How to spot Forex Scams and avoid them?

Forex scams idoforex

Foreign Exchange Market (Forex) has been the world's largest market so far. So there's no wonder there are plenty of Forex trading scams happening. Although the authorities have taken steps to protect the Forex market from such scams by heightening its security, it seems that there are still out there. So there is a possibility that you might too be vulnerable to these Forex Scams.

 

 

Forex scams may come in different forms. Hence, there's no such way we can name that this or that is the only method that might come as a scam. Yet, there are some ways to sense and spot the scammers.

If you are a beginner it might have already been little difficult to identify due to your lack of Forex knowledge and experience. But as you go further with this article you will find it's not that difficult. Mind you, you will have to be cautious and learn Forex gradually.

1. If a broker says that it directs you to gain huge amounts of profits without risks, then you have to be very cautious. Why? Because, Number one, Forex Trading itself is full of risks. Number two, There's no way you can trade without risks. But having a proper knowledge of it and practice you can minimize them. And number three, Forex is about making predictions. So no one can assure or promise of a future market change.

2. The next way you can sense of a Forex scammer is, that the broker or the account managers or the partners promise you a hundreds of pips in a day with no risk. The rationale behind why this should be sensed as a scammer is that if they are capable of giving that kind of an offer to you, why others can't and why they are trying to sell their own system to you? makes sense right?

3. The other way to sense a Forex scammer is that they do not reveal a license or the regulatory authority on their website. If a Forex manager or a broker has this license, why are they not displaying it. Because, if they are doing a business, and if their objective is to gain profits by delivering a service to their customers, showcasing the license inevitably attracts customers to them by building trust. Why have they given up such a valuable strategy in their business? That says something isn't it?

4. Most scammers do not reveal much about their organization their location and other background details. Having said that, we cannot say that all the organizations that have mentioned their location is not a scammer. Because it's just about updating their website. So take a careful notice on their country of origin or the headquarter's location falls under highly regulated Forex countries and do bit of research whether they are visually available in somewhere else; in videos, their advertising, marketing campaigns, webinars, tutorials etc.

Spamming your emails and messages with unprofessional tone of speech containing so much of exaggeration and unreal sounding facts or promotions could be another way of a spammer's reaching you.

Apart from this, if an email or an SMS asks your personal details without the name of the sender's name and there seems to be other way of contacting them, it could probably be a scam (Usually the licensed and professional companies have an established support center communicated on their platform or site and they are always professional in communicating)

Learn Learn Learn

What makes you rich first is, learning Forex. Because then you know what exactly Forex is and how it behaves and how to apply Forex strategies in order to expect profits. If you are a beginner, we suggest you to start from the very beginning. Forex Basics. 

Carefully Study the Forex Broker/Provider

If you come across a Forex broker or any other provider, check the following

  • where are they based?
  • how many branches across the world are being operated?
  • Is it regulated by an authority?
  • Does it have a valid license from a regulated body?

The answers to these will keep you in the safe side.

Get the Forex Broker confirmed

Websites can say that they have Forex license. Because usually the people do not cross check them. So if you have doubts of whether a broker/a manager has a license or feel like you are being scammed, just get it confirmed by the regulatory body of that country. Popular Forex regulatory bodies are as follows.

  • USA - CFTC (Commodities and Futures Trading Commissions)
  • United Kingdom - FCA (Financial Conduct Authority)
  • Australia - ASIC (Australia Securities and Investments Authority)
  • Cyprus - CySec (Cyprus Securities and Exchange Commision)
  • South Africa - FSB (Financial Services Board)
  • India - SEBI (Securities and Exchange Board of India)
  • New Zealand - FSP NZ (New Zealand Financial Service Provider)

Forex Trading App for South Africa

Forex Trading app South Africa

"Yes, it is not easy to choose the best Forex Trading app out of many. That's why we decided to list down the best among the best in South Africa"

If there's anyone in South Africa or in any other country who has been wondering which Forex Trading app to use, here are them. The best and the most suitable trading apps that suits your requirements.

Forex Trading app - the trading game

This is a free Forex Trading app that helps any trader to learn and practice trading despite their level of expertise. The app offers many features like entertaining lessons, pro tips, knowledge tests and practice environments in addition to real trading.

etoro logo

eToro is a Social Trading app which basically helps you to copy pro trader's trading decisions and apply in your trading. eToro was the first in the world to introduce such a useful trading app. Its features include copy trading facility, leverage, stop-loss order, demo trading (practice trading in a virtual platform)

Minimum Deposit - $200

Trading Instruments

  • Forex
  • CFD
  • Commodities
  • Cryptocurrency
  • ETFs
  • Stocks

Plus 500

plus 500 logo -Forex trading app

Plus 500 app is considered to be one of the best trading apps used in South Africa as well as the other countries. This is also rated as one of the best trading platforms to trade with. This will be a good pick if you are especially seeking ways to trade CFD as well as Forex.

Minimum Deposit - ZAR 1500

Trading Instruments

  • Commodities
  • Cryptocurrencies
  • Forex
  • ETFs
  • Indices
  • Stocks
fxtm logo- south africa

FXTM Trader or Forex Time Trader is just another broker that's popular among the most South Africans. What makes this broker more easy to trade with is that FXTM offers the opportunity to start trading with a minimum amount of $5 under their account known as "The Cent Account"

Minimum Deposit - $10

Trading Instruments

 

  • Commodities
  • Cryptocurrencies
  • Forex
  • Indices
  • Metals
  • Shares
  • Stocks

CM trading

CM Trading Logo - best forex trading apps South Africa

CM Trading is the most involved broker in South Africa and is regulated FSCA. It is originally in Johannesburg and operates in Seychelles as well.  This broker is appreciated among its users for its innovative movement with its offerings. Their management define it "We are always looking to give you that bit extra"

One of the innovative moves is that their Guardian Angel feature. it informs you of the major market changes that happens in the market immediately. To name another, CopyKat service. That enables traders to connect with people who are under the same broker.

Minimum Deposit - $250

Trading Instruments

  • Commodities
  • Cryptocurrencies
  • Forex
  • Indices

Forex Leverage

Forex leverage

The answer to the question why this Forex market has become this popular could be because of Forex leverage. You might have heard the word leverage in different situations in different contexts. But what actually means this especially in Forex? As you move down the article, you will get a basic yet a solid idea on what this leverage is and how that works 

Imagine that you are already a Forex trader. But you do not have enough capital to invest or open up a particular position. Then you are left yourself with two choices. What are they? You will either stay without opening a position or will borrow some money from someone else to invest in for the same. Well, that borrowing and investing in the Forex Market is called Forex leverage. But what it differentiates from common leverage methods like borrowing money from a friend or so is that you can always go for leverage with a broker. 

One of the most advantageous things in Forex is that you can get high leverage compared to other online investing methods like stock trading. Therefore there is a high possibility that you can make profits involved with the same level of risks which might in the event of a wrong decision bring losses. 

It is not as difficult as it seems to understand. For example, just imagine you are thinking of buying a house at the price of $200,000. You walk to the bank  and ask for a loan. Then the bank say, they will grant you a loan. But you will have a minimum margin to contribute which is $20,000. The balance of $180,000 would be approved as the loan. This is exactly what applies with Forex leverage too. If you have only $1000 and you would want to go to a transaction of $10,000. You may go for a broker who offers this leverage facility with the minimum (eligible) margin requirement and fill the balance of $9000 the same way.

Usually the most brokers mentions the Forex leverage margin in a percentage such as 0.25%, 0.5%, 1% and 2%. Say you spot an ad on the internet, a broker saying that you are required to go with a 1% margin. That means the percentage of your contribution for the total transaction value is 1%. Say you intend to open a position with a $100,000 account, then you are required to deposit the minimum contribution (margin) of $1000. (100,000/1000). Once taken that into a ratio you will find the leverage margin ratio as 100:1 (meaning you get $100,000 for a $1000 deposit)

Following are the most common leverage margin ratios that most brokers offer.

Minimum Margin Requirement Maximum Leverage
0.25% 400:1
0.5% 200:1
1% 100:1
2% 50:1
3% 33:1
5% 20:1

It is true that most social trading platforms offer this leverage facility at different so called ratios. Therefore it is understandable that you face the question as to which margin level to use. But I must say that It's not easy to decide the best margin level to use. Because it wholly depends on the strategy you use in Forex. But to give you a tip, it is always wise to go with the least margin levels if you wish to go for long positions and consider of higher margin levels if you wish to do scalp trading.

Note: Your capital could be at a high risk if you go for leverage without having a clear idea of Forex Leverage. Therefore it is always recommended to try with a Demo Trading account in a virtual environment before you try to do actual trading.