Are you interested in learning how to avoid a forex scam?
We've received a lot of questions over the past few months about how to avoid a forex scam and what forex is.
Foreign exchange trading or forex trading is a legitimate side hustle. But, there's a growing rise in forex scams due to the popularity.
Above all, it's important to understand how to identify and avoid a forex scam if you're considering getting involved with trading.
In this post, we will outline what you need to understand and how to prevent falling for a forex scam.
What is forex trading?
Forex trading is the conversion of one country's currency into another. Most importantly, exchanging currencies is helpful for things like international travel, business, or foreign trade.
In fact, there are many different currencies in the world so there's a need for a way to exchange them for one another. Foreign exchange is helpful in these types of situations.
The foreign exchange market is the largest market in the world and is mainly unregulated. Currencies from every country are in the foreign exchange market.
People who have started forex trading are looking to profit from their trades.
In today's society, the Internet has made it easy to access platforms such as forex trading. The main goal is to exchange your currency for one that you predict to rise in value in the future so you earn a profit.
On the other hand, there's constant fluctuation with each country's currency and most are valued according to the laws of supply and demand.
How to spot a crime
There's plenty of opportunity for a scam due to no governing body. Ultimately, you have to be extra careful to avoid a forex scam.
The large amount of activity occurring in this industry is concerning. You may see the following types of scams:
- Counterfeit forex funds
- Robot systems
- Signal sellers
- Broker scams
As usual, scammers do a great job in all industries to mislead a person to believe what they're offering. Here are a few ways to spot a crime when trying to avoid a forex scam.
1. No background information
Scammers will do a great job of trying to convince you something is profitable and you won't experience any losses using their approach.
They may even show you charts of profits but in all actuality, it's hard to determine if the charts include real data or not. Don't base your decision on something that's not verifiable and seems sketchy.
Ultimately, if they don't want to provide background information or exact details, then it's probably a scam.
Brokers will always provide proof of their legitimacy. Scammers don't register with any regulatory authority. This is a red flag and you should run the other way.
Additionally, you can contact a regulatory authority who can provide you with a list of regulated companies so you will know which Forex brokers to avoid.
2. Offering guaranteed success
To be clear, there's no such thing as a 100% guarantee. In fact, traders would never share the information with other people if there was.
Certainly, these offers will sound very attractive, especially to people who are new to forex trading.
A good rule of thumb is, if it sounds too good to be true, it probably is. The foreign exchange market is impacted by too many factors and is not predictable to offer guaranteed success.
It's important to understand what goes into trading and the 'dream' that scammers offer so you're clear on what to expect.
In general, you should avoid any promises made to you, be cautious with any claims that they have a secret formula to make you rich, and don't install any software programs on your computer that aren't trustworthy.
3. Unrequested advice
Most times when you receive advice that you didn't ask for, it's probably a scam. This is a key way to avoid a forex scam. You may receive an offer to purchase a product or service with very little information or time.
In fact, this will make you feel very uncomfortable. You can always just remove yourself from the conversation and ask to no longer be contacted.
Also, if they start to ask for your personal information, you should immediately think it's a scam.
Many people offering phony forex trading scams and investment funds. A lot of people end up losing their money once it is sent to the broker. And the broker eventually says they don't know who you are and have never received any funds.
The main thing to understand is, because it's unregulated, it's very hard to get your funds back.
How to avoid a forex scam?
You should find ways to educate yourself to avoid forex scams and stay up-to-date with the latest trends. There are several free resources and webinars online to stay informed of the latest financial scams.
A great place to check is usa.gov. They provide the latest information for common scams and frauds that can happen to you.
In fact, the more you know, the better chance you have at not falling for a forex scam.
Ultimately, whenever you consider investing, go slow and make sure you understand what you're putting your money in. You don't want to lose your hard-earned money to a scam.
If you are not sure what to do, you can always hire a financial advisor. You want to hire a financial advisor who will help teach you what to do rather than just do it for you.
You want to understand what is being done with your money.
Another layer of protection is to buy identity theft protection. In the unfortunate event that a scammer gets your personal information, identity theft will help protect you.
IdentityForce is one of the leading companies for identity theft and only costs $19.99/month for the UltraSecure+ package. They also have family packages available.
This small fee each month will be worth your peace of mind.
Alternatives for extra income
Most people are looking for ways to make extra income on the side. Having additional streams of income is a great way to build wealth.
Forex trading isn't the only way to make extra income. There are a lot of less risky options available and you can choose multiple to generate more income.
In fact, there are many work-from-home jobs that you can do for extra cash.
Some of our favorite side hustles are:
- Blogging (sign up for our free blogging course by clicking here)
- Freelance writing
- Online tutoring
- Focus group
- Online surveys
- Cashback rewards
Final words - avoid forex scams
Forex trading will present you with a good amount of scams. While you're looking to make extra money and invest, be sure you're choosing the right options.
Do your research and be 100% sure it's not a scam. If you're unsure, don't do it.
As always, if it's too good to be true, it probably is.
Do you feel prepared for investing? Why or why not?