The Foreign Exchange market is the biggest financial market in the world. The forex market trades trillions of dollars every day. With this large amount of money floating around in a market that trades instantly, many scammers are given the opportunity to defraud people.
Various traders from different parts of the world are constantly looking for the best broker in the market. However, this task is often very difficult because of the influx of Forex brokers in the market, many of which are a scam.
Although many of the popular forex scams have stopped, new ones keep popping up every day and investors need to research a broker before trading with it.
This article will point out five ways to spot a fake forex broker and avoid getting scammed.
- Promising Huge Returns on Investment
This is perhaps the most important giveaway of an illegitimate Forex broker, giving a guarantee of unusually high profits with little financial risk within a short period.
The idea of making large profits without any financial risk and at the shortest possible time might seem cool, especially to new traders in the market. But, it is vital to note that there is no such thing as a 100% guarantee in a market as speculative as Forex.
Therefore, if a Forex broker is making promises that sound too good to be true, it probably is.
- Regulatory Red flags
This is another obvious way to spot fake Forex brokers. Scammers never register their “businesses” with any regulatory agency.
When searching for a legitimate broker, never forget to check for the regulatory authority under which they have been registered. A true broker will always provide substantial proof of its legitimacy.
Even if a Forex broker alleges that it is regulated by a particular agency, endeavor to check out the list of companies under the agency’s regulatory watch and find out if they are saying the truth.
- Fake Customer Reviews
Many people have fallen into the hands of scammers because they believed the testimonials of various “customers” who claim to vouch for how great the broker is and the wealth they have amassed since trading on its platform.
However, if a considerably large number of the reviews look alike and only go on and on about how great the broker is without providing any useful information regarding the quality of service, then, they are most likely to be fake.
These fake Forex investment news often tell the “from rags to riches” story, claiming that they had been very poor before trading with the broker and automatically becoming rich.
- Lack of Credible Company Information
If there is no verifiable information about the location of the brokerage firm, its executive team, or customer support mediums that it offers, then, it is most likely not legitimate. Illegitimate brokers do not provide any real contact information, names, or locations to avoid being traced.
Therefore, if there is no honest information about the company, its executive team, location, corporate history, or any other financial information, it is best to stay away from such a broker.
- They Offer Automatic Trades and Signals
Many fake forex brokers offer their clients free automated trading that is carried out by robots or computer algorithms. They often claim that their robot’s trade-off signals can generate huge sums of money for their clients automatically, without any risk.
Nevertheless, always bear in mind that no company has found a way to consistently generate huge profits through automated or signal trading. Even if they did, they would never offer their trade secret to their clients for free.
Most forex scams are slowly dying out but always be wary of new forex scams because the appeal of making huge profits will always attract new scammers to the market.
Avoid brokers who promise a stratospheric profit within a short period and aggressively advertise themselves and their services. Doing thorough research before trading with a broker will reduce any chances of falling into the hands of scammers.