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What are Forex Frauds and Know How to Avoid Them

Trading scams in forex or foreign exchange market takes place usually due to the deceiving of the trading broker. Forex market is considered to be a high risky market and if any broker tries to convince that the forex market as a low investment and high profit yielding market, then it is for sure that the broker is up with deceiving strategies.

Forex scams or frauds include activities such as excessive buying or selling of trading securities from our account by a broker for the purpose of generating commissions, making a trader rely on a particular software by making him believe that it will guide him to large profits, improper management of accounts by the broker, ponzi schemes, outright fraud, false advertisement, etc.

Tips to avoid forex frauds:

  • By following certain strategies and by taking certain precautionary measures, a trader can protect himself by becoming a part of a forex scam.
  • A trader should not fall for false advertisements by the broker. He should have minimum knowledge about the forex market before entering in to the trading.
  • A broker who scares the trader by convincing him that the trading in forex market requires excellent skills of investment, high business acumen and great levels of intelligence should not be opted. This is because forex is a simple market and is much simpler than stock market, hence basic knowledge of trading is sufficient to stay in the market.
  • A broker certified by National Futures Association (NFA), Commodity Futures Trading Commission (CFTC) is only to be approached.
  • A broker giving high leverage should not be entertained, as forex market is considered to be high risky zone and a beginner should trade with low sum or with demo accounts till he gets the experience.

Above all a forex market should have a self regulatory bodies in order to curb these scams or frauds.

Updated: March 29, 2013 — 3:33 am
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