Trading Forex can lead to incredible opportunities. Unfortunately, the high potential returns also require substantial risk. It’s crucial you’re getting the right education and that you partner with trusted experts. There are a few red flags you should always look out for —particularly promises of unrealistic returns. Remember, while it is possible to consistently profit from trading, no one can guarantee results.
Keep your emotions in check
Fraudulent forex signals and companies often play to our innate greed. Everyone wants to earn a lot of money in as little time and with as little effort as possible. Keep yourself from getting scammed, and keep your greed under wraps. Traders often fall prey to predatory companies; they are promised high returns but fall for Forex fraud instead.
Select a trusted broker
Find a broker you can count on. Don’t give someone access to your equity unless you know that they’re reliable. Do your research. Security is crucial. Check his or her status with the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) if you’re in the United States. If not, find the corresponding regulatory body in your country, and verify that the broker you’re considering is legit before you ever give them a cent.
Forex trading signal scams
Another potential Forex scam involves automated forex trading software or Forex signal generating services that claim astronomical results from back testing the product over a certain time period. Often, such time periods are carefully selected and then the system’s parameters are optimized to show high profits with low drawdowns.
A system may perform well in theory but not do nearly so well when exposed to a live trading environment. Other factors are presented when trading a live account, and items like dealing spreads and order slippage must also be considered. Although Forex signal software and trading robots are increasingly sophisticated, they still can run into trouble replicating the success of experienced human traders. That’s because these algorithms are unable to take certain factors into account.
Avoid unrealistic returns
Remember that unrealistic returns and guaranteed results of “earning without work” are the biggest fraud red flags when considering a Forex program. Whether you’re looking at a trading robot, signal service or investment ideas, always remember to exercise caution when purchasing goods or entrusting money to others.
High returns certainly attract customers, but unrealistic returns attract victims for Forex fraud.