When we look for information on the Internet about Forex trading, you will come across many scams and complaints. That might even make you nervous about your decision to join trading. The fact is that, like in any business you will come across good brokers and bad brokers.
Therefore, you will need to conduct research for choosing a Forex broker, in order to avail the long-term benefits. Basically, trading is a challenging process, but if you work with wrong brokers, your chances of making profits are practically zero.
Some of the alleged scams for you to be aware of:
Signal sellers offer a system, where they provide information on favorable times to buy & sell a currency pair. System may be of two kinds – manual and automated. Mechanisms of systems also differ, as some use of technical analysis, and others depend on breaking news, while some others employ both.
The aim of each system is to offer information that point towards good trading opportunities. Usually, the signal sellers charge monthly or weekly or daily fees for their services.
Several market analysis reports suggest that the signal sellers are scammers. Criticisms are:
- Is it really possible to create a system that can beat the volatile trade market?
- Why will a broker having such profitable information, would want to make it available widely?
- If this signaling system is so incredible, then why not use yourself to earn vast profits?
At the same time, many experts claim to have benefited from signals. The best way to find a reliable signal seller is by opening a trading account with reputable brokers. You will soon come to know if the signaling actually works or not.
You will need to separate reality from fiction:
Many traders fail, and then start posting disgruntled comments to blame the brokerage platform. While you search for the best forex broker, you must learn to separate reality from fiction.
Complaints like – ‘I experienced slippage on all my orders’ or ‘ The market direction reversed, the moment I placed a trade’ or ‘My position was stop hunted by the broker’. All traders experience these issues, which is not probably the fault of your broker.
Many new traders make trades according to their instincts, and it is a common tendency for them to change the trade direction. This can go wrong, and he/she can lose money. It is more important to understand the market dynamics.
Of course, there are some brokers who try to get their commissions, at your expense. Some reports say that a few brokers randomly move the quote rates to set off the stop orders.
Trading is not a zero game. Brokers earn commission with increase in trading volumes. However, long term relationships with regular clients allows them to earn more profits.
Slippage is a psychological issue, which gets triggered due to panic or anxiety. Exchange rate environment is volatile and the brokers will not give a guarantee that an order gets executed, at your desired price. Some of the reported scams are actually because of the insufficient knowledge of traders.
How to find out, if your current broker is bad?
Signs that suggest that your current broker is a scam artist:
- Communication starts to break down
- No email responses are received
- Broker does not answer your phone
- Provides vague answers to your questions
What to do when you detect you are trapped with bad broker?
- Read the signed documents thoroughly to ensure if the broker is really wrong.
- Be straight with the broker, but without getting offensive.
- If the broker does not respond appropriately, or allow you to withdraw money from your account, then report them to regulatory authorities.
Many of the recorded scams are basically insufficient understanding of the trade markets, but when the brokers are really at fault, it is necessary to take action.