Many novice traders who have tried their hand at Forex at least once note that trading on it is extremely unstable and characterized by significant risks. Because of this, most inexperienced traders begin to negatively relate to all Forex exchanges, calling them nothing more than liars or scammers. In this article, we will try to find out how to distinguish a normal broker from a scammer.
The main signs of a fraudulent organization:
- Similarity with financial pyramids. If a company offers income at the expense of funds contributed by other “clients”, then everything suggests that this is another financial pyramid. In this case, you need to contact the police.
- The promise of high income. Companies with dubious reputations offer tens or even hundreds of percent of annual income, which implies high risks, which, as a rule, are realized. Unlike similar organizations, the financial decisions of conscientious brokers, first of all, set the goal of minimizing risks and safety of clients’ funds and only then making a profit.
- High-income guarantee. Scammers often write on their websites that the client will receive income in any case, but trading in the financial market always involves risks, albeit minimal ones. They must be mentioned at least in a full legal disclaimer. By law, such a disclaimer must accompany every advertising message. For example, an honest organization notes in every message to clients that it does not guarantee income when investing in financial market instruments.
If you are not sure about the honesty of the organization, then you can first find out if this company is in the forex broker scams list. Perhaps the scammers have already become known.
Manipulation of the Trader’s Consciousness
A trader is an ordinary person, and therefore such qualities as gullibility, susceptibility to various beliefs are inherent in him. This is exactly what some companies use, whose specialists have already learned to put pressure on the weak points of novice traders, forcing them to make the decisions they (companies) need. The broker knows that one of the first ways to collect information about Forex sites from newbies is to visit specialized forums. Here they are already waiting for reviews about a particular broker, moreover, both reviews of real clients, reflecting the objective situation, and written on request.
If a broker does not have a license, this means that its activities are not checked by regulators, no one monitors prices and the speed of order execution. In case of controversial points, the trader will have no protection. Can you be sure of the safety of funds in this case? The forex broker shouldn’t be only licensed but also a member of financial institutions.
How to identify a fraudulent scheme of brokers in the foreign exchange market?
This phenomenon is quite rare on Forex, however, despite this, modern scammers are quite inventive in their machinations, that even experienced traders often fall for skillfully hidden deception. Any broker whose assets are significantly lower than their obligations should be considered a potential financial pyramid.
When an insured event occurs, debts are unlikely to be paid to all those affected. And until a controversial situation arises, the company’s clients may not even guess that they are working with an unfair dealing center.