Scammers are known to ‘thrive’ where there is good money to be made, and this explains why forex trading is full of many scams which have left many unsuspecting forex traders devastated by huge losses.
Assessing the broker’s customer support and checking their status with the relevant regulators are some of the ways you can use to tell if you are dealing with a legit forex broker or just a scammer. For example in the United Kingdom, the regulator is the Financial Conduct Authority while in the Netherlands the regulator is the Authority for the Financial Markets. Each country has its own regulator.
This post will offer tips on some of the methods you can use to check through forex brokers and reduce the chances of becoming a victim of forex trading scams.
1. Test the broker with small amounts
Always start with small amounts as a test. Use this amount to carefully monitor how their trading works, and finish the test by withdrawing the money. If you notice something is not right, for example, if the broker makes it impossible to withdraw your money, then don’t give them a chance.
You can also run forex simulations with different investments and watch how they perform. There are a number of forex platforms that offer these types of forex simulation tools that help to check a broker’s performance before signing up.
2. Check the accuracy of predictions, don’t trust margins
Find out if their forex predictions are accurate. You should also check the broker for customer testimonials and success stories from other traders who have traded with them in the past.
Do they provide a margin? Many forex brokers don’t offer margins because of the risk involved. But forex trading scam companies will always be quick to offer margins as an incentive to trade with them. Therefore, if a broker claims to offer margins that are too good, please think twice.
3. How is their customer support service?
Do they offer reliable customer service? This is something forex scam companies will never excel at.
Try reaching out to them before signing up for an account. If they take too long to respond to your query as a potential customer, then avoid them completely. A good broker should offer 24/7 customer support or be proactive in attending to both existing and potential customers.
4. Are they recognized by regulators?
Again, the forex trading broker you’re considering should have positive status with the regulators in each country where they operate. If they are not registered, that’s a sign of a forex scam. A forex company that takes its obligations seriously will always register with a country’s financial authorities before starting to operate as a forex broker.
5. Check Social media for red flags
Social media is increasingly becoming a powerful avenue to check on businesses, as customers are ever quick to express frustrations through their social media accounts and groups. Forex traders are particularly vocal about their experiences, and they’ll let the world know via Twitter, Facebook, YouTube, Google+, etc.
Chances are high that any forex trading company that is scamming people will already be outed on social media. To check this up easily, simply go to a social media platform like Twitter or Facebook and search by typing the name of the broker, followed by the word scam e.g ‘forex broker ABC scam’. Go through the posts that come up and analyze any negative mentions.
Have you been scammed by a forex broker?
We understand the frustration that comes with getting scammed in forex trading, and that’s why we have invested to help you recover the lost funds. Take advantage of our free consultation service to determine eligibility for a refund and we’ll offer you the much-needed professional help in the recovery process.