The forex market is constantly expanding and experts say that it would continue to do so globally in the future as well. Forex trading is no longer considered any less significant than stock or crypto markets due to increasing participation and better return on investment. Look for the best brokers to trade forex, if you wish to learn everything about forex.
However, many scams have also plundered this market by confusing, tricking, and stealing money from several newcomers. As time goes by, forex broker scams have become more frequent, repetitive, and difficult to avoid. But in this article, we shall discuss 7 methods to avoid forex scams.
- Avoid risk-free investment promises
Forex trading or any other kind of trading that directly involves money should never be considered a risk-free opportunity. No matter how great any particular forex brokerage platform is, they can never provide 100% risk-free trading at all times. Avoiding a broker that makes such an unbelievable offer just to attract more traders to sign up with them is surely a scam that we must avoid at all times.
- Check regulations and legality
Not every country follows the same financial rules and has similar regulatory concerns. This affects the availability of some of the best brokers used to trade forex in different nations. Always make sure to check before registering with a forex broker whether they are legally available to serve traders in your country of residence. There should be clear license and legality details on the website of the broker of your choice.
- Find a demo account offering
Most of the time, we could mistakenly choose a scam forex broker without our knowledge only because it looked legitimate. To avoid this happening to you, try not to proceed with the live account meant for trading as soon as your background check is complete. Find out whether the broker offers a demo account or not and use it to see how it performs to ensure that the broker is in fact reliable or not.
- Search background of team members
Every forex brokerage service provider exists like any other normal company that has several people working behind it. While you decide if a particular broker is legitimate or not, make sure to do a thorough search about its team members like founder/director, senior executives, and also brand ambassadors if applicable. If none of the company members has an online existence then chances are it’s a fraud company meant to scam people.
- Google company history and news
When we begin our search for the best brokers to trade forex, we Google everything we need to know about them. Google is a significant source of information that could tell us a lot about the history and background of the company we’re interested in. The Google news option can lead you to the headlines that mention the name of any particular forex broker. Detailed background research is critical to guarantee that the broker one has chosen is not going to steal their money.
- Read reviews and discuss with traders
If you ever search forex broker reviews then you will find hundreds of thousands of (mostly) honest and detailed reviews about every single popular forex broker operational in any part of the world that accepts international clients. Reading such reviews can give you secondhand experience regarding the characteristics, pros, and cons are associated with any particular forex broker. In addition to such reviews, a trader can always ask questions and discuss with fellow online forex traders about their opinion regarding the best broker to trade forex.
- Double-check backtesting results
If you are looking for irrefutable proof about the effective and successful operation of a forex broker then spend a lot of time on their official website. There you will find some backtesting results that show how the trading platform on one occasion helped a trader make a fortune. A simple double-check of such a result can reveal whether it is original or just made up a lie to confuse and mislead novice traders into spending money. The easiest way to do it is by running a reverse image search.