How to Avoid Forex Scams

Unfortunately, the number of scams in forex investing is increasing.   More investigations are leading to court activity for violators who are taking investors funds.

There are two common types of fraud being committed by unscrupulous forex brokers and firms
The first scam involves companies that are operating without being registered and the second scam is run by registered forex companies and their sales people who are marketing their services.

When forex brokers advise you their product will help to earn money in forex, be careful.  The validity level to this comment may not be justifiable. Ask for references and check if any complaints or investigations are pending for the company.

How to recognize forex fraud:

• If its too good to be true it probably is. Learn to read between the lines.  Nothing is free, everything must be paid for. Employ safety measures when investing funds in forex currency.

• Do not believe brokers who claim forex investors can make money even if the current market conditions are not favorable.  This is not true.  The market status has an affect on forex investing values. A large sum of profit is not guaranteed when the market is constantly fluctuating.

• Beware when brokers say they can guarantee a 30 % return on investment in a short period of time.  Forex does not work in this way.  Knowledge of sound trading strategies and understanding of how forex trading works is helpful to prevent being “scammed”.

• Do not allow people to talk you into believing the risks in forex are low.  This is not the case.  All commodities and forex investment transaction have a risk involved. A broker may submit a request to invest money and also add the risk may be only a few hundred dollars per day. Again, this statement is false.

• Brokers may claim they can help to recover losses. Once a loss is incurred, it is difficult to recover unless the value of the forex investment increases at a later time and the forex commodity has not been sold.

• There is also an additional risk involved when trading forex online. Refunds may not be obtained easily as the vendor does not advertise information on how to contact the company. This can incur a total loss, and very dangerous when investing thousands in forex commodities.

• Before investing, the company background information should be collected.  Not all companies are verifiable, this should be a trigger of doubt related to the legitimacy of the forex investment business entity.

• Do not fall for interbank market investment service offer.  Some brokers will offer to invest in the interbank market on your behalf. The unregulated, unregistered forex companies will claim to trade within the interbank market. These transactions deal with the investment banks and larger companies.

What is the interbank market?

The interbank market is a collection of currencies transactions that occur with banks and other corporate giants.

As you can see, scams and fraudulent companies are not difficult to realize.  Keep your eyes open and money in your wallet.