7 Ways to Avoid Forex Scams

Posted on December 2, 2009 by Yohay
Filed Under Forex Opinions, Forex Software | 5 Comments

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid loosing your money in such scams:

Forex scams are becoming frequent. Michael Greenberg reports on a luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud.

So, how can we avoid falling in such forex scams? Casey Stubbs already covered this issue, and gave 3 ways to avoid forex scams. I’ll expand on his advice, and add some more thoughts:

Image credit: Gubatron on Flickr.

  1. If it looks too good…: Sites that promise automatic and big profits in no-time should raise your first suspicion. There’s no easy money in this market. Sites that try to sell such products will usually have only one page that showing blinking dollars and no serious explanations. The graphics are usually “loud” and not humble.
  2. Talk to people: Casey suggest talking to people in the company and also with people that use the product to get an idea. In some cases, the people you’ll see in the promotion video will already look like clowns. In other cases they will look serious, but you need to verify that they really stand behind their product.
  3. Google the product and search for problems: I’ll add that you easily do a Google search, and add words such as “sucks” or “scam” to the name of the product. If the search results yield too many convincing results, it isn’t only competitors that are complaining – it’s real people that have already suffered.
  4. Check the people on LinkedIn: The world’s leading professional network has a very wide audience. Searching for the people behind the company in Google will almost always yield the LinkedIn page in the first results. If the people behind the venture don’t have a profile on LinkedIn, that’s a problem. If they do, see who recommends them. Solid recommendations will help you feel better.
  5. Regulation: A serious participant in the market will be regulated by at least one authority. The American NFA is the toughest authority (sometimes too tough). A stamp from the NFA, FSA, CFTC or another reputed institute in a normal country doesn’t mean that the company is bona fide, but it’s better than nothing. Companies listed in some exotic island look suspicious.
  6. Demo account: As aforementioned here, a forex demo account is the basic broker check. Some robots can actually have an OK performance, but how can you know that? You need to check it out. Ask to try it without real money.
  7. Intuition: Well, at the end of the day, you get a feeling about the people on the other side. As you can see, the forex industry has lots of bad people in it. Contrary to the basic rule at court, where a person is innocent until proven otherwise, you should assume that everyone is guilty, and that they need to prove their innocence to you.

Those are my 7 cents. Do you have additional tips?

Further reading:

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Comments

5 Responses to “7 Ways to Avoid Forex Scams”

  1. Forex Links for the Weekend December 12 | Forex Crunch on December 12th, 2009 12:02 am

    [...] Michael Greenberg gives a funny example of suspicious broker. Here’s my post about how to avoid forex scams. [...]

  2. Forex 2009 - Favorite Posts | Forex Crunch on December 29th, 2009 10:02 pm

    [...] Forex Scams – 7 ways to avoid them – There are still too many crooks out there. I think that this post didn’t get the deserved attention (it didn’t reach the top 15). [...]

  3. Some tricks scammers use to game their trading system with 488% gain | Quantisan.com on January 5th, 2010 8:43 pm

    [...] general advice on avoiding forex scams, ForexCrunch has a good article on 7 Ways to Avoid Forex Scams. http://www.covestor.com var addthis_pub = 'quantisan'; var addthis_language = 'en';var [...]

  4. Random Noise | TradeProfits on January 21st, 2010 10:23 pm

    [...] Forex Scams In addition to the post mentioned above, you might also want to take a look at the following post. Yohay Elam from ForexCrunch posted 7 ways to avoid forex scams back in the beginning of December, [...]

  5. Oops, we’ll reinstate your position | Forex Crunch on February 17th, 2010 5:01 pm

    [...] brokers were born equal. Some will play dirty tricks to drain your account without being typical scammers. Here’s ascenario that happened to me and to many [...]

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