People are afraid of starting Forex with a reason. There are many scams. It’s easy to avoid them if you know these essentials.
As forex popularity grows, so does the number of scam companies. It is, unfortunately, a normal thing in any branch of business. The good thing is, we now know the patterns where we can easily differentiate a scam from regulated companies and brokers, so it’s a question of the right source and how to look for it. That is why we compiled this simple list that can make your research process quick and easy. Most importantly, you will feel safe. These are elementary things you should check before you start trading.
Massive win in 24 hours? Wait a minute
No one will give you money for free, and forex trading is not gambling. With this being said, how do people get thousands in a day by simply signing up for a trading account? The answer is – they don’t. They are being scammed, and they are consciously falling for it. Of course it sounds suspicious when someone emails you or calls you out of the blue to tell you “now is the time to invest everything you can!”. There are many online, flashy ads claiming you can get your money back if something doesn’t work out within three days, but that is probably a scam as well. Scam marketing plays heavily on your emotions, and if you need money desperately, you will turn to this without a second thought and regret it a couple of hours later.
Connecting with people who are already trading can be easy thanks to various forums and comments on the review pages. Ask them how it works for them, is it good and what went wrong if they are bitter about Forex. Upset people are usually the ones who fell victim to a scam and were too impulsive. Be careful around those who have good experience but keep pushing you to reach for that one company. It can easily be someone who wants to scam you, so neutral but informative bits can be used the best.
People can review anything online, and brokerages and brokers aren’t an exception. They offer a service, so it makes sense for people to share their experience. It’s similar to what we mentioned above, but reviews are great when looking for a good broker. Does he have a LinkedIn page? Are people in general satisfied? Do comments look fake? They must have more than one platform to reach them, but LinkedIn is a must. If they can barely be tracked, it means they are 99% scammers. In case they check out everything we mentioned (good reviews, accounts, etc.), check the company they are working for. This is another thing that has to be to be sure you can work with them. If they have a website saying they are regulated but reviews (outside their page), are awful, move on.
Regulation is a must.
A mandatory thing when you are opening a trading account is regulation. A company and its brokers must have a licence and be regulated, to prevent scams and protect customers. You will not find a serious company that isn’t on the regulator’s list. Websites act as regulators, depending on where you are, keeping a list (and updating it), on new licenced and regulated companies. This is the easiest way to check their credibility, since they should be regulated by one or more authorities such as NFA, CTFS, or FSA. Even if it’s on the company’s website, check the regulator website, so you’re sure it’s not just photoshopped. Keep in mind that companies registered in exotic countries are most probably scammers as well. Even if you are consulting, unregulated forex brokers carry a more significant amount of risk because you can’t know if they gather lots of information on the internet, or have been active in Forex long time experienced brokers.
Now that we went over the basics, you are sure everything is good to go once you are sure everything is regulated. From there on, listen to what your broker has to say and take it slow. You are beginning a journey towards a source of income that is going to be steady if you devise a good trading plan with your broker and keep learning.