How to Avoid Forex Trading Scams in 2021

how-to-avoid-forex-scam

How to Avoid Forex Trading Scams in 2021?

CFD and Forex trading markets trade trillions of dollars a day. Traders around the globe are always looking for the best brokers to trade forex, CFDs, stocks, cryptocurrencies, etc. With new forex brokers, CFD brokers, and cryptocurrency brokers popping up constantly, determining the legitimacy of a broker can be a real challenge.

As a trader, it is vital to research a broker before depositing your money to trade. However, with all the tricks that scammers deploy to fool traders, especially newcomers, spotting the scammers is no easy task. At Brokerswatch.com,  our mission is to assist forex traders in identifying reliable brokers by exposing scam brokers and regulated brokers alike.

Brokerswatch.com provides detailed information about most brokers by listing the facts without favoritisum. Some of the information you will find about the broker is detailed information about any penalties they have been handed by the regulator, percentage of clients losing money, regulatory bodies they are part of, etc. We also use industry insider sources to expose other tricks scammers and regulated brokers use, such as using different brand names to conduct their “not so clean” business activities.

In addition to the valuable information and research provided by Brokerswatch.com, which is totally FREE, below are basic questions you need to ask yourself when evaluating a broker and avoiding a forex trading scam:

Is the broker regulated?
If regulated, how trustworthy is the regulatory body?
Is the broker offering profits, rewards or cash bonuses for opening an account?
Is the broker offering automatic trades or signals to guarantee profits?

Is the broker regulated?
Forex brokers that are regulated by reliable regulators are always more trustworthy. In addition to the strict rules that a broker needs to follow, setting up a brokerage business in such jurisdiction requires a large investment, which makes it unprofitable for scammers.
Unregulated brokers do not have to report to a governing body. This means that if they scam you in any way, beyond posting a bad review online, there is little you can do to get your money back. These scam brokers have no legal authority to answer to and are very good at hiding their identity.
It is worth mentioning that nowadays, almost all regulated forex brokers do operate the same brand or entirely different brand out of unreliable jurisdiction. Regardless of why a reputable regulated broker uses such jurisdiction, if you choose to open your trading account with the loosely regulated entity of the broker, this will leave you exposed just the same as you would have with a scammer. Getting your money back will depend totally on the broker’s good will.

If regulated, how trustworthy is the regulatory body?
Not all forex regulators are the same and they should never be considered equal. The regulation is only good if the authority issuing the licence can impose severe punishment by wrong doors and can compensate traders in the case of fraud.
A broker regulated in Cyprus, which is part of the EU, is no match for a broker that is regulated in the UK. It is fairly easy and inexpensive to establish a brokerage in Cyprus vs brokerage in the UK.
To prove the point, when Ironfx, a broker in Cyprus, conducted a scam for over 100 Million, the Cypriot regulator (CySec), imposed a measly few hundred thousand EUROs penalty, while Ironfx continues to do business as usual.
On the other hand, when Alpari UK went bust, all traders were compensated for over 80% of the invested funds.
You can find more about these cases on the web or on brokerswatch.com

Is the broker offering profits, rewards or cash bonuses for opening an account?
Scam brokers often make outrageous money-making claims, such as “make $50 a day from a $250 investment” or “make 80% returns on profit signals” or “99% success rate.”
These claims are a scam, full stop. Regardless of whether they are being made for Forex, CFDs or any other product, or by regulated or unregulated brokers. Stay away from any broker promising such offers. If they are able to make such returns, they would never share such secrets with you. Remember, they are in the business of making money and not giving it away.
You also need to be very wary when a broker is making a cash bonus for opening an account. Such offers are usually made by scam brokers because you will never see your money, let alone the bonus promised. Some regulated brokers do provide such offers, but only out of their loosely regulated entities. The reason for this is simply if they are to make such an offer from a reliably regulated entity, they have to do it without any strings attached. This means that you should be able to cash out the offer anytime you want and without any conditions.
Still, if a regulated broker offers you such an offer, it should be an indication that you are most likely to lose your investment and the bonus provided because the conditions they attach to such offers are impossible to achieve, even by professional traders.

Is the broker offering automatic trades or signals to guarantee profits?
Similar to the make money offers, if a broker offers you automatic trading signals with guaranteed returns, it means they are scam brokers. I repeat, no one or entity in the financial industry is in this business to give money away. NO, you are not that lucky to have found a broker or someone that knows how to make money in trading the financial markets and is willing to share it with you.

In conclusion, trading in the financial markets by retail traders such as yourself most likely results in you losing your money. The rule of the game is that the house always wins, in this case, the broker is the one that always wins.

If you still want to give it a shot, do so by trading with a reliable broker. The odds are stacked against you by default, and it is your job to improve your odds. Begin doing so by doing your research and by using brokerswatch.com free services to help you.

Happy Trading.