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Safe Trading – Tips for Avoiding Forex Scams

The fact that the foreign exchange market is the largest financial market in the world is already a well-known fact, and one of the main reasons why so many new traders open up accounts daily. Precisely because forex trading is happening at such a large scale, and on the online environment, it becomes harder and harder for traders to be completely protected from scams, cybersecurity attacks and, overall, frauds.

There are regulatory bodies that aim to protect traders, which we will discuss more in this article, but they can’t do all the work in a market that is open 24 hours a day, 5 days a week. This is why, it is up to you, the trader, to make sure that all your activity is developed in a safe environment, on secure platforms and only through regulated brokers. If you are wondering what you can do to ensure your safety when trading online, follow the tips below, to give yourself some peace of mind.

Forex market regulations

The high liquidity and volatility of the market make it hard to establish one single regulatory agency to supervise all trades that happen around the globe. This is why, either independent or governmental bodies have split this job to ensure the protection of traders in their jurisdiction. Amongst them, the most important are:

The Financial Conduct Authority (FCA) in the UK

The National Futures Association (NFA) in the US

The Federal Financial Supervisory Authority (BaFIN) in Germany

Autorité des Marchés Financiers (AMF) in France

The Australian Securities and Investments Commission (ASIC) in Australia

The Financial Services Agency (FSA) in Japan

These regulatory bodies are responsible for providing licensing for brokers, to ensure traders that they are legit and trustworthy, as well as protect all parties involved from illegal or suspicious activity. Throughout time, numerous traders have reported suspiciously significant losses, that had to do with using leverage or margin trading, which is why regulators have imposed some rules that all brokers need to respect, such as limiting leverage or allowing for a 50% margin close rule per account basis. These situations happened mostly in the UK and the US, the two most important sales desks in the world.

Only trade with regulated brokers

Given the fact that there have been so many situations where people were scammed, by being promised bigger wins, or bonuses by brokers, it is very important whether the broker is regulated or not. Checking this is very easy, as reputable brokers usually have a section on their website, where they mention regulation. After you find that out, a simple search online, regarding who the regulatory body is and whether or not they are trustworthy should reveal everything you need, to decide whether or not to open an account with them.

The trading community is very active in the online, and there are numerous forums where scammers or untrusted brokers are a hot topic of discussion, so finding the information you need should be quite easy. Unfortunately, besides a bad review online, there is no much you can do about unregulated brokers, precisely because there is no authority they are obliged to respond to.

If it’s too good to be true, it’s probably a scam

Let me put it this way: anything on the lines of “100% guaranteed success” is a scam. There is no way a broker can guarantee you won’t be losing because otherwise, there would not be a trading market. While some of these offers may sound incredibly good to the untrained eye, expert traders know better than to fall for empty promises.

Other brokers may promise they found a secret formula to maximize profits, and they are more than happy to share it with you. This could not be further from the truth. There is no such thing as the perfect formula, and even if it was, there is probably a hand full of people in this world that know it, and there is no way they are sharing it with you, for free. So, remember, if it sounds unbelievably good, you should probably not believe it.

Protect your account

Nobody should have access to your credentials beside you, which means that, just like any other online account, the password for your trading account should be well-kept. Basic security rules should be enough to keep you out of trouble, so make sure to:

Use a strong password, containing at least one number and one special character, and make sure to not reuse it for any other online account.

When possible, opt for two-factor authentication

Never reveal your personal information to third parties that have no authority to ask for it

Using public networks can also be a way for unwanted eyes to spy on you, so never log in on your trading account by using the free Wi-Fi provided by your favorite coffee place, or restaurant. If you want to trade on the go, consider using a VPN, or a mobile hotspot that only you have access to.

Make sure to log out every time you let someone use your computer, to avoid placing your account in the wrong hands. Remember that this is real money we are talking about; money you have worked hard to win and losing it would be a shame.

Consider antivirus and firewall protection

If you don’t already have one, install an antivirus right now! And I am not talking about a free, barely useful one, but rather a trusted, paid one, that is able to scan and identify any potential threat that may put your sensitive data at risk.

Malware can enter your computer through the most seemingly harmless attachment you download, including trading eBooks, email attachment or programs you install.

Recently there have been reported a lot of scams involving trading bots, which claim to use algorithms to enter and exist sales for you at the most profitable moment. While not all bots are scams, you should always do some research before using such software. Again, keep away from promises that sound just too perfect.

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Written by Hassan Awan

Wordsmith BuddyContent Author

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