The Forex or Foreign Exchange market is undoubtedly one of the largest financial markets in the world where both institutions and investors trade currencies. As per the recent Triennial Central Bank Survey, the trades each day have raised from billions to whopping trillions in the last few years.
Besides, the Forex market is run by the top-tier international banks located in major locations in four time zones, thus making 24 hours currency trading possible.
Although Forex Trading is legal, the industry has recently been diluted with scams and malicious brokers. The main reason behind such focus from the scamsters in the forex market is the most compelling option to make money from the higher returns. As a result, the traders now need to be utmostly focused while choosing the trading platform.
How does forex trading work?
The forex market is all about catching up with the ongoing fluctuations in the currency exchange rates in different regions. It doesn’t set or regulate the price of different regions but determines the exact relativity between different currency values. Thus, one can take the position of any major currency against any others.
While most of the activity in the forex market is done by the top-tier international authorities situated at different locations, a few of them can be influenced by known factors and thus can be speculated by individual investors.
However, investing in currencies is a whole different story compared to stocks, bonds or real estate, etc. It is a mere fact that the stock market is a definite positive game as the stock value rises over the long term unless the company is bankrupt or ceases.
But, the forex market is unpredictable and has high risks both in the short term and long term. So, every forex trader must keep an eye on the price trend of the chosen currency every single day and make sure whether the trend is going as per the analysis. Sometimes, even the strong forecast made by gathering multiple sources can be proved wrong due to adverse conditions like a recent pandemic.
So, it is obvious that forex trading is legit, but the risks involved in it and the scamsters trying to use the market are what make it dangerous.
Can forex brokers be a scam?
Not every forex broker is a scam out there, many forex traders are still earning millions only by trading in forex these days. Well, there are a few platforms that are either scams or are vulnerable to cyber risks like ghosting, front running, and spoofing, etc.
In such cases, if the trader has not analyzed the platform well, it is most likely that the forex broker may turn into a scam stealing data, money and mislead the whole ongoing trend. So, it is completely on the traders to choose the platform wisely and detect if any loopholes or suspicious activity are going on.
Here are some scams that came into view being the forex brokers south africa which one must be familiar with before choosing the platform
- Spoofing is when a trader tries to manipulate/change the market by either changing the complete view of the trend or by making the trader place a larger order by compelling them.
- One of the most common ongoing scams these days is front-running in which the broker places a trade from the trader account without any concern.
- Trade signal generators are mostly scammed out there unless you are paying for the reliable brokers out there. Well, you may find firms that claim to provide trade signals at the right time and take a fee in exchange for it, which is a scam.
- Automated forex trades are also one of those compelling things that attract the forex trades faster. Well, these are the robot scams which have no base, unless it is from a renowned forex broker.
Forex trading is 100% legit, but those are the ever-increasing scams that make it look like a scam. So, a trader should understand that there is no shortcut for making money without any knowledge or experience. Many other scams are running out there besides the above-mentioned ones, which is why one should always be alert while choosing the forex platform or while placing the trade.