As the world's largest financial market, it's not a surprise that Forex attracts many participants, some of which have fraudulent schemes in mind. This is why Forex scams continue to rise, even when news of such events has been spread widely online and via social networking channels.
People are not exactly uninformed, so why do they continue to fall for such scams?
In an interview with US News, regulatory and government investigations attorney Braden Perry, and CEO of Tickeron, Sergey Savastiouk shared their thoughts on the prevalence of Forex scams and how to avoid them.
According to Perry, the foreign exchange market provides the perfect "atmosphere for spoofing, ghosting and/or front-running."
The risks in Forex have also increased due to the rise of online trading platforms. These platforms, big or small, created "more opportunities for fraudulent promotional schemes, overstatement of returns and the failure to pay out for wins."
Since some Forex brokers are guilty of running scams, Savastiouk recommends that "you properly select a brokerage account and firm.”
He advises traders to:
But is regulation the ultimate measuring stick for a legitimate Forex broker? Not exactly.
There are a few reasons why a brokerage firm would not be regulated.
One of the key reasons is that the company wants to save on operational costs, which is why it might operate under offshore licenses or remain unregulated. A licensed broker has to deal with strict capital maintenance, set up protective measures, and strictly follow best trading practices, which will cost money.
This shows that an unregulated Forex broker doesn't equate to a scam broker. It all comes down to due diligence when choosing a Forex broker and in educating yourself on how to identify fraudulent schemes.
Investigate further and look into:
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