Go online and run a search for forex scams. The return will blow your mind. You will probably start to wonder if forex is a scam or not. There are an incredible number of unscrupulous people running scams on the internet in the name of forex, giving this kind of trade a bad name. The good thing is that at the end of the day, legitimacy prevails and the scams fall off the ledge.
Every time you want to trade in this industry, you have to be aware about the existence of these scammy brokers. Remember, you are going to trust them with a substantial amount of money, so you need to know and verify that you are dealing with honest people. To make good money with forex is hard. It will therefore become even harder when the forex broker you are dealing with is implementing strategies that manipulate the market and work against you. The most possible result here is that you will lose your money and your broker will ride into the sunset to enjoy his loot before venturing out again to look for his or her next victim.
Not All Scam Claims are Real
When you visit online forums, you will meet many unhappy traders crying foul because they have failed to make money in forex trading. You will need to understand that when most of us fail, we never blame ourselves for it. We look for some other person to blame. The truth is that most of these feelings may be due to the trader’s lack of oversight and not an issue with the honesty of the broker. You will therefore need to learn how to separate fact from fiction. Of course, it is true that some of these traders are raising legitimate concerns, so do not ignore it either.
You will see most traders arguing that the broker had the intent to manipulate the result. They will say that as soon as they made their move, the market collapsed. Others will voice the opinion that the broker did not seem at all interested in reversing a negative turn. Now, these things happen in forex because that is how the trade works. However, there is always the possibility that the trader is wrong.
Beginners do not have a trading strategy. They will trade because their emotions dictate so. At that point, they forget to keep in mind that things will not always shift in their direction. In doing so, they ignore the fundamentals of forex, where a trade can go either way. You do not have to make a killing just because you feel confident about making a play. Experienced traders know how new entrants trade, so they will move in the opposite direction. When the market closes, chances are that the experienced trader will make a good return while the amateur goes home empty handed. Due to their failure to understand the strategies of forex, they start believing that their brokers, other traders or even the whole market place has conspired to rip them off.
Stay Clear of Manipulating Brokers
There are situations when the broker is in the wrong. Reports have surfaced about brokers who try to manipulate the system so that they can make more commissions at the expense of the trader. Some of them will put quoted rates in motion in order to initiate stop orders when other brokers have not had their rates moving up. However, this is a rare occurrence. Keep in mind that brokers will only make good commissions when the volume of trade is high. Generally, most of them want to keep clients and help them trade regularly so that they can stay in business themselves. A broker with no clients will no longer be able to sustain his or her existence in the market, and they all know that.
Real problems with forex brokers do occur. This happens sometimes the relationship between trader and broker start falling apart when the problem of communication arises. Emails can go unanswered, phone calls too, and there is a feeling that the professional is not interested in the needs of the client.
The solution here should be that the two parties need to sit down and handle the issue. The broker needs to communicate more; it is what the job asks of professionals. The trader should cede ground, because the broker is the professional in charge. A problem arises at times when the trader cannot make withdrawals, and the broker needs to explain the situation.
Protecting Yourself Against Scams
You will need to read the fine print of the account opening documents very keenly. Some incentives may work against you. Since the broker knows the terrain better than you do, there is a chance that the unscrupulous ones will attempt to use your own ignorance against you. For example, if the trader happens to deposit £15,000 and receives a bonus of £3000, then somehow the money gets lost, and he or she tries to withdraw it, they may say it is not possible since the bonus cannot be withdrawn.
If you do not understand some of the terminologies, it is always okay to ask. Pay attention to incentives and explore ways in which they affect your ability to withdraw funds from your trading account.
After you have checked a broker out, open a ‘mini account’, with a small deposit, and proceed to trade for a few months on it. You should always try to make a withdrawal with your mini account. When you can make withdrawals without problems, and everything seems fine with your mini account, then you can start trading with more money. If you find that there is a problem with communication and withdrawals, then those are red flags and you need to move on. It is always a good idea to warn other people when you get problems with a forex broker.