For decades, forex trading news has informed the public about how over $1 trillion is being traded daily involving central banks and large corporations.
The market also allows private individuals to speculate on several currencies’ price movements, including the Euro, British pound, Japanese yen, US dollar.
Based on the unending opportunities associated with the forex market, more investors are trooping into the industry to participate in its success stories.
Despite the market opportunities, several reported cases of scams have left investors scratching their heads.
As a new investor, you’re most likely to be misled by criminals parading themselves as legit forex trading brokers since you’re not equipped to spot a forex trading scam.
How To Spot Fake Forex Trading Sites
Given this, we have put together some points to help you avoid fake forex trading sites.
- No Background Information
It is a red flag when a forex trading broker does not display information about its founders and other execs.
When operators of a forex trading platform fail to provide detailed information about the company, it is clear that investors are dealing with ghosts. It is only a matter of time before the platform shuts down abruptly.
Stating explicitly the owners and exec of a forex trading site will allow investors to conduct adequate research about the listed personnel. If the execs have any past criminal record, it will be easily spotted.
- Too Good To Be True
Of course, it is essential for trading firms to provide excellent features and services to stay ahead of their competitors.
However, investors should trust their instinct and conduct proper research about the firm when its offerings seem too good to be true.
Forex trading brokers that have been in operation for more than three months, usually have valuable information across the internet about their services.
- Check Online Reviews
The fantastic thing about Google is that it brings multiple sources of information about a particular topic by merely inputting its name.
If you doubt a platform’s authenticity, all you need to do is enter the company’s name in the Google search bar.
Doing this gives you access to tons of information about the forex trading broker from online forums, with stories of investors who have had bitter or sweet experiences using the platform.
Although this approach is one of the best ways to identify fake forex brokers, you have to take whatever information you gather with a pinch of salt because some facts may be misleading.
Some reviews are bent on tarnishing a firm’s reputation, while others are paid comments made to lure unsuspecting investors.
Regardless, do not rely on one source, be thorough with your search. If possible, check all available reviews you can find and judge whether the investment site is genuine.
As always, this is very important for any financial investment platform. The trading platform must be regulated under the laws of the country where it operates.
You should check if the forex trading broker is licensed. If the broker is regulated, its licensing or registration number is usually placed at the site’s footer for easy verification.
Firms under the law’s watchful eyes cannot decide to disappear with people’s money without being apprehended within a short while.
Financial authorities know that issuing a license somehow bestows trust on the platform. This prompts regulators to carefully analyze the firm’s activities before granting these brokers the necessary permission to operate.
Also, being regulated allows the authorities to conduct routine checks on these platforms to ensure compliance.
- Inability To Exit A Trade During Volatile Market Action
One major factor that drives the forex market is major economic or political announcements. Events will certainly occur, which will influence the market in a positive or negative light.
However, what is most important is for a broker to allow investors to exit a trade whenever they feel like it. If there is any restraint in withdrawals during a highly volatile market, it is a red flag.
- Massive Referral Bonus
If a forex broker indeed uses people’s funds to trade, there should be little or nothing left to entice existing investors into bringing new ones.
Besides, a firm does not have to give out massive referral bonuses when its operation is genuine because happy customers will always spread the gospel across several social media platforms.
Promising a massive referral bonus only points to one direction – Ponzi!
Here you have it, the six ways to identify fake forex trading sites. You should be vigilant not to become a victim of forex scams by conducting due diligence on the forex trading broker. Only use a regulated broker that has lots of positive online reviews with verifiable claims. Once it sounds too good to be true, flee!