Forex is an international exchange market that, from the very beginning of its development in the 70s-80s of the 20th century, has increased its daily turnover from 5 billion to 7 trillion dollars. According to analysts and experts, the significance of Forex will continue to grow in the coming decades. While trading is still quite an obscure topic for most people, many investors make a living thanks to brokers that allow them to get into the big game. Despite the beliefs of some individuals, currency speculation is just as legitimate a way to make money as dropshipping. The only difference is that in the first case, people speculate not on the price of goods but on the value of currencies or other assets. Nevertheless, crazy turnovers attract numerous scammers who prefer illegal ways of enriching.
Forex Trading Scams – Reasons for Its Widespread
Although individuals can still act as scammers, most often deceived victims deal with groups of experienced scammers. One person cannot create a legitimate-looking website, come up with literate documentation, write high-quality content and engaging calls to action, and devise a smooth-running scam scheme on their own. Unfortunately, most investment companies on the market are anonymous fraudulent organizations. The reason is quite trivial – it is too difficult to be honest since to launch a legitimate trading business, a broker must:
- possess impressive liquid capital to pay out money to clients on time;
- improve their trading platform;
- hire specialists;
- obtain a license and successfully pass audits of financial authorities.
All Unregulated Brokers Are a Scam
So, it’s obvious that most Forex market scammers are brokers. Forex, which arose several decades ago, was originally conceived as a currency exchange market between different countries. Its first participants were the largest national banks. Since very extensive amounts of money are circulating on Forex and transactions are measured in billions of dollars, most traders don’t have enough money to make at least one trading operation themselves.
For this reason, we need brokers that offer favorable leverage so that a trader can operate with amounts significantly higher than his initial capital. But how to make sure that the broker you have chosen is trustworthy? One of the main conditions for permitting forex activity is obtaining a special license from a reliable financial authority. If an investment company is not licensed or regulated, it is 100% involved in fraudulent brokerage.
Regulatory Body Obligations
As mentioned above, any Forex broker must have a license approved by a reliable financial authority. After certification, the regulator always adds the supervised company to its database on its official website. However, it’s extremely important to choose brokers regulated by financial authorities with the highest traders’ confidence rate. Among them are BaFin, FCA, ASIC, MiFID, CySEC, and others. Their main goals are:
- licensing of investment companies;
- prevention of actions and manipulations that can violate the interests of organizations and clients;
- protecting the rights of trading process participants;
- conducting investigations.
How to Identify Forex Scams?
Often a scammer can be discovered after reading the information they provide on the official website. For example, the Forex broker offers bonuses and high leverage (1:400). In addition, the company indicates that its headquarters is within the European Union. However, the maximum allowed leverage within the EU is 1:30, while bonuses are completely prohibited. Verification of information is your most powerful weapon in the fight against dishonest deceivers.
Checking the License and Regulation
In addition to comparing the broker’s promises with existing laws, it is extremely important to check the regulation. Be aware that many scammers can lie about regular audits from a trusted regulator while holding an expired license from an offshore financial authority. The best way to avoid a scam is to check the databases yourself.
Checking Trading Reviews
There are many independent forums and review websites where traders share their trading experiences. Don’t forget to google for positive or negative feedback before investing your money into a scam broker’s account.
Checking Global Fraud Protection Reviews
Global Fraud Protection and other funds recovery companies regularly share reviews of fraudulent and honest brokers to provide you with an enjoyable trading experience. Global Fraud Protection expert articles contain information on regulation, brokers’ compliance with legal requirements, and other important aspects that should be comprehended before cooperation. However, if you have already encountered online Forex fraud, you can contact our managers to get your money back. Don’t let the scammers go free!
