The foreign currency market (FX) is enormous. Its average daily trading volume, which includes currency futures and options, is more than $5 trillion. 1 There aren’t many rules, either.
As a result, numerous forex frauds are still possible. These con artists advertise “secret trading formulae” or algorithm-based “private” trading strategies as a way to make quick money. In addition, some claim to have “forex robots” that trade on your behalf.
A broker from The Investment Center, Ann Ricci, gives some steps you may do to reduce your chances of being a victim of a scam.
Before you start, do some research on brokers!
Perform your due homework before engaging in FX trading. The National Futures Association has built a Background Affiliation Status Information Center (BASIC) (NFA). In addition, there are instructions on how to pick a broker and how to prevent fraud.
The NFA is the industry’s governing organization for futures and options. Every trader who intends to do off-exchange FX operations must join the NFA before interacting with the public. In addition, the Commodity Futures Trading Commission (CFTC) should also be contacted.
The Commodity Futures Trading Commission (CFTC) is the government organization in charge of futures and options trading. In addition, you may use BASIC to look up any legal proceedings conducted against persons or businesses.
The FX market is not wholly anarchic, but it lacks a central regulatory authority. The majority of deals are conducted on the currency spot market. It also has the most straightforward set of rules.
The rule-making agencies that have jurisdiction over forex brokers have set requirements that they must follow. The NFA has penalized or banned several people from ever playing again. Brokers who are licensed by the SEC and FINRA stand to lose more if they conduct unethically. They wouldn’t jeopardize their other securities licenses by defrauding their forex consumers.
Stay away from the signal sellers:
Finding operators to trust in the forex market is one of the obstacles a novice forex trader encounters. One set of operators that beginning traders should carefully evaluate is signal sellers. A signal seller promises that their system of signals will identify the optimum trading periods. The system might be manual, requiring the user to enter trade information manually. On the other hand, it might potentially be automated to execute a transaction when a signal is received.
Specific systems use technical analysis while breaking news is used by others. Many of these systems combine the two, but they all claim to give information that leads to successful trading possibilities.
The majority of trading signals are well-known and debated. There is also a wealth of information regarding trading signals on reputable, accessible websites. One of the telltale signs of a phony signal seller is that they give instructions on beating the market with their new technique. Traders use trading signals to enter and exit trade positions. Fibonacci retracement levels, Bollinger Bands, and other terms are used to describe these indications. Look for unusual trade signal names since they are accurate signals utilized by traders. The signs are probably not legitimate if no one else has heard of them.
Any assertions about whether a method works are based on a more considerable conviction that no one can forecast the next move in a trading market. On this issue, there are competing viewpoints.
In his well-regarded efficient market theory, Nobel Laureate economist Eugene Fama contends that obtaining these types of short-term market gains is impossible. 4 His Nobel Laureate colleague Robert Shiller, on the other hand, holds a different viewpoint. Instead, he contends, based on research, that investor emotion causes booms and busts that might lead to trading opportunities.
To find out if a signal seller can assist you, create a trading account with one of the more well-known forex firms. Then, create a demo account and use the signals to place trial trades (without risking real money). With time, you’ll be able to determine whether or not predictive signaling is a viable option for you.