How To Save Yourself From Forex Scam

August 6, 2013 11:47 am

forex_scamForex Broker scams are one of the most popular scams when it comes to foreign exchange market and the reason for this is because those markets are extremely unregulated. Of course, different authorities are constantly working in order to make this market well regulated, but still, many scam brokers appear.

If you broker is not double crossing you, then trading can be a really hard business. This is why people always say it is important to be as informed as possible. This will help you differentiate scam brokers from reliable ones.

Within the next lines we will try to inform you and provide readers with different tools that will help them against forex scams.

Facts

There is barely a broker out there which can say all of its feedback is positive. It is easy to find lots of angry comments from traders and here comes the part where you have to learn to determine whether or not the claim is legitimate and can be considered as a daunting task.
Keep in mind that the big percentage of traders enter the forex market without any significant knowledge and the final result is more than clear – losses that have nothing to do with the broker. Therefore it is important to check out whether the broker is scam or just attracts the attention of too many traders without experience.

What can leave the traders feeling discouraged is the fact that beginners tend to make mistakes that the veterans will take advantage of. In some cases it is better not to follow the trend because it is not always right.

Of course, there are many situations that is entirely a broker’s fault and most of the times it involves stacking trading commissions at the expense of the client.

Yet, another problem that may occur is the slippage. It occurs when in case of sharp movements in the market cause buy or sell orders to execute at price considered as “wrong”. There are some brokers that have guarantees that guard against slippage, but on the other hand most of the brokers do not.

When do the actual Problem occur ?

In many cases, the problems occur when there is no communication between broker and client. So basically if the trader is not getting regular email responses or the received responses are unhelpful or vague, this is a sign that this might be a scam, so you should consider yourself warned. Remember, that the good broker will be always available to the clients. The received answers should be helpful and solve any questions or problems the trader is having.

How can You Save Yourself from such Scams ?

The first and probably the more important thing you need to do in such case is to check for complaints about not being able to withdraw money. The best case scenario is to contact the complainant and ask about the experience.

Next, remember to read the fine print. In many cases, up front incentives might be charged against the trader. This is extremely important because you will lose money. For example, if a broker is offering a bonus upon account signing up and then the account loses money, the broker might say that the bonus can’t be removed and therefore hold the entire sum hostage. It is important to understand every aspect of the broker’s regulations.

Of course it might not be a bad idea to search for reviews of the broker. Also pay attention to the details of every single complaint, search for any pending legal action against the broker as well.

Last, but definitely not least – once you have chosen your broker, start with a mini account. It is always better to start with a small amount of capital and use it for a month or two. After this try to withdraw the funds! If everything goes well, then you can be more than sure that the broker is reliable so you can start trading with bigger sums.

The financial crises showed people around the world that no matter how popular or big a firm is, it is never completely safe because there is always a risk involved with trading. Remember that no broker is 100% secure.

What to do if you have been scammed by your broker?

And we are about to repeat this one more time – read the fine print! It is better to be prepared rather than be sorry later. Don’t be rude, be stern. Explain what course of action you are about to take if you don’t receive the needed help or answers to your questions.

Some of the actions you can take include posting comments or marking the broker as a scam on any of the numerous forex review sites. And if you think that they are really wrong – just report them to the regulatory body of the country.

However, in many cases, the “scam” is nothing more than a trader without any experience. Of course, scams do happen on daily basis, but our advice here is to check whether the person complaining is not just another person without trading skills.

If you are already experiencing problems with your broker, try to solve them by contacting them via email, if things do not go well, follow some of the steps we’ve mentioned above.

Where to Trade

BinaryTribune is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action, Binary Options and Social Trading.

Related