It is no secret that nowadays forex trading has become one of the fastest growing and one of the most lucrative industries around. As with any such blossoming industry, there are many people out there who would like to take advantage of the phenomenon for a quick forex scam, instead of investing time and money into developing a legitimate forex trading business.
As a forex trader it's extremely important to learn to recognize forex scams when you stumble upon them, obviously since it would be extremely unpleasant to get ripped off when all you're trying to do is invest in the forex market. Fortunately, most of these forex scam businesses are not very cleverly disguised and can be spotted quite easily with a minimum amount of research.
Below you will find several key tips on how to recognize a forex scam as opposed to a legitimate forex trading service.
1. Browse the site
When you come to a forex site offering forex trading services it is very important to search for a few key pieces of information. You should always check what company operates the site and if that company has all the necessary licenses to deal forex. The forex industry is highly regulated and a non licensed forex broker would get shut down within a very short amount of time. If there's no mention of a legitimate and licensed company behind the site, this is most likely a forex scam. Furthermore, you should browse the entire site to get a sense of how professional this provider is. Legitimate forex trading companies put a lot of effort into their site since the site represents the face of the company to the public. If you see that the site is a slap dash attempt at putting up some sort of front, if it has abundant spelling and grammar mistakes, looks generally unprofessional and doesn't provide relevant information you have plenty of reason to believe that you might be looking at a forex scam.
2. Get a second opinion
The great thing about the internet is that you can't run a forex scam for very long before the people you scam start spreading the word around. Now this doesn't mean that you should believe every person who claims that a site is a scam, since you can probably find forex scams accusations about every legitimate forex trading company online. Here you should really do some research to find several examples of public opinion to form a more unbiased view of the forex provider in question. If you find that most of the public responses to the provider claim that it's a forex fraud, you might have legitimate reason to think that it's a scam. You should however read the claims and decide for yourself whether they're actually based on any real evidence or not. When you find claims that the most popular forex provider online is a forex scam, it's probably not true. To find out more about this particular example read more about the eToro scam accusations case.
3. Download the demo
Most legitimate forex providers offer their clients a demo version of their platform so that new users can get an impression of the software and how the company operates before depositing funds. If the provider you're checking out doesn't offer a demo platform, that's already a reason to be suspicious of a forex scam. If they do offer a platform, we suggest that you download it; if they have an online version of the platform, even better. In any case, you should definitely have your antivirus on when downloading, just in case. Once you've downloaded the platform, try opening a few trades to see how it operates. Also, it's important to check the live forex data against a few other sources û this is a good indication of whether the forex broker is legitimate or whether they're just making it up as they go along.
4. Contact support
This is really the ultimate proof. Any real forex broker has 24 hour support to assist their customers. Forex scams don't have the actual capital to invest in a support team. We suggest that you do this over the phone (most forex brokers have toll free support numbers) since chats and emails can be answered by chat programs or non professionals. If you talk to an actual support representative who knows his chops about the company and about the forex services his/her company provides, you're most definitely dealing with the real thing. Plus, you just might get a special bonus offer out of it.
The basic principle that you should go by is that forex scams are out to make a quick buck, therefore they're not going to put much effort to make their scam actually look legitimate. If they did that, they might as well have become a real forex dealer. So you should always do a thorough check of the forex provider to get a sense of their level of professionalism. If you see that the provider has put a lot of effort into their site, their platform and their support team they're just not likely to be a forex scam.