The forex market is believed to be the biggest market in the world nowadays with billions of dollars traded daily. It has become the playground for scammers recently. Although there are financial organizations taking steps to prevent that, new types of scam appear everyday. Today, I will show you how to find a scam broker in this market.
Lying about spreads
This type of scam means that brokers will manipulate the spreads of the pairs you choose. Spread is the difference between the bid price and ask price of a currency pair. It is the main income of forex brokers.
Every currency pair has a different spread rate. However, in volatile conditions, brokers can make the spreads much, much wider. For example, the spreads of their demo account is only 1 or 2 pips. But in real life conditions, it can be up to 6, 7 pips.
To avoid this type of scam, you should frequently compare the spreads of different forex brokers to know the common rate in the market. Also, you should only trade with the lowest spread forex brokers.
Fake trading history
Some scammers will promise you a lot. They will guarantee you very huge profits after you invest in them. But when you ask for trading history as proof, they will try to change the subject. Those are definitely scammers. Remember to always check for trading history.
Moreover, they can even make fake trading records using Photoshop or other software. I even met some who use demo account’s profit to bait me.
Too good to be true
Scammers tend to offer you investing opportunity with very little risk or no risk at all. There is no such thing as no-risk in the forex market. This is a very risky business. You can never make profits from forex trading without taking a few chances. Plus, nobody in the right mind would share a perfect way to make money to others.
Keep a cool head and decide whether an offer is too good to be true. If it is, stay away from it. 99% of them are scams. Here are some tips for you when you are offered such things:
- Be cautious about those promises.
- Try to stay away from “secret method” or “secret formula”
- Don’t download any software until you’re sure it won’t screw your computer.
Another characteristic of a scam broker is that it can never obtain a regulation. A reliable forex broker will always happily share their forex regulations to anyone. It is very easy to check the legitimation of a forex regulation. You just go to the website of the regulators and type in the regulation numbers.
To make sure you can find a scam broker before doing business, research thoroughly before making any decisions. There are many fake opportunities in the forex market and you can easily be scammed if you’re not careful. Remember, making money from forex trading is not easy but losing money for forex trading is very.