Forex Trading Is Really Legit.
How Does Forex Trading Work
Forex is a foreign currency exchange established to keep the world economy and international trade going. And technically, anyone can trade on Forex - as long as they are willing to pay 6 000 USD upfront, as well as some monthly fees. For many private traders, such demands are pretty absurd and impossible to comply with. That's why Forex brokers, i.e. JustForex, exist - in exchange for a small fee, they allow you to use their Forex terminal. In some cases, this fee is attached to every transaction you make. In others, it is already included in the price of currencies you can purchase with this broker.
However, this is not the only way. There are broker companies that act as trading houses - as in, actually, sell you their own resources. This makes you trade against them, which makes the entire partnership not fair. There is nothing criminal in it of itself, but it does give the broker a reason to make their customer lose.
Unfortunately, the 'trading house' option is by far prevalent. It allows the brokers to simplify their trading systems and not spend as much on the infrastructure. Most of them still provide the classic trading experience on special ECN Zero accounts, but they cost a lot more to the customer.
The Brief Summary of Scams on Forex
While the scammers on Forex are numerous, they are can be divided in several groups:
Fake brokers. The most naive and old-school scammers that will simply take your money and run. The most egregious example is CrownForex in 2007, but there have been many others before them. Nowadays this kind of scam is incredibly rare, however, it still appears sometimes in the developing countries with weak financial regulations.
Malicious brokers. Trading houses that shuffle the deck against their own customers aren't as popular as they used to be, but still pretty apparent. In 2018 a bunch of brokers were banned in Russia due to doing exactly this and not being transparent to their customers. What's even more concerning, is that sometimes the malicious practices come from regional management and the other branches might be perfectly legit.
Fake Signal Sellers. Signals allow you to trade following someone else - ideally, an experienced broker that knows what they are doing. It's a good learning opportunity, as well as a pretty safe way of trading as a beginner. That said, there are fake signal sellers that either embellish their credentials, or once again - simply run away with your money. However, this is also why most websites that sell signals have a way to check credibility and trading history of a signal seller.
Some Forex traders also accuse legitimate brokers of being scammers, if their strategy failed and they ended up losing money. It makes checking whether or not the broker is really a scammer difficult and causes a lot of false positives.
How to Avoid Scams On Forex
The best way to avoid scams is to check verifications. For example, if you are looking for a broker, make sure that they are verified with a decent financial regulations agency like FCA or FINRA. If they have any other regulation - that's alright but they definitely should have a proper registration too. A good example of the latter is JustForex, who are registered in Belize but also have an FCA license.
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|Publication:||Nigerian Tribune (Oyo State, Nigeria)|
|Date:||Apr 19, 2019|
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