How to Avoid Falling Victim to Forex Trading Scams

Alex Curran
By Alex Curran
4 Min Read

As a result of investors looking for new ways to make money and diversify their portfolios, there has been a rise in the practice of trading foreign currency online in local markets. The platforms facilitate investors’ access to marketplaces all over the world. Investors with full-time jobs can make extra money by trading foreign currency online as a side business. All they need is a reliable internet connection. Know more about trading company

But as online forex trading has become more popular, the chances of fraud have gone up at the same time. In these internet markets, there has been a profusion of unlicensed brokers who are taking advantage of naive investors and traders. To make sure you don’t lose your hard-earned money to scammers and don’t fall for their tricks, you need to be sure beyond a reasonable doubt that the broker you are working with is real and has a valid license.

The first thing to do before engaging in any kind of transaction is to perform the necessary research and check the legitimacy of the organization that provides online FX trading. Simply accepting a broker’s assertions as true is not sufficient on its own. A trader has the right to ask for proof that the other party is legitimate.

Secondly, licensed, and legitimate brokers normally follow a robust customer onboarding process known as KYC (know your customer). Before they can fund their accounts and start trading, potential clients must go through this process and fill out a full application and upload documents for verification. This requirement is aligned with the Proceeds of Crime and Anti-Money Laundering Act as clients must disclose their source of funds.

Corrective Measures

1.       To protect your interests, only work with brokers that are registered with the Capital Markets Authority (CMA). The CMA can help you get your money back if they engage in any unethical behaviour. The absence of a CMA license should serve as an immediate warning sign for any prospective clientele.

2.       Unauthorized brokers won’t require Know Your Customer checks since they know that evaluating clients upon signup and on a regular basis is one of the most effective methods for preventing money laundering.

3.       Thirdly, dishonest forex brokers frequently make returns on investments that are significantly higher than average. Using heartfelt success stories of previous clients, they convince the unwary to put their money in with them. In addition, they will entice traders to open accounts by promising large sign-up bonuses and other benefits.

4.       A fourth form of deception used by fraudsters is phishing, when victims are tricked into thinking they are dealing with a real company when in fact they are being directed to websites that are not regulated by the government and do not employ licensed brokers.

5.       To conclude, the fifth red flag of an online forex scalpers is the employment of spam. The arrival of unsolicited emails is another warning sign, especially if they contain requests for personal information like your name, phone number, and address.

The Bottom Line

If you’re thinking about investing in online forex trading, it’s best to do some research beforehand. Knowledge is power. Never rush into trading or investing your money based on flashy advertisements, promises of large returns and bonuses, or unregulated items.

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