high return on low risk with a predication to increase in currency value.

If you are finding that an unregulated financial company that is trading off-exchange forex, contracts and foreign currency futures with retail customers can be completely illegal and may be planning some scam or fraud. People often comes with the complained that they are promised to get high returns over a few week or month on low initial investment. However in reality the concerned investor money is hardly used for any kind of Forex trading, other than it is simply stolen.

Who regulate the trading?

The CFTC (Commodity Futures Trading Commission) regulates the entire thing. They keep control over the commodity futures, contracts, trading of currency. This institution may take action against suspected of deceitfully or illegitimately selling of any currency, options contracts and commodity futures. Here presenting some useful tips given by CFTC that may help you to avoid such scams.

• If the concerned company is promising opportunities which sounds too good:
Always try to stay away from such trading opportunities that are offering ways to make you rich overnight. Never think to use or invest your hard earned savings, mortgaging your house, retirement fund in these Forex trading schemes as there may be the chances to never get your money in return.
• If the institution give guarantees claims or profits unusually with high performance:
If anybody is promising to give you 30-40% return just in two months then it should be observed carefully before making an investment. Often these claims of providing massive profit stay false and completely based on tactics to lure your hard-earned money.
• If your selected company downplays the risks that are concerned with currency trading, or conveying that a written risk disclosure statement is only the routine formality specially imposed by the government:
Always be cautious of different statements that are claiming that the entire losses will be recovered by the company and your investments will stay 100% safe. Forex trading includes a high amount of risks that can end up by losing all your money.
• Don’t ever trade on margins:
If you don’t have sufficient time to scrutinize all the trades very closely then margins should never be used as the popular margin trading can end up with debt rather than profit.
• If the company is operating with an interbank market:
Always try to stay away from the companies that are luring you into some kind of trading in the interbank market and promising to give better prices as the interbank market stay speculative and stay available for short-term. All the currency transactions negotiate in an unsteady of big companies and banks.
• The companies are saying to transfer cash via mail, internet or any non-physical location:
One should not prefer the company that is asking to deposit money with electronic mode rather than any office. These phony companies usually located overseas and often create the identity with the aim to defraud investors. Therefore, the company must have a physical office near you.
• Currency scams are making objective to ethnic minorities:
Cultural communities’ particularly Chinese, immigrant communities, Russian are easily lured by the scammers. These scammers put advertisements in ethnic newspaper or television regarding job opportunities for which you need to deposit some money. Once you post the amount then they use it for their own purposes and never come back to you.
• The company also makes it hard to get their performance track record:
Try to be skeptical of forex trading companies who provide incomplete information on their own performance history. Their all related forex trading websites, brokers and companies stay available with wrong information and sometimes project in such a way that they are the member of CFTC or NFA.
• It stays difficult to get their background information:
One should never deal with an individual or with a company that are trying to pretend their actual information. Anywhere if the company looks suspicion then don’t hesitate to stop dealing with them. Try to use the CFTC and do proper investigation of the company or broker you are planning to do business with him.

All the above mentioned factors indicate the ways to avoid forex trading scams to save your hard-earned money.


How to Avoid Scams in The World of Forex Trading - overview
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Articles on the Jadenforex blog written by "Jadenforex" include guest posts, and items written in collaboration with several authors.

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