If you’re involved in forex trading, you’ll be aware there are many disturbing tales surrounding scams and frauds. These stories are widespread because of the monetary gains that the scammers and fraudsters can make. A particularly alarming trend is the proliferation of forex brokers acting in a fraudulent manner, while appearing to be professional, legitimate businesses which are legally regulated. However, there is a growing and sinister trend for non-legitimate regulatory bodies which can lend credence and a veneer of legality to fraudulent brokers. We look at how to avoid being a victim of such illegal activity.
Do Your Research
How do you ensure that you’re not the victim of forex fraud? The first and most important action you can take is to thoroughly research the regulatory authorities in your particular country. In the UK all forex activity is monitored and regulated by the Financial Conduct Authority. Its website lists all individuals and organisations which are regulated by them to do business in the UK and are allowed to offer certain services or products. Making the right checks on a firm you intend to do business with is a simple matter and will offer you reassurance and peace of mind that if anything does go wrong, you and your money are protected.
If you are looking to use the services of a foreign broker, it is imperative that you investigate the relevant regulatory authorities in that particular country and whether the fx firm is registered or licensed with them. In the largest forex market in the world, the USA, the National Futures Association (NFA) and the Commodity Futures Trading Committee (CFTC) both have responsibility for ensuring forex trading is regulated and that the highest standards of propriety are adhered to. All forex brokers must be a member of the NFA in order to operate legally. Other countries have their own regulatory authorities.
Check Out the Brokers
If you were buying a new car, you would research it thoroughly, paying particular attention to fuel economy, safety and the Vehicle Excise Duty band that the model you’re interested in belonged to. You might visit websites to look at reviews of the vehicle and check out its good and bad points. In the world of forex, you should carry out similar meticulous research in order to avoid losing your hard-earned money.
The internet is a repository of information which, although it may take some digging, will yield results on both positive and negative reviews of a brokerage firm you’re interested in dealing with. Beware of false positive reviews as these may have been posted by people who have been paid to compliment the company.
You are also advised to make enquiries into the company’s regulatory record to ensure that you don’t fall victim to illegal activities.