You have been highly successful with trading currencies with this new offshore Forex broker that you have been trying out of late. You have doubled your money, told all your friends about it, and now it’s time to withdraw some of your winnings and have a party. But, your withdrawal requests get ignored; customer service does not return emails; and suddenly, your account is frozen. Then they suddenly disappear.
Forex traders cringe when they hear stories like these. They know full well that it could happen to them, too, at any time. But, wouldn’t it have been better if you had performed a little more due diligence up front before you ever wired your hard-earned capital to these culprits? In the first place, Forex trading is high risk, but choosing to use a broker in another country is fraught with even higher risks. Some of the best Forex brokers are overseas, but why take the chance?
Stopping a scam is all about never getting involved in one in the first place. Make no mistake about it; the criminal element in our society is well trained in how to separate you from your money. Awareness is your first line of defense. Here are a few tell tale signs that might indicate a potential Forex scam in progress:
- Outrageous Marketing Claims: Fraudsters prey on our secret desire to get rich quick. All manner of marketing claims will spew forth, touting how easy it is to make quick gains, to use their expert assistance to pave the way to riches, or offering simply more leverage and thinner spreads. The trick is to get your deposit and then never return it. This scam applies not only to brokers, but to all other providers in the industry, from account managers to software/robot salesmen. If it seems to good to be true, then walk the other way;
- Very Little Risk: If you hear these words or that “it is almost a sure thing, nobody loses money with us”, then, once again, walk the other way;
- Urgent That You Act Now: Once again, if there is urgency connected to when you participate, beware;
- Referrals: If you think you are safe when a friend refers a broker to you, Bernie Madoff’s clients feel differently. They were duped because they relied on a friend’s suggestion, which is exactly what is written in the criminal’s playbook. He treats his first customers well, so they will deliver a host of new clients, ready for immediate fleecing;
- Forex Broker Reviews: Legitimate Forex brokers are proud of their service and their management team. They prominently display their names and addresses. No one is trying to hide, but appearances can still be deceiving. You must look for independent testimonials. Check with other traders for their valued opinions. Ensure that regulators keep a tight watch on them and see what they or other authorities have to say about your potential business partner.
Put ego aside — Let caution be your guide!
by Sara Mackey
ForexFraud.com is a comprehensive website informing traders on how to avoid becoming the victim of Forex fraud and scams - whether from brokers or individuals. To learn more about how to protect yourself and what to look for in a forex broker, please click here.