Sadly, scams in the foreign exchange world are not uncommon. Many people have fallen victim to them over the years, and there is no reason why this won’t be a risk you will face. They can take many forms, and can sometimes appear so convincing even an experienced trader may fall for them. Luckily, there are some steps you can take to protect yourself.
Facts and figures
Unfortunately, the foreign exchange world is far from immune when it comes to dealing with scams and fraud. Just recently, it was revealed by the Financial Conduct Authority that more than £27 million had been reported lost over the past year as a result of investment scams in this field and in the related field of cryptocurrency.
The FCA has specifically pointed out that scams are designed to be convincing. “Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal,” said Mark Steward, who is Executive Director of Enforcement and Market Oversight at the Financial Conduct Authority.
Doing your due diligence
Before going ahead with a forex trading opportunity or a forex broker, it’s important to be sure that you do your due diligence. In some cases, this can be as simple as going online and typing the details of the provider into the Financial Conduct Authority’s register. Third party broker reviews are also useful here, and are likely to reveal any red flags well in advance. As this Degiro review shows, there are many positive aspects to most brokers and coming across a fraudulent one is not particularly likely. All you need to do is to stay on your toes, and make sure you don’t leave yourself unnecessarily exposed.
Don’t get greedy
It’s also worth pointing out that forex scams often lure people in using the same sort of techniques. They like to appeal to people’s innate sense of getting a good deal, or their desire for more money. In many cases, forex scammers will show images supposedly of themselves enjoying luxury products, using social media to spread the falsehood.
If you find yourself thinking that a forex trading opportunity looks great, bear in mind that it’s probably too good to be true. In many cases, greed is the key to becoming a forex fraud victim. Remember: trading forex can make you money, but you have to stick at it and put in the hours. There is no such thing as a get rich quick forex trader, and you’ll need to put in the effort to extract the rewards.
With so many forex scams out there, it’s clearly the case that doing your due diligence and keeping yourself alerted to the risks is important. If you fail to do so, the consequences could be significant: you may find yourself in a situation where you lose your deposit, for example, so it’s important to be as prepared as possible.