Home Forex Trading How to Avoid Forex Trading Scams in 2021

How to Avoid Forex Trading Scams in 2021

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Forex markets manage trillions of dollars daily. Traders at all levels of experience search for the best brokerage firms to trade forex, CFDs, and stocks. Many new forex brokers might not be as secure as you think. 

Each online forex broker has its strengths and weaknesses. This article discusses how to avoid forex trading scams in 2021. 

Broker’s Licenses 

Trustworthy forex brokers have top-tier licenses. This regulation ensures they report to a governing body and are held accountable for their actions. The best way to check a broker’s registration is to check at the bottom of their website. A safe broker will reveal the risks involved with trading and the authorization it has to operate trades. 

When a broker has a license, it includes proper risk disclaimers and regulatory information on all its websites. Read more about online brokers and licenses in our in-depth reviews. 

Regulatory Body 

Another aspect to consider is how trustworthy a regulatory body is. There are cases in which brokers claim to have a forex license by a body that does not monitor forex companies. You should always research additional information on both the broker and regulatory body. 

Trustworthy forex brokers have top-tier licenses from entities like: 

  • FCA Regulated – Financial Conduct Authority – United Kingdom – (Great) 
  • CySEC Regulated – Cyprus Securities & Exchange Commission – Cyprus (OK) 
  • ASIC Regulated – Australian Securities & Investment Commission – Australia (Good) 
  • SFC Authorized – Securities Futures Commission – Hong Kong (Good) 
  • MAS Authorized – Monetary Authority of Singapore – Singapore (Good) 
  • FCA Regulated – Financial Conduct Authority – United Kingdom – (Great) 
  • CySEC Regulated – Cyprus Securities & Exchange Commission – Cyprus (OK) 
  • ASIC Regulated – Australian Securities & Investment Commission – Australia (Good) 
  • SFC Authorized – Securities Futures Commission – Hong Kong (Good) 
  • MAS Authorized – Monetary Authority of Singapore – Singapore (Good) 

Claims 

A noticeable sign a forex broker is a scam comes from the way it advertises its portfolio. For example, if a provider promises a 96% success rate, it is likely a scam. Safe forex brokers do not promise returns of any kind. 

High Cash Bonus 

If you want to avoid forex scams, you should pay close attention to high cash bonuses. It is most likely a scam when a broker has a suspicious cash bonus amount for new accounts and doesn’t share details about it.

Most regulated areas around the world do not allow bonuses for opening new accounts. The USA and China are two notable exceptions. 

Automated Trading To Guarantee Profits 

Most scam brokers provide access to automated trading performed by an algorithm. These brokers state their robots use trade signals to help you make more money. In most cases, such scam brokers focus on cryptocurrency and binary options. 

Brokerage Firm Information 

A reliable and trustworthy online broker shares credible information about the company. This means you will be able to easily check a company’s history, financials, and headquarters. Scam brokers don’t share any names, locations, or contact information. 

Awards Authenticity 

Many scam brokers say they have impressive awards. Most of the time, these will say “Best Broker 2015” without any additional information. Scam brokers purposely use fake awards from a couple of years ago, as these are challenging to verify. 

Sponsorship 

A common scam to avoid is corporate sports sponsorship advertising. If a brokerage firm has a major sponsor paying for their name to be on a jersey, it doesn’t imply it is trustworthy. So before creating a forex trading account, learn more about the most secure brokerage firms in 2021. 

Final Word 

Before you start trading, you should do some research. Reading our in-depth reviews will help you discover which are the best forex brokers in 2021. If you want to avoid scams, you should pay close attention to the aspects discussed above. 


Methodology 

The mission of Business24-7 is to provide comprehensive, unbiased ratings and reviews of online providers. User experience, the mobile experience, customer service, costs and fees, security, the quality of trade executions, the products available on their platforms are all part of our six-month evaluation of a providers’s platform. The rating scale was based on thousands of data points that have been weighted into the scoring system.

Providers were also required to fill out a multi-point survey regarding every aspect of their platform. In-person demonstrations and evaluations were provided by the majority of the online providers we reviewed.

Stefan Grasic, along with our team of industry experts, conducted our reviews and developed this methodology for ranking what form is used in online investing.

Business24-7 maintains high editorial standards and provides the best advice and recommendations. The products and companies that we review may compensate us when you click on the links on this website. Click below to find out more about our review process and methodology.

Disclosure

All trading involves risk. More than 80% of investors lose in spread bet and CFD trading. As these complex instruments allow for the use of leverage, there is a high risk of losing more money than you have deposited. Before attempting to participate in spread bets and CFDs, consider how well you understand them and if you can afford to lose your money.

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Braden Chase is an investor, trading specialist, and former research specialist for Forex.com who helps aspiring investors develop the confidence and habits they need to make an income from the market. Braden has served as a registered commodity futures representative for domestic and internationally-regulated brokerages and has also spoken & moderated numerous forex and finance industry panels across the globe.

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