Is your Forex Broker a Scammer?
Scams in the Forex market are a norm basically since its inception. This unfortunate fact has contributed to the legitimization of what is the world’s biggest market and, consequently, a legitimate investment option. The truth is that any potential investor should be careful enough to avoid making bad decisions and trusting their money to scammers.
If you’re new to the Forex market you’re probably interested on hearing about ways of avoiding scams and deceitful proposals or to determine if you’re being a victim of a scam, this article will try to provide basic guidelines that could be useful to reach such objective.
Losing money doesn’t mean that you’re dealing with a scammer
First things first: if your broker made you lose money that doesn’t necessarily mean that he is a scammer. Losing money in the financial market is always a possible outcome and even experienced brokers lose money. This happens because even though we currently have tools to make proper market forecasts, there is still a random component in the market, not even the most experienced broker can foresee sudden shocks or unexpected factors (like a political decisions) that could affect the market behavior.
So, if your current broker made you lose money don’t panic, this doesn’t mean that he is a scammer, it just means that he is a human being that makes mistakes like any other one.
On the contrary: if your broker “guarantees” you a high performance, be in alert
Forex trading is not a magic tool, so expecting a consistent high performance in a small amount of time is, in the best-case scenario, naïve. So, if your broker “guarantees” you are making a big fortune in a reduced timespan be aware, he might be a scammer, such thing doesn’t exist, making a fortune with forex requires time and a lot of experience, and for sure you’re going to lose money at some point if you trade consistently over time. He also aware of the reality that economic basic facts establish that profit is proportional to the amount of risk taken, so even if your broker is very good at managing the risk, the probability of losing money will always be there, and not being honest regarding that basic fact is a big red flag. Stay away from smoke sellers and accept the fact that getting rich in the real world requires a lot of time, perseverance, effort, taking risks and, why not, will to accept that you cannot always win.
Location and reviews
The First thing you should do is looking for available reviews of your current or potential broker and his location. If your current or potential broker has bad reviews (or no reviews at all) or is in a place with weak regulations you should be skeptical. Lack of regulation is preferred by scammers since is easier to avoid legal punishment, therefore is better to hire a broker that operates in a well-established and regulated market.
Exorbitant fees and money withdrawal
He also careful enough to compare your broker’s fees with other offers in the market, if your broker is charging you too much that can be considered a red flag. There are also scammers who won’t let you withdraw your money easily or who will pressure you to deposit more money, in such case the best option is notifying your local authorities, since you might be experiencing a scam.
Automatic traders are also a good option, but you shouldn’t get them for more than a few hundreds of dollars, and it also helps to research if the offered system is guaranteed since there are a lot of faulty systems who basically gamble, which would be a huge loss of time and money for a potential investor.
A good communication is needed
Be ready to be skeptical if communication with your broker is rather poor. A fluid communication and transparency is important and needed. Also, be in alert if your broker begins to invest your money in options that don’t fit with your personal preferences and aims, so check your investments regularly and inform your broker of your desires and anxieties.
Be conservative
If you’re planning to make a deal with a new broker, the best thing to do is beginning with a small capital. Don’t put all your assets in the hands of someone you currently don’t trust on, and don’t let a broker pressure you to put more money than you desire to invest. Feeling comfortable is important to develop a healthy relationship with your broker and developing mutual trust, if those conditions cannot be developed the proper thing to do is avoiding establishing a relationship.
