The foreign exchange market has become a crowded place. With millions of people around the world logging on every hour to trade currency, it is now the most popular way to trade worldwide. The reason for this is its easy accessibility from anywhere you are at almost anytime.
But with great popularity comes great opportunity – for scams. Watch out for the following 5 things when choosing a Forex brokerage.
- Brokers regulated by the “wrong” authorities
You’d be hard-pressed to find an online broker with absolutely no regulation. And anyone who would choose to trade with one has to be very naive. But not all regulations are equal.
Make sure that the brokerage allows trade in either the U.K. or the U.S. or both. If they only allow trading in small countries, then avoid them, even if your country is covered. Also, make sure they’re regulated by the actual authorities in those countries. Many fraudulent brokerages will be regulated by authorities in Cyprus and the like – and no one else. This is a major reason to turn and run.
Always use a regulated broker that can claim certification from the FCA and the like.
- Software that offers few indicators
Good Forex software offers a range of different indicators to help you make good Forex decisions, including the popular momentum indicator. MetaTrader 4 is generally considered the best software available.
If a broker is offering software that does not have these indicators, it is a sign that they don’t really care about your success – only about getting you to give them your money.
- They market aggressively
Good Forex brokerages don’t target the naive. Scam agencies do the exact opposite. They contact people far and wide and market to them aggressively, almost strong arming them into investing with them.
If you are getting countless calls from a broker, don’t trust them.
- They offer immediate riches
Forex will not get you rich immediately. You might succeed to the point that you can quit your dayjob, but this will take time. Good Forex brokers tell you this. They don’t let you get carried away by the prospect of easy money.
Scammers, on the other hand, will promise immediate wealth beyond your wildest dreams. This should be a sign that they’re untrustworthy.
- They don’t want you to learn
The more you learn about Forex, the more you realise how nuanced trading is. There are many factors to consider, and a considerable amount of education is necessary.
Good Forex brokers therefore offer trading academies. But in reality, learning about Forex can and should chase some people away. Scammers don’t want to chase anyone away, and they will not offer opportunities to learn.