As you know, forex is the largest financial market globally, with a daily transaction of around 6.6 trillion dollars. And with forex trading taking place worldwide without a central location, it is given that there might be some illegal activities.
While legal trading is legal and overseen by numerous regulatory bodies, not every broker is keen on following the letter of the law. Trading is risky as it is, adding scam brokers to the mix doesn’t bode well for the traders. That’s why traders must be extremely diligent while choosing a broker because you don’t want to end up risking your money, even before you make a trade.
Hence, research as much as you can about a broker before you trust them with your money. The first thing you have to check is whether they’re regulated or not. The chances of an authorized broker cheating you out of your money are pretty low. While you may find contradicting information about any broker on the internet, it will be easier to separate fact from fiction by digging a little deeper.
As more than often traders, especially beginners, end up blaming their brokers for their loss. While there are scammers are out there, the broker is not always at fault. So be wary of revenge reviews when doing research. Complaints by traders about being unable to withdraw money or not receiving responses from a broker are definite red flags. Also, be on the lookout for any outstanding legal actions against the broker.
Even if the broker passes all your scrutiny, do pay close attention to all the legal documents you have to deal with while opening an account. Read the fine print so that you have a clear understanding of what exactly you’re agreeing to. And when starting a partnership with a new broker, start small. Trade for a month with a mini account; take them for a trial run.
All these precautionary steps must become second nature to you while trading if you want to steer clear of scammers. There is no way of avoiding risk in trading but at the least, you can make your odds better.