The Forex market is the most liquid market in the world. So much money is traded, to a tune of five trillion US Dollars daily.
With minimal regulation of this huge market, new traders can be targeted by scammers. Especially traders thirsty to become professionals.
And it happens all the time.
So the BIG question that this post seeks to answer today is, can you become a professional trader without getting scammed?
The answer is definitely yes.
And here’s how to go around Forex scammers.
Choose Your Broker Wisely.
There are real, genuine brokers on the internet.
Still, there are fake brokers who aim at making money fraudulently from the unsuspecting trader.
But as a dummy trader, how can you tell if a broker is genuine or not?
Do your due diligence and find out what goes on behind the scenes of any broker before you open an account.
Here is a checklist to compare fake against genuine brokers:
- Slippage – a genuine broker has no business manipulating the price of an asset to the disadvantage of the trader.
It happens that a trader executes a trade at a certain level, but the broker executes the deal at a price higher or lower than the actual market value.
If that ever happens to you with any broker, then you need to rethink your loyalty because it might be another scam.
- Liquidity – a broker may not have enough capital to cover the trades placed by all its traders.
Think of it and you will realize that such a broker is only brewing an atmosphere for the trader to lose money.
The broker is almost running bankrupt and investing with such a broker is getting yourself in trouble.
- Churning – because a broker gets a commission every time a trader places a trade, the broker can unnecessarily initiate unwanted trades without authorization of the trader to make more commissions.
Beware because this is a quick way to lose money. Especially to such are unplanned trades. Notice such mishaps on the broker platform you are currently using, close that account, and run for your life.
- Withdrawal – did you just try withdrawing money from your trading account and it’s been two months and the broker hasn’t sent you any money?
If you cannot access your money every other time, then you don’t know what is happening behind the scenes.
A genuine broker should give you access to your money all the time. Anytime.
Avoid Expert Advisor Scammers.
Expert Advisors or trading robots are software that can execute trades on behalf of humans.
They are fast and more accurate than humans, generating more profits than human traders.
But wait, who is selling you the bot?
Yes, they have shown you the robot executing trades, very quickly and accurately.
Sometimes, so many profitable trades within a short time.
But how much profit is the bot generating per trade?
You might be shocked that the robot is generating tiny profits per trade.
Then there is the issue of inefficiencies which may lead to your account getting wiped in minutes.
Before investing your money in these robots, try to answer this question.
Has the seller subjected the robot to independent testing?
If they haven’t, then how sure are you that they don’t just want to get those bucks from you then leave you to handle the menace of a bot?
Don’t fall so easy for robot deals.
You must ensure that the bot is efficient enough, tested by independent parties, and certified to be genuine.
Choose Signal Sellers Wisely.
Signal sellers, who might be other retail traders, offer advice on how and when to execute trades.
This is a common area for scams.
That hyped signal provider of yours who claims to have transformed many people into millionaires might be the next scammer.
Not all these people who claim to provide 100% accurate signals actually provide genuine ones.
So that daily or weekly contribution might be their only motivation, after which they may vanish into thin air.
Ironically, some signal sellers will ask for a lump sum or a one-time subscription, after which you will never hear from them again.
Why don’t you just develop your own trading strategy?
This will generate trading signals which you understand, other than seeking to adopt signals you don’t understand.
However, if you must get a signal provider, ensure they are genuine.
Research a lot about them, to ensure you are not walking into a scam.
Avoid Fishy Account Management Deals.
I know you are looking for someone to trade for you and that may cost you all the money you invest.
An ad will come up enticing you that a company offers Forex account management by ‘highly skilled’ traders.
You will then go ahead to deposit money with them.
That might be a huge mistake you make in your trading career.
Sorry to say but if this is a scam, you may be in the initial stages of bidding your money goodbye.
You may lose your invested profits together with all the promised interest.
If you must get an account manager, ensure you trust them.
The best thing you can do is actually trade for yourself.
The desperation that comes with looking for someone to trade for you is destructive.
Avoid High-Yield Investment Programs (HYIP).
Have you come across a firm saying that you only need to invest a small amount of money with them and earn huge returns daily?
Most actually claim to invest such money in Forex trading, yet they only operate like a Ponzi scheme, paying initial investors with current investors’ money.
Be wary of any program which promises you unreasonably huge returns citing Forex trading.
They actually do no Forex trading and eventually, the firm collapses as management walks away with investors’ money.
Beware of Copy or Social Trading.
Brokers strike deals with experienced traders, who are meant to be copied by new traders.
Copy-trading actually sounds like a solution to the struggle which comes with learning how to trade.
The broker will earn commissions when new traders place trades.
The copied trader will also earn commissions for every copied deal of theirs.
The experienced trader may actually not care whether you lose or gain, as long as they earn the commission.
They may enter trades carelessly, misleading new traders who copy them.
If you are that new trader, you will lose money.
If you are not careful, you will end up blowing your account.
To become a successful professional trader in Forex, put in the time. Learn how to trade and trust only you.