Is Forex Trading a Scam?
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As of late, the forex market is placed in a pretty strange position. No one would expect forex to grow on such a large scale in the last couple of decades, nowadays being the largest and most active market in the world.
Only a few years ago and forex used to be considered a niche but now we’ve seen the tables turn and the forex market has had record volumes recently.
With more and more average people aspiring to become successful forex traders, so many positive stories about making money thanks to forex, so many forex gurus promising an immediate success to look up to, there is no wonder why the average person would question the whole concept and mechanism of forex, wondering whether or not there is a scam hiding behind all the success and profit forex advertisements and broker companies are talking about.
Is forex trading a scam? Traders, brokers, investment gurus will all tell you that forex is nothing more than an investment opportunity that exists for many years while the forex mechanism is exploited by all international financial institutions to the average people exchanging currency for an upcoming trip.
What does not make any sense are the expectations that forex trading can make you a millionaire overnight or the idea that forex will always bring you a profit and you will never stumble upon the failure or loss. The people and companies promising you all of the above said are the reason why someone would consider forex trading a scam.
Because once you dive into the realm of the foreign exchange market and start trading, you will soon find out that success and failure go hand-in-hand as it is with everything we experience in life. Whether or not success will outweigh failure is a matter of a number of factors and your own efforts as a trader. And there is nothing dicey when it comes to forex since it is all about the risks you are willing to take.
What is forex – the short version
By now, you most probably know what forex is and you just want to dig deeper into the topic. However, if you are not quite familiar with the concept of forex or you are bombarded with so much information and stories of success that sound like a false advertisement, look suspicious, and make you think that forex trading is a scam, let us explain you about the foreign exchange market short and clear.
Forex is the foreign exchange market, the engine behind all operations with currency exchange around the world, this free scene accessed by all sorts of players, starting from international banks and financial institutions, through the commercial corporations and lower-scale companies, to the average person exchanging currency at the airport or everyone who wants to become a forex trader and be a part of this community.
Forex has been around for a few decades already and it is considered to be very close to the idea of the perfect market thanks to the free and easy access and the opportunities it offers.
All currencies float under free market rules and trading with them can be a potential opportunity for making money as a side-job for the average person.
However, trading with currency is not that simple and straightforward as it sounds despite the fact that forex is definitely not a scam.
Forex trading is certainly not a guaranteed way of earning a consistent profit. In fact, the majority of the forex trading newcomers are destined to experience failure and loss on at the start.
Even the most experienced traders will tell you that forex does not treat their money kindly and sometimes they lose money. However, this certainly does not back up the statement that forex trading is a scam.
The potential losses actually represent the need for adopting a certain set of skills and knowledge before stepping into the world of trading.
It is quite impossible to just go with your guts when trading forex without a good educational background. That is right, forex trading may not be rocket science but there is a whole structure of knowledge backing up the well-prepared trader.
Although even the best forex trading education cannot guarantee to make a lot of money, it is definitely the fundamental support when you aim to achieve your milestones.
We at Trading Education know for a fact that the comprehensive forex trading education that provides you with valuable information and helps you develop much-needed skills increases your chances to experience more success, helps you evaluate the risks and manage them, supports you in reflecting the errors you’ve made and learn from your mistakes.
With the suitable forex trading training, you will be able to back up the experience you are about to gain with all the tools you need to stand the best chance of success. Our forex trading course available here is created to provide you with all the information and training needed for supporting you engineer your forex trading experience around benefiting from good opportunities.
So is forex trading a scam? Could it be a scam if we put so much effort and dedication in mastering it as a piece of art? We highly doubt that someone will ever think that forex trading is a scam after finishing our course!
How does a forex trader make money?
Forex trading is a very basic and classic concept in the world of economics, especially considering its deep roots in the context of the supply and demand theories. Someone will tell you that the basic mechanism of forex is buying when the price is low and selling when it is high. While this is very true, it is certainly not the only rule making the forex world spin around. There is no denial in the fact that forex operates because of the demand-supply relationship. Every time a bank demands more currency than there is in supply, the price of that currency rises. Respectively, once the supply is higher than the demand and the price will drop.
So while the banks and big financial institutions are the backbones of the forex market, the little players are the ones who can take advantage of all these changes… or lose money because of changes they haven’t foreseen.
In order to be able to make a profit from forex trading you would like to know how to speculate on the changes and benefit from global situations or to know when to stop and predict potential unremunerative scenario.
A blend of making the right decisions, using the right tools, and choosing the right moment to act is the backbone of the formula for success when it comes to forex trading.
However, no one can ever be able to make such an accurate judgement in any given moment when trading with forex. With that being said you may think: “Is forex trading a scam then?”
Re-consider this thought! Despite the fact that you cannot be 100% accurate when trading forex you can increase your chances of success by understanding probability of the movement. You can do this by learning about technical and fundamental analysis.
So how to not get scammed on forex?
Your priority when aiming to avoid forex related scams is finding a reliable and professional forex broker. Of course, this can be easier said than done but once you make sure to stick to popular, renowned, and well-known brokers with an overall good reputation you can have the peace of mind you’ve done your job properly.
In addition, you would like to be wary of brokers who promise you the world, unrealistic milestones, and guarantee of immediate success and profit. Some aspects you would like to consider when narrowing down your choice of forex brokers include:
- The age of the broker company. It makes little to no sense for a forex brokerage company to spend years and years in building up a good reputation of reliable and trustworthy support and finally decide to waste it all. Generally speaking, you can put your trust in companies that were established at least 5 years ago. However, keep in mind that this is not the only criteria you should put trust in.
- Reviews can also be good guidance when choosing a forex broker company to work with. Despite the fact that it is not that easy to trust reviews as good ones can be easily bought and bad ones may be a result of strong competition, it is still a good idea to check out all reviews and try to get a general idea of the company’s image and activity. Google is a good way to start with when looking for reviews as it is not that easy to trick it and be sneaky with some bought reviews when you are marketing your company. Make sure to look around for reliable websites dedicated to helping you prevent forex scams like forexpeacearmy.
In general, make sure to use your common sense. The most common forex scams are actually not that hard to spot once you have a basic idea of how forex trading works and what you can actually expect when you get involved in the forex world. Here are some really basic but very effective tips to follow in order to easily spot the red flags and avoid a potential fraud:
- Avoid opportunities that are too good to be true or the ones that are suspicious in some way.
- Stay away from brokers who guarantee large profits and overnight success.
- Avoid companies promising little to no financial risks.
- Do you know what trading on margin means? If no, then you better stay away from that too.
- Be wary of companies claiming to trade in the Interbank Market because it is safer.
- Always be wary when sending your money online. You have all the right to ask the company for licenses and proof of business registration before registering.
- Ask for the company’s performance track record.
- Avoid companies which are not willing to give you their background. The risk is too high in this case. You can use reliable websites to indicate whether there are outstanding legal actions against a broker.
- Avoid companies selling trading systems without any proof and those who evade the answer when asked for proof.
- Don’t give away your personal details and any sort of information to someone you don’t fully trust.
- Avoid companies showing anomalies and inconsistencies in their terms compared to the regulations of the regulatory authority.
- Make sure to read through all the fine print when creating your account.
- Don’t trust anyone pressuring you to transfer money if you are not comfortable with transferring money.
- An authentic organisation will understand your desire to learn more about them and they will happily answer all your questions or arrange a meeting at their office.
We hope that with all the facts and warnings you now have on hand you will be able to find the answer to the question: “Is forex trading a scam?” Make sure you feel completely comfortable and safe when stepping into the forex trading world.
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The whole problem of forex trading being assumed as a scam by misinformed people is not why questions such as “Is forex trading a scam?” exist but who gave forex trading a bad name.
Unfortunately, the whole story of forex trading success is now clouded by some scammers masquerading as genuine forex traders.
One of the main sources of misinformation is such scammers showing off on social media and making people invest their hard-earned money into their scam instead of what the real concept of forex trading is – an opportunity for making a profit that comes with all its risks and challenges but all of these in the domain of legal activities.
Using your common sense and having a good educational background and understanding how forex trading works are the best ways to spot the red flags and warning signals of fraud and avoid getting involved in a scam.
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