Forex Trading Scams and How to Avoid It
Introduction to Forex Trading Scams-
Forex is the short form of foreign exchange. Here, the foreign exchange is a global platform where the national currencies are exchanged. Trading in this foreign exchange sounds exciting and can result in higher returns. With the increasing popularity of forex trading, there has been a significant rise in forex trading scams. These trading scams often convince the clients for trading by setting up attractive sites, through promotions and advertisements in the local newspapers. These scam Forex brokers often guarantee high returns with low investment opportunities.
The trading can take place on a legal basis on an exchange or board of trade approved by the CFTC (Commodity Futures Trading Commission). CFTC is the regulatory agency that administers the commodity exchange act. Here, the foreign currency futures and options contracts can be traded. It can be done by any individual with a high net worth or any other financial institution such as a bank, insurance company, registered securities broker-dealer, etc. The CFTC has observed that there has been an increment in the financial complexities of investment opportunities and in the number of forex trading scams in US. The situation has become so bad that the CFTC has issued an advisory that explains you to be skeptical enough if you are being offered higher returns with minimal investment by any promoter of foreign investment opportunities.
Prevention From Forex Trading Scams-
The number of scams has increased so fast that it is necessary to identify the potential scammers and avoid trading with them. Here are some points to remember before moving ahead with any trading company-
1. High-Profit Guarantees – The market today is so volatile that one cannot predict the returns. It is impossible for any forex trading company to offer you the guaranteed amount or returns. Any company making these claims should be avoided.
2. Low Risk – As stated earlier, the currency market is volatile in nature and contains substantial risk. It is not the place to put your funds if you cannot afford to lose them. Any company that guarantees secure investment should be properly checked before investing.
3. Sound Too Good to Be True – Do not fall for any scheme that sounds too good. For example- get rich quickly or get double profits in some days and get wealthier. These schemes often attract investors resulting in the loss of the funds.
4. Checking the Track record of the Company – Try to get as much information as possible to know about the company, its working, history, investors, etc. If you ever find some sophisticated or unclear information regarding the company, avoid investing with them.
5. Avoid Transactions on the Internet – It is very easy to make transactions online as it takes some seconds. But to get a refund, might prove a difficult task. Beware and be cautious before transferring any amount to these firms as it may lead to the loss of the amount.
All these points mentioned above should be clearly followed up prior involving in any forex trading with the companies. Any firm making false claims and promises should be avoided and reported to the CFTC. Thorough and proper research is required before investing your savings with these companies in order to protect yourself from the forex trading scam.
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