The trading scam will exist as long as the Forex market exists. As the schemes evolve, scam trading sites attempt to extort your money. Is there a solution to this problem?
As trading scams are always around, so make sure you don’t fall for the trap. Forex scammers tend to target newbie, desperate, or untrained traders. But, once you master the market, you are no longer an easy target.
Sometimes forex scams are named after the creator – like the Ponzi scheme, developed by Charles Ponzi. However, one thing is common: Forex scams often use phrases like “too good an investment opportunity to be true” as a way to disappear with your money.
The Steps to Take to Avoid Scams
1. Check the Legal Notice
Online brokers and other investment advisory services are subject to strict regulation to ensure investor safety. Your first instinct should be to go and check the legal notices page. It must be clear and the information must be legible and understandable.
2. Check Contact Information
The broker’s contact details must be visible, telephone number, email address, physical address … Call them! If it’s not a Forex scam, they should answer the phone, and if they’re busy, they’ll get your message and call you back. If the phone number listed is unassigned, or systematically rings in the blank and they never call you back, it is a scam!
Likewise, use the email address listed on the site to write to them. Finally, check that the coordinates indicated on the site correspond to those indicated on the page of the regulator of the online broker, in case of difference, you are facing a scam.
3. Check the Regulation and the Country
Forex scammers like to use addresses based in tax havens. If you see the Marshall Islands, Bahamas etc. you are surely facing crooks! For your security and that of your funds, favor brokers who are close to you, in your country or in your geographical area (a broker based in France or in Europe for example). This allows you to reduce the risks because in the event of a scam it will greatly facilitate your procedures!
4. All Regulations Are Not Equal
Yes, you should always choose a regulated Forex broker, but even regulated, a broker can be a scam. You must therefore pay attention to the regulations held by your online broker. Typically a broker regulated in the Bahamas is suspect, what real guarantee do you have in the event of a problem? Favor globally recognized regulations, such as the FCA (Financial Conduct Authority) in London, which offers solid guarantees to all investors, including European ones.
5. Make Secure Deposits
When you want to make a deposit, make sure it is a recognized and secure payment processor. How to be sure? If you use the Google Chrome browser for example, you will see a green padlock appear next to the url to confirm that the site is indeed certified. If it does not appear, stop right away, it is because there is a high risk of scams!
Also remember to check the site of the payment processor, like online brokers, they must be regulated and their legal notices should be checked.
If you prefer to make deposits by wire transfer, check that the bank identity statements correspond to the broker, with the same company name and the same address.
6. Make a test withdrawal
In general, and in particular if you are in doubt, withdraw! The promises of earnings have no value until your money has arrived in your bank account. The withdrawal period is also a good indicator of the seriousness of your broker, they must be clearly indicated on the site. A withdrawal by bank transfer should take approximately 2 working days, and withdrawals by card up to 10 working days.