Forex scams are common because the market is to a large extent unregulated when compared to other financial markets. Though regulatory authorities are actively trying to bring in rules and regulations in the forex market, it is still a place where scamsters often play their games. In this context, it pays for traders to be as informed as possible to be able to differentiate the reliable and genuine brokers from the others.
Reviews – All Are Not True
It is a common to find that almost all traders come out with negative comments and reviews about their brokers. In the light of this, it has to be understood that a majority of the traders starting to trade come with zero knowledge about the financial markets and how they function. Therefore, many of them end up with high losses for which the broker is in no way responsible. Therefore a bad review is simply not an indication that the broker is a fraudster.
It is also true that some brokers take advantage of their clients by stacking trading commissions at their expense. A beginner trader may also lose money because of slippage. Slippage occurs when sudden sharp movements in price cause buy and sell orders to be executed at prices that are thought of as wrong. Whereas most brokers have a guard against slippages, many others do not.
The actual problems between brokers and their clients start with lack of proper communication. When there is no sufficient communication between brokers and their clients, whether it is in the regular emails from the broker, no response for the clients’ queries or when the responses are vague and do not help the client in any manner whatsoever, it is indicative that the client may be in for a scam. Such signals can be treated as warnings. Genuine and reliable brokers always make themselves available to their brokers at all times. Answers to the clients’ queries will be directed towards solving the problems that the clients have.
How to Keep Away from Forex Broker Scams
#1: Firstly it is a good idea for the client to check complaints about not being able to withdraw funds when required. In such a case, it is best for the client to contact the complainant and get a true picture of the situation.
#2: The client must ensure that all the terms and conditions are understood properly at the time of signing the contract with the forex broker. In many cases it has been observed that some upfront incentives are charged to the traders’ accounts at start. If there is a bonus offered on signup, and if the account soon after loses money, some brokers do not allow the clients to withdraw the bonus amount. All parts of the broker’s terms and conditions should be understood properly.
#3: The client should make it a point to go through the available reviews of the brokers that are in the market. They should pay close attention to whether there are legal actions that are pending against the broker before signing the contract.
#4: With any forex broker that the trader has tied up with, is best to start trading with a mini account. It is best to start with a small capital outlay and build up on it over time as the trader gains experience and knowledge of trading. The trader can withdraw the amount if something goes amiss with the broker. The first few months are a good indicator of the reliability and genuineness of the broker. However, it is also necessary for the trader to understand that no broker can be guaranteed as 100% secure as forex trading is a career that always carries a risk, no matter who the broker is.
#5: It is important to be aware of information that is available online from forex brokers that is advertised as free. Many a time, so called education packages come for exorbitant sums of money. Of course, it is good for the trader to do a little amount of research and look out for forex websites that provide a lot of free education material. There is a lot of information present that can help the trader to get on to smooth start in the forex trading field.
#6: Forex traders are many in number and many of them have flashy websites that are designed to entice new traders. In such cases it is important to find out if the brokers are registered with the local financial regulatory authorities. This, to a large extent indicates whether they are genuine players in the market.
#7: A 24/7 client support program is indicative of a genuine forex broker. The reliable brokers will be interested in safeguarding their reputation in the market and will have a genuine concern for their clients’ problems. A round-the-clock client support program is one that a trader can look out for while picking a genuine forex broker. Many of them provide support in multiple languages for international clients.
#8: During trading, it is important that a trader records all the transactions that take place. Take a screenshot of every order that is placed, each trade that is taken, and price feeds that the trader feels are odd. Having records of the trade and good trade journaling habits will assure the trader of any support /evidence that is required to pin down a scamming forex broker or in the event that the trader files a dispute with a forex broker.
#9: Finally, it is important for the trader to develop good trading habits and be disciplined. However advanced the trading system is or how much ever time is spent in finding the right forex broker, the trader is always bound to lose money when there is lack of discipline on his/her part. Though it is easy to blame the broker for any financial calamity that traders may get themselves into, it is always the individual choices of the traders that gets them to their present positions.
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