April 13, 2017 (Investorideas.com newswire) Fraud has from the very beginning been a cloud of contention against arguments that propose foreign exchange as the new realm of the successful financial speculator. Surely no one wants to have his or her dreams of success and financial prosperity crushed by a crook. Yet a foreign exchange trader is not defenseless against fraudsters in the financial market: by just remaining informed and knowledgeable about certain key facts, it is totally possible to avoid all but the most unlikely forms of forex scams.
If you do a quick internet search on forex broker scams, the number of returned results is staggering. While the foreign exchange market is slowly becoming more regulated, there are quite a lot of unscrupulous brokers and forex signals providers who should not be in business. Fortunately for investors, they eventually get weaned out.
However, when you are looking to trade forex, it's very important to know which brokers are viable and reliable and to avoid the ones that aren't. In order to sort out the weak brokers from the strong, and the reputable ones from those with underhand dealings, we must go through a series of steps before depositing a large amount of funds with a broker. Trading forex is hard enough in itself, but when a broker is implementing practices that work against the investor, making a decent profit can be nearly impossible. This article will discuss some viable tips that will protect the regular trader from scam brokers.
Trust regulated brokers only
It is important that as a beginner you stick to the regulated trading platforms and never try your luck too hard by trusting the competence of a broker whose only claim to legitimacy is the assurance of its owner or a marketing representative. Though not all unregulated trading firms are run by crooks, but it is probably a lot better to avoid any disappointment at the early stage of a forex trading career by beginning with the regulated firms.
Always begin with a mini-account
If you trade with a broker that does not fully satisfy your expectations, it is a good idea to begin trading with a mini account and to slowly build up your position as you gain confidence in your competence and the honesty of your market maker. This approach does not totally eliminate the risk of fraud but does reduce it significantly.
Most people are inclined to affix the seal of credibility to any trading platform that seems to have a legitimate and professional-looking website, and a competent marketing or sales team. However, these two by no means imply any degree of safety from fraud. On the other hand, a committed fraudster or scammer will probably never shrink from making a substantial investment in his marketing at the earlier stages of his operation in hope of the great profits that he expects to receive in the end.
Compare Price Feeds
Just imagine a horse with blinders. This horse's vision is completely limited to what is in front of him. If for any reason there is a hurdle in front, this horse has no other option but to exert the additional effort needed to jump over it. This is a very sad horse.
If you only rely on the price feed on your broker, you are basically trading like a horse with blinders on. You have absolutely no idea what is going on in the rest of the forex world due to the fact that you have limited yourself to your trading platform's price feed. If your broker firm chooses to widen spreads, and run your stops, manipulate rates, you have no way of knowing if the move resembled the general market.
You absolutely do not want to be a sad horse. Because you are a smart forex trader, you want to have the most complete and comprehensive view of the market as possible. The best way to achieve this is to subscribe to a second, third, fourth or even fifth price feed. That way, you get another view of the market, and you would have a chance to easily confirm whether price really moved the way it did.
Make sure you keep a detailed journal tracking all your transactions! Just like in a courtroom, you need verifiable evidence to make a case. You may feel cheated, but if you have nothing to prove it, then that feeling will remain just a feeling.
The easiest and the quickest way to keep records is to take a screenshot of each order you execute, each trade you make, and any other suspicious broker activity like odd price feeds.
Not only is this great trade journaling, but it will also be very useful if have been victimized by an errant fill. By properly tracking the trades you make, you can assure yourself that you will always have the evidence needed to support any case in the event that you file a dispute with your broker.
File Legal Action
If for any reason, you cannot settle your conflict with your trading platform, then it is time for you to take legal action. Most brokerage firms give in when faced with the threat of legal action, but if they do not, you can easily approach either the Commodity Futures Trading Commission or the National Futures Associations.
The Commodity Future Trading Commission has a Reparations program that provides an inexpensive, fair, expeditious, and impartial platform to handle customer complaints and resolve disputes between futures customers and commodity futures trading platforms.
Finally, remember that in the long run, disciplined and safe trading strategies is the only route to success in the forex market. The occasional glitch (maybe, dishonest brokers) can be taken in stride, but sloppy trading will eventually take you out of the market, with or without crooked brokers
Name: Tom Adams
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