The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing 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:
- 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.
- Talk to people: Casey suggests 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.
- 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.
- 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.
- 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.
- 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.
- 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?
- How to use LinkedIn? The basic guide.
- Forex Demo Account for Technical Analysis – the first and best use of a demo account.