Is forex trading legit? Yes, it is, and a good number of people are already making a killing in the industry. However, like any other commercial activity, it has a fair share of risks. One of them, and probably the most concerning, is the increasing number of scams.
These scams are fueled by forex brokers who claim to be industry experts. They have learned the art of duping unsuspecting traders into pyramid schemes, forex bucket shops, and unauthorized trading. So, what are some warning signs worth noting before choosing a forex broker?
✔ A Shady Website
A forex broker with a shady website may not be trustworthy. The best and most trustworthy brokers will invest in a professional, high-quality site with the necessary information. This information may include disclosure of risks, background information, contact information, and any other legal information, such as affiliated regulatory bodies.
The best websites should also feature well-written informative blogs. However, you should also notice that some scammers are established and can easily invest in such sites. It is up to you to be cautious and look out for other warning signs that could prove otherwise.
✔ No Clear Regulatory Information
Regulation is one of the most critical things to consider before choosing a forex broker. The most reliable ones are regulated by an international or regional regulatory body. For instance, a forex broker in Canada will be regulated by the Investment Industry Regulatory Organization of Canada (IIROC).
A forex broker that doesn’t display such information on their site may not be up for good. However, you should also not underestimate the power of a determined scammer. They may be regulated but still get involved in scam activities.
✔ A Broker Guarantees High Immediate Returns
Whether you are starting as a forex trader or already established, you should know that this activity is not a get-rich-quick business. As such, no broker can ever guarantee you such returns. You should have enough reasons to walk away if they insist on this claim.
These are techniques they use to lure rookie traders who need urgent money. They may also use unsolicited marketing by relentlessly requesting you to join their platform. It even gets worse when they ask you for personal information while not sharing so much about themselves in the first place.
✔ Unresponsive to Queries
Forex trading is not one of the easiest activities out there. It is just as challenging, and that is why, most of the time, you may need to contact your broker for assistance. If you encounter a broker with a poor response to your concerns, it is a sign of fraudulence.
Legit brokers have responsive customer support, and established ones even go the extra mile to utilize AI chatbots to handle queries. Others have a direct helpline with motivated professionals willing to respond to your queries anytime.
Final Say
Forex scams are close to impossible to deal with completely. That is why, as a trader, you should be cautious and look for warning signs pointing to a particular broker as a fraud. Generally, you should look for warning signs like unresponsive customer support, promises of high returns, shady websites, and unclear regulatory information.
