Are you enthusiastic about joining the forex world? You may have probably heard that the forex is the biggest financial market in the world with volumes of about $5.3 trillion a day. This translate to about $220 billion per hour, which is even more than the assets traded on the New York Stock exchange for a whole day. In such a large market, you are bound to find some unscrupulous brokers or even traders. As these scams become prevalent, it is imperative to educate yourself on some of these scams and get forex brokers ranked without bias in the market.
Types of scams
Before anything else, it is important to highlight some of the common scams before giving you tips on how to avoid fraudulent forex brokers. As you know, the best way to avoid being the victim of a forex scam is to get educated on how the forex market works. Here are some of the popular scams
1. Signal sellers
New to forex? No problem, you will find a lot of individuals willing to take you through this murky financial markets. Signal sellers are mostly expert traders who offer to assess the markets and advice you accordingly. They will analyze the market and tell you which currency to purchase and which one to sell. While there are professional signal sellers who are highly rated and regarded in the industry, there are also fraudulent signal sellers who are out to make a quick buck. It is advisable to do some due diligence before selling or buying a particular currency regardless of your signal seller’s proficiency.
2. Forex software
A quick search or tour round the internet will uncover a plethora of software which promise to assess the financial markets and determine the most lucrative trades. Not only do these software programs offer promises they can’t keep but will also cost you an arm and a leg. It is not advisable to buy such costly software as there are free software that can even do a better job. You should, however, not depend on these software to do your trading for you, it won’t end well.
3. High Yield Investment Programs
Defined as a high yielding investment scheme which promises a ridiculous rate of return over a short amount of time. Individuals in charge of such schemes will often never reveal how they make their funds but only make promises. The danger is that these programs may close shop at anytime and chances are you will never see your capital invested ever again.
How to choose a reliable brokerage
Another way to lose your funds in the forex market is to select a fraudulent forex broker. Although there is a lot of information on how to select the best and most reliable brokerage firm, there are a couple of factors you should consider before selecting your broker. These include:
- Brokerage experience
- Client reviews
- Support systems
Would you rather a hyped forex broker who has only been in the market for six months or a brokerage company that has five years experience. In the forex markets, brokerage firms that cannot wither through the bear markets are always unable to survive. This is, especially true if the firm is not properly regulated or does not have a large financial backing. Companies that have been in existence over a longer period of time have stood the test of time and probably offer genuine services.
What better way to know a company than to read about it from current or even former clients? The internet has made it possible for people to interact and give reviews of the products or companies that they use. You can find some valuable information concerning the services offered by a forex broker and if they process payments smoothly. You don’t have to get burnt to learn that fire is dangerous, let someone else’s experience inform your decision.
A reliable forex broker should always be available when you require their services. Before settling on a specific broker, it is important to establish whether they have good customer service. You should, however, be wary of forex brokers who have good customer service when you are enrolling but will no longer pick your calls once you are a client.