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The term Forex was the buzzword in trading not too long ago. It seemed like everyone was jumping on the Forex bandwagon and investing money in this quick trading method. Its popularity led to many Forex trading scams that attracted the attention of regulators worldwide.
As a result, many countries have clamped down Forex trading. Although there is nothing inherently wrong with trading currency spreads, the number of unregulated brokers and Forex scams were so numerous that regulators took action.
The result of these developments is that there is more awareness of the pitfalls of fake Forex brokers, but they are still out there. You can indeed make a lot of money in Forex trading, but you can also lose a bundle, even with a legitimate broker. Of course, the losses and risks are even greater with a scam Forex broker.
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Forex is another term for foreign exchange. It is based on trading fluctuations and differences in currency pairs. The most popular pairs are the dollar and the Euro. A Forex deal involves the seller promising the buyer to pay the difference in the value of the pairs at an established time.
There are various kinds of Forex trades. The quickest trades are spot trades, which occur at the time the order is made until two days later, excluding holidays and weekends. Forward trading is longer term and is set at a later time. It is also adjusted to changes in interest rates. Futures Forex trading is like forward trading, and allows the buyer to set the amount and certain dates. Forward trading requires the use of an exchange.
Forex trading has many benefits and downsides. It is a highly liquid form of trading, which means that the trader cash in on their stakes if they need the money. This is also helped by the short-term nature of trades.
Also, it is easy to invest in Forex with relatively small amounts of money. Most brokers ask for minimum amounts from clients, but Forex trading minimums can be lower. Many people feel that Forex is relatively easy to understand. There is no need to research companies as required with stock investing. Since everyone deals with currency, the concept behind Forex is tangible.
However, there are also disadvantages to Forex. The first issue, as discussed above, is the number of Forex scams. It can be a challenge for those who are new to investing to distinguish fraudulent Forex brokers from legitimate ones.
Many investors are attracted to the high rewards that can be achieved with Forex, but this comes with significant risks. The currency movement fluctuates rapidly and often is affected by unexpected events, such as a natural disaster or a major event. The outcome of an election can also turn currency values upside down.
Forex traders have to be alert to fluctuations in currency pairs around the clock. This can make short-term trading styles stressful. Also, Forex may be about currency, but it is more complex than it seems at first glance, and it is not unusual for traders to get in over their heads and experience dramatic losses.
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Because of the many Forex scams that popped up a few years ago and the dramatic steps taken by governments and regulators to combat them, there may be negative connotations to the word “Forex” and some who believe it is shady.
However, Forex, in its own right, is legitimate. There is nothing inherently unethical or illegal about trading currency pairs. The problem with this kind of trading is that it often puts the trader at the mercy of a broker. Many types of trading, such as stocks, require brokers, but there is more oversight for stock trading than Forex. Regulation and oversight protect traders.
Forex is based on contracts between buyers and sellers. This is a contract between a client and broker. Stocks involve actual ownership rather than just an agreement with a broker. Therefore, Forex traders are more vulnerable than stock traders, since the sellers may not decide to honor the contract.
In addition, Forex trading also tends to attract people who want to make money quickly. These traders may be desperate drum up some cash to cover debts or emergency expenses. This may cause traders to skip doing due diligence and settle on a broker that may seem honest but is perpetrating a Forex scam. Desperation should never motivate a trading or investment decision.
There are several telltale signs of a Forex scam. Unfortunately, some of these are only obvious after clients have signed up, deposited money, and have begun trading. However, is possible to sniff out some of these tactics by a careful examination of their website. These tactics are all red flags:
Point spread scams can be detected by asking a few questions. Always be wary of brokers who are reluctant to answer questions about their services. If the broker has a bid and ask rate spread that is demonstrably different from other brokers, they are probably dishonest. Compare several brokers and find out what the going spread rate is.
Signal seller scams are characterized by people claiming to have a formula for Forex trading success charging money for giving “expert” advice. These parties may be Forex scam brokers in disguise selling clients a separate service when they do not make the gains they expected.
Since changes in currency happen in different time zones often when traders are asleep, robot trading has become popular. These robots execute automated trades. Unfortunately, many of these robot services are fake and can make customers lose a lot of money.
Scam Forex brokers often pressure their clients to make trades they don’t want and can also make unauthorized trades on their client’s behalf. When their customers ask to withdraw their money, these fake brokers will refuse, make some excuse, and demand that they deposit more money for additional trades. They will also sneak in plenty of unexplained fees.
The best way to avoid Forex trading scams is to work only with a regulated broker. Don’t be satisfied with a digital version of a certificate, but do some research and ensure these credentials are genuine. Seek the aid of advisors such as Fund Recall to help you determine legitimate brokers from fake ones.
If you plan to make money investing, it is worth the time and effort to research brokers before signing up. Seeking the advice of a third party, such as Fund Recall will confirm the broker is legitimate.
Don’t give up hope if you have lost money in a Forex scam. However, it is unlikely you retrieve your funds by yourself. Scam brokers can be quite sophisticated in their tactics and it can be hard to track them down. You will need experts to help you retrieve your money from a Forex scam.
Consult with Fund Recall professionals who have the experience, the training and the contacts to track unscrupulous brokers and other scam artists. They can locate the path of transactions, find out what happened to your money and return your funds.
Consult with Fund Recall experts today to get your money back from a Forex scam!
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