Foreign exchange trading, also known as Forex trading is a legal option to earn extra cash. However, as it has grown in popularity, there’s also seen an increase in frauds involving forex.
It’s crucial to know how to spot a scam in the forex market. Do this before you make the decision to participate in trading. In this article, I’ll outline the things to look out for to ensure you don’t fall victim to a scam in the forex industry.
What is forex trading? is it legal to trade in forex?
Forex trading is the process of converting one currency into another. The practice of trading in currencies is essential for international travel, international business, as well as international trade.
Because there isn’t one worldwide currency, there needs to be a method of converting an equivalent amount of one against another. That’s why foreign exchange enters the picture.
In the end, you might be asking, “Is forex legit, and is forex trading legit?” Sure, they are, however, there are a lot of frauds to avoid. Let’s discuss the specifics of how the forex trading process operates.
Is Forex legitimate?
To answer the question, “Is Forex legit” The answer is yes, Forex is legit. It is Forex also known as the FX market is basically an international marketplace in which international currencies are exchanged. The currencies of every country are part of the market for foreign exchange. This means that it is the biggest and the largest market around the globe and is also a legal market.
The exchange rate of currencies is what is called an exchange rate which is the amount of value one currency has against another.
Let’s say, for instance, let’s say you decide to purchase 1,000 Euros, at the EUR/USD exchange rate of 1.18. This means you’ll be paying around $1180 (USD).
In the next exchange period, the rate rises up to 1.20 and you can exchange those identical 1,000 Euros back into US Dollars. In this instance, you’ll receive $1,200 (USD)–for an income of $20.
As central banks are responsible for ensuring the stability of their currencies They are also an active participant in trading on the Forex market.
What is the process of trading in forex? Forex trading functions
Forex trading occurs within the Foreign Exchange Market or Forex (FX) and traders try the exchange foreign currency to make profits. However, the market is typically an unregulated, over-the-counter market, and is not tied to an official “exchange” despite the word exchange in its title.
It means that currencies are purchased and sold through a system of banks. Trading can occur all day. Contrary to exchanges where the trading of financial instruments is on specific regulations, rules, and time during the week. In the end, you can answer the query “is forex trading legit?” is yes.
It is believed that Forex is the biggest global market for trading, with an average amount of $5 trillion traded by Forex traders every day.
As with many other things the internet has made trading in forex more accessible. Individual investors who participate in forex trading do it in order to make profits from their trades. The whole idea is to swap your currency into one you anticipate to increase in value, and earn you profits.
While it’s as simple as it might appear, forex trading is in reality quite complicated. A variety of factors influence the worth of a currency as well as eventually, exchange rates. These include the country’s rate of inflation as well as interest rates, stability in the political and economic spheres as well as the national debt, and many more.
This makes the market extremely unpredictable and risky to invest in if there’s no idea of the risks involved. Thus, investors who are new should stay clear of this.
Which kind of Forex fraud is there?
With all the activities and no centrally-controlled authority, There is a lot of opportunity for traders who aren’t regulated to fall victim to fraudsters in the forex industry. Some are quite common which you must be aware of should you choose to trade.
Forex scams and robot trading systems
The prospect of earning money from your sleeping is appealing. In the end, we all want to earn a passive income. In the case of forex, you can find scammers who claim to offer trading robots or trading systems that will perform the work for you.
Computers handle this type of trade, and they automatically make sell and buy decisions in accordance with certain criteria. Naturally, the forex robots haven’t been tested and verified by any other source to prove their authenticity.
In any event, it’s not a great decision to rely completely on any software to make decisions about your investments and money. While we may want to believe that computers are foolproof, however, they’re not.
Additionally, no one (not even computers) can accurately predict global developments or economic indicators that can influence the market. While the idea of having a robot trade with you could be attractive, you should try to steer clear of them because they could be a part of the many scams that robots have.
Scams involving forex sellers and signal sellers
Signal sellers are businesses or individuals who pay to give advice on the best time to purchase and sell a specific currency pair. In general, they require that customers pay a certain amount of monthly fee for the information. They often offer claims of outperforming in the marketplace and claim that they have the market down to the level of science.
A scam that involves a signal seller is a scam that aims to collect cash from traders without providing any details. And, many of them don’t have the experience or other means–to offer guidance. A quick Google search will reveal how it’s easy to market yourself as a signal marketer.
It can be difficult to distinguish the signal sellers who are scammers because they usually give glowing reviews and boast about their past of making massive profits. No matter what details they offer, beware.
Multi-level marketing forex scams
Forex’s popularity has been bolstered through the rise in multi-level marketing (MLM) companies that are based around trading in forex. They already have plenty of doubt and this is no different in the case of forex. Certain well-known forex MLMs require their members to pay monthly fees in exchange for daily trading signals and educational material on forex.
Members are then encouraged to attract more members through the possibility of receiving tiered commissions. These companies place the focus not on trading but more on attracting new members. The reality is that you don’t need to be a member of a company or pay a membership cost to trade on the forex market.
Broker frauds
A broker for forex is a business that gives an access platform where you can buy and sell currency. You’ll need an intermediary to conduct forex trading. However there are many brokers who are not authentic and trustworthy, and they are constantly finding ways to steal your money or saturate you with charges.
There are some that are not even regulated and therefore are not accountable to any authority. In the event of fraud, it’s unlikely to be a good option to pursue legal remedies.
It’s recommended to conduct the necessary research regarding any broker you are planning to work with. You can conduct some background checks through the Background Affiliation Status Information Center (BASIC) website, which was created by the National Futures Association.
False forex money
There is a chance to find Forex funds that offer guaranteed profits on the initial investment. False funds can boast high annual returns that appear attractive. However, as the saying says, if you think it’s too promising to be real the odds are that it is.
Instead, look at a more secure and reliable index or mutual funds to fund your investment ventures. Don’t be fooled by the scams of forex fraudsters.
How can you recognize fraudulent forex trading?
As you’d imagine, scammers do an excellent job of trying to cover up their fraudulent actions. However, there are a few signs that can be used to determine if it is one of the fraudulent forex trading scams.
1. A guarantee of success, or significant profits
The market is not a guarantee particularly that of the Forex market can be described as an assurance. Many factors can alter at any time and impact the market.
If someone is boasting of massive earnings, profit guaranteed, or certain outcomes, they’re selling fraud.
2. There is no substantial evidence or background details.
It’s easy to see pictures of profit charts. Scammers are well-informed and will only show gains and not losses over some time. In the worst instances, they might display charts of demo trading accounts that aren’t the same as real-time trading.
Do not make a choice to partner with someone else or buy an item on this or any other limiting information. Request background information and complete disclosure of your gains and losses. If they don’t respond or are in the dark, it’s likely to be a scam in the forex industry.
3. Unsolicited marketing
Insistent and unwelcome marketing is usually an indication of fraud. If you are being forced to buy a product or service without any details and no time, it could be a scam.
Be cautious when they start to request private information that could be used to commit crimes such as identity theft. If you feel uncomfortable or pushy, do not respond to it.
How can you avoid fraud in the forex industry?
The most important thing that could be done to prevent fraud in the Forex industry is to learn about it. The more you understand about forex, the less likely to be a victim.
Find out more about the forex market as well as the terminology and authentic resources to help traders. You might want to set up a demo account with a reputable broker in order to test your skills before putting real money in the account.
Similar to any other form of investing, it is important to take your time before making decisions about your money. It is also advisable to talk to an expert advisor or employ a financial adviser who will guide you and assist you to make a complete financial strategy. Additionally, you should ask lots of questions!
What should you do if find yourself scammed?
Perhaps this information has come to you a little too late, and you find out that you’ve been scammed. Maybe a cash withdrawal was already taken out of your bank account. What options do you have to get your money back?
Who can I reach
The process of getting your money back could be a bit difficult. For starters, you should contact the Commodity Futures Trading Commission here (CFTC).
You may also attempt to recover your money after an untrue transaction. The FTC provides some tips, including contacting your bank to revoke any transfer and then asking for a refund.
Other ways to earn money
Are you sure that forex is legal? is forex trading legitimate? Yes, but it’s not the only method by which you can transfer extra money to your bank account. There are other, more straightforward, and less risky methods to make more money.
If you’re not sure about trading forex, you might consider starting a side business. There are numerous jobs that can be done from home which can earn an extra income. Some of them are:
Writing for freelance
Writing freelance is an effective way to earn cash. It’s flexible in terms of hours and it’s not difficult to start with if you’ve got an inherent talent for writing and access to the internet.
Proofreading
It involves reading the writing of someone else to ensure that the writing flows smoothly and that it doesn’t contain any errors in grammar or spelling. It’s an easy side job you can do during your free time.
Data entry
Data entry is exactly what it’s called – entering data. It’s not difficult and can earn you an additional income.
Social media manager
If you’re a lover of social media, you should become an administrator of social media. Aid businesses in planning their social media content and marketing and connect with their target audience.
Virtual Assistant
Virtual assistants can perform a broad array of tasks for individuals or businesses. It is possible to earn substantial money from this after you’ve gained some expertise.
Online tutoring
If you’re an expert in one particular area, you can use your expertise to assist others. You can tutor people in languages or math sciences, science, or something else you’re competent to instruct.
These are only a few ways to leverage your abilities to earn some extra money online. Also, you should seek out ways to negotiate a pay rise. Additionally, you should eliminate unnecessary costs from your budget, and remember to cut costs efficiently.
Final thoughts on scams in forex trading
When you look for ways to earn additional cash through Forex trading, it is possible that you could be a victim of fraud in the forex industry. Therefore, it is essential to conduct due diligence and do your research prior to trading in the market.
If it appears too promising for it to be real, then it is. It could be a fraud in the forex market.
