How to identify a Forex trading scam and stay clear of it?

The world isn’t exactly a fair place; scams happen in one form or another, people get cheated of their hard-earned money, and it’s only those who’re wise that are unaffected by it all. When it comes to Forex trading in India, the scenario is not any different. With daily trading volumes averaging to trillions of dollars with no accountability and no solid regulation, the chances of falling victim to a scam are high – but not to those who’re smart enough to spot it.

How it all started?

With digitalization, currency trading took on an online avatar, where buying and selling were carried out in front of computers. Early Forex trading scams stemmed from manipulation of bid/ask spreads on the computers. Instead of providing the normal spread, the spreads provided differed between brokers. The higher the spread displayed for a currency pair, the more commission brokers make, thus eating into any profits made.

Modern day scams in Forex trading:

#1) The signal seller scam

Signal sellers are usually a retail firm, a managed account company or even an individual trader. These entities promise to trade on behalf of Forex traders and make them wealthy. With fake reviews, testimonials and faulty evidence to prove their competence, most traders end up trusting them and hand over money to invest in the Forex exchange, only to find them disappear. While most signal sellers are honest and are backed by a genuine reputation, it’s wise to be wary when choosing one.

#2) Trading systems

One of the most prevalent scams is that of trading systems used to start Forex trading online. Some sellers make over-the-top claims and promise absurdly high returns that might seem too good to be true. Many fall victim and spend hundreds of rupees buying such systems, only to find that the “robots” have dumped their money down the drain. Most of these automated online trading systems aren’t submitted for review nor are the claims made supported by substantial evidence. If it’s too good to be true, it probably is – so stay clear of such trading platforms.

#3) Broker scams

Your Forex broker, the one whom you trusted with your money, could be the one slowly working against you. Several Forex traders fall into the trap of unscrupulous agencies who claim to offer trading accounts with flexible bonuses, high leverage and other benefits. A few signs that should signal you of a scam are when the broker doesn’t allow instant withdrawals or when there are persistent problems within the trading station.

Be a winner, don’t be the victim. Keep an eye out for Forex trading scams in India and you’ll be able to make your way through the FX market a lot easier. It’s always advisable to choose the right broker, that’s fully regulated and is trusted by traders. You can’t go wrong with choosing WesternFX, Asia’s award-winning Forex broker.