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Avoiding Frauds and Scams in the Foreign Exchange Market

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Avoiding Frauds and Scams in the Foreign Exchange Market

Avoiding Frauds and Scams in the Foreign Exchange Market

A large number of people have been ‘burned’ by fraud operations conducted on the Internet. Their websites may appear to be quite legitimate, leading you to question whether they would have gone to all that bother to establish a trading platform solely for the purpose of stealing your money. Beware.

Avoiding Frauds and Scams in the Foreign Exchange Market

The first thing I look for in a broker is where he or she is located geographically. If I discover that they are based in a country where the financial industry is, in my opinion, largely uncontrolled and underdeveloped, I immediately withdraw my consent to participate. This is awful news for honest brokers in those nations, but it is your responsibility as a trader to ensure that your capital is properly protected. If you don’t have that, you won’t be able to trade. The onus is on them to persuade you that they will do the right thing by you as a business owner or shareholder.

I began with an Australian broker as a stepping stone. Currently, I’m using an American-style keyboard. Although I have not used brokers headquartered in the United Kingdom, the British financial industry is considered to be one of the greatest in the world.

Companies based in nations such as Japan, Germany, and France are likely to be equally as good as those based in your home country if their website is in your native language.
Be on the lookout for any license numbers that they may have registered with regulatory authorities that function as government watchdogs and regulate the financial and investing industries.

These are organizations that apply stringent standards in order to protect your financial investment. Some of these restrictions may include the necessity that brokers keep all customer funds separate from the cash used for the operation of the company. Your money is required to be placed in highly respected banks, and monies are only removed from these accounts in response to particular withdrawal requests made by the account holders.

There are some fictitious regulatory agencies floating about in cyberspace as well, so keep an eye out for them. Take a peek at how long they’ve been in business for yourself. Try to find any reviews or comments that have been made about them on the internet. Try to identify discussion groups where traders can express their opinions about their brokers.
A list of considerations to bear in mind will help you avoid being a victim of a scam.

Keep your distance from opportunities that appear to be too good to be true.

Those who have lately obtained a substantial sum of money are among those who are looking for safe investment vehicles to put their money into. Retirees who have access to their retirement money may be among those who qualify. “It is obvious why retirees would be drawn to assets that offer large returns while posing little risk.” This is also one of the reasons why they are so vulnerable. If you consider yourself to be one of these individuals, proceed with caution. A large number of shady persons are out to get your money. Furthermore, unless you are able to start expanding your money, only a small portion of your money should be dedicated to trading. Because not everyone is successful in trading, it is not a venture that should be undertaken haphazardly. It is your entire life savings that are at stake.

Individuals or organizations who claim to be able to predict or guarantee large profits should be avoided.

Trading in any form is difficult. It is no different when it comes to trading currencies. Be mindful of remarks that make it appear as though something is simple. Statements such as:

  • Regardless of whether the market goes up or down, you will make money in the currency market.
  • Make $1000 per week, every week;
  • we outperform 90 percent of domestic assets; we have a track record of success.
    You’ll get returns of 70% every year on your investment.
  • Here’s a no-risk technique to consider.

You might wonder why they would bother telling you about it if they were able to achieve such returns.

Companies that downplay investment risks should be avoided at all costs.

When corporations claim that written risk disclosure agreements are normal formality mandated by the law, keep your wallet close to your body and your handbag securely closed. Keep an eye out for comments like: With a $10,000 investment, the most you may lose is $200 to $250 every day; We promise to reimburse you for any losses you incur.

Companies claiming to trade in the interbank market should be avoided at all costs.

‘Do not believe anyone who claims to have access to the Interbank market’ or who claims to be able to provide you with access to trade in that market because that is where the best bargains may be found. This isn’t correct at all. The ‘interbank market’ is not a geographical location, nor is it a physical structure. A loose network of currency transactions is simply arranged between large financial institutions and other large corporations, and it is known as the interbank market.

Ethnic minorities are frequently singled out for attack.

Occasionally, Russian, Chinese, and Indian minorities are attracted through the employment of ethnic periodicals and television informationmercials. Sometimes these advertisements advertise so-called job opportunities for account executives to trade foreign currencies’, in which case the recruited account executive’ is expected to use his or her own money to trade currencies and is frequently encouraged to recruit others, such as their friends and family, to do the same.

Obtain information about the company’s history.

In order to be certain that the company is who they claim to be, double-check any information you receive. In the event that it is at all practicable, try to find out more about the people that run the company. Employers should not be exclusively reliant on verbal comments and pledges made by their staff.

If you are unsure, it is not worthwhile to put your money at risk.

If, after attempting to obtain information and at the conclusion of the process, you are still unsure about a particular company’s credentials, my recommendation is to begin exploring elsewhere.

You may be able to obtain additional information by contacting government watchdogs, who are always on the lookout for new patterns and complaints on scams and other fraudulent activity. Please see the resource area of this website for a list of organizations that regulate the securities sector, which is organized by country and organized by state. A list of brokers has also been provided, which you may find interesting.

This is an excerpt from the book The Part-Time Currency Trader.

Simeon Bala
Author: Simeon Bala

I am a finance market research analyst with over five years of experience. I have a strong interest in personal finance and investment research. I am also a skilled copywriter.