Forex trading is a great way of income, but these days scams are a huge issue in this industry. It is even worse that these frauds are difficult to spot. However, you must find a trustworthy forex broker and you can do this by using the most accurate, updated, and proven data. Here is a list of the signs of a scam, and how to avoid them.
If you come across an investment company that is not regulated by a legitimate regulatory body or government, you can surely say that it is a scam. It is a must for financial institutions to be regulated because of dozens of reasons. It prevents the misuse of funds by controlling the operations of the company.
A company can run into a crisis at any moment when they need more cash as working capital than they have. The revenue of a forex trading company comes through accepting funds directly from clients. A legitimate forex trading company keeps through spreads and fees from this revenue. If the company is a market maker, then it makes money when clients lose their money on trades. Moreover, if a company accepts funds to hold inside of the company’s account, it can be brought into questionable territory very quickly even with scrupulous accounting of the room for suggestive reasoning or risk trading. This is why it is very important for the company to be regulated.
Any type of investment scams including forest scams try to keep the owners of the company protected so they can escape prosecution and being caught. One of the best ways to do this is by registering the companies in a location where it is not difficult to indulge in illegal or unethical activities. These locations are typically in small corrupted countries where the companies can persuade the government officials to allow scam for monetary compensation. So, if you come across a company that is located in a remote island country under an undeveloped government, it is most likely going to be a scam.
Overly Aggressive Sales Techniques
Forex trading scammers try their best to operate just like legitimate trading companies. The sales departments of the companies contact clients via phone and email to persuade them to use the trading platform for investment. A salesperson from a legitimate broker is already aggressive, but a scammer is even more aggressive. As they have no morality and they only want to scam people out of their money, they use any means possible to achieve this. If you notice that a broker is calling you nonstop and being very manipulative, it is a huge red sign of a forex trading scam. You must research the broker before proceeding with it.
Manipulation into Deposit
Along with aggressiveness, you may notice that the salesperson is not bothered even when you say that you do not have any more money to deposit. Whenever a scam victim is interviewed, they always say that the broker was too busy to convince them to deposit more money in, even when they said that they do not have the money. Whenever the broker makes a call, the salesperson comes off as friendly and shows interest in the personal life of the clients.
However, when it comes to the part when the broker asks for more money, the conversation always becomes unreasonable and uncomfortable and continues longer. They have no regard for anything the client says or simply do not believe the client. Instead, they keep insisting. There are even cases where the broker asked the client to take a bank loan claiming that the investment opportunity was too good to miss.
Keep in mind that a good salesperson from a legitimate broker may persuade you, but they will let you make the decision in the end. However, if the salesperson is too pushy and crosses the thin line between persuasion and manipulation, then it is surely a scam. You must hang up the phone in these cases, and also stop trading with the broker.
The first thing you need to remember that forex scammers always try to push users in depositing money into trading accounts. However, they try to stop clients to withdraw money from the accounts. Many victims have come open about it and shared their stories about how the withdrawals are not processed and they end up losing money.
You may notice that the broker is always reacting negatively whenever withdrawing money is mentioned. Sometimes, withdrawals are outright denied. This is one of the clearest signs that this is a forex scam. Unfortunately, you will come to know about it only after depositing your money, but it is still not too late to stop using the trading platform.
Troublesome Web Presence
This is a bit tricky, so, you need to be careful when you research a forex trading company online following these guidelines mentioned below.
First, if you cannot find any information about a company online because it has a scarce web presence, then you must proceed with caution. A legitimate broker is bound to have some information available online apart from its own website. You may find them in review pages, web pages, or sponsors that provide content.
However, even when you find a lot of web presence, it is essential to check the sources carefully. Sometimes, scammers also publish fake reviews to con people. Although review sites try to maintain integrity to prevent fake reviews but they cannot always filter the fake from the real successfully.
It is also suspicious if you have not found the company but the company has contacted you first. Scam companies usually do not appear in Google search rankings because legitimate trading platforms take those places for their services. So, scammers attempt to contact individuals.
It is not easy to check if a forex trading company is a scam, but you can identify the signs by being careful. Recognizing a fraud broker and avoiding it can save a lot of your money from getting scammed.