The forex market is gaining popularity day by day. The disgruntled options and stock traders are pouring into forex for a number of reasons. Forex trading is considered way more lucrative and more straightforward. Most traders end up into forex trading with insufficient information; they dive into the market without understanding how the market actually works. With so much money in a badly regulated market, Forex scams will be promising fortunes in no time. These scams are cleverly formulated that even experienced traders could fall into them. The scams will be crafted in different ways but the end result is one, you will lose your hard earned money. In the recent past, many scams are in the form of signal providers. Signal providers are individuals or firms that scan the market for favorable buy or sell opportunities and sell to traders. Do not misunderstand, there are good signal providers who will earn you money but there are others whose intention is to steal from you. In this article, we will be showing you how to avoid scam signal providers.
How to avoid Forex scams: Analyze the historical results of a provider
When doing this analysis, never rely on results published on their website; always look for results published in other reputable sites. Results published on sites such as Myfxbook and Forex Peace Army are more reliable than what is shared on the provider’s website. Secondly, you need to crosscheck the results shown with your broker platform. Are the entry and exit points tallying with what your online platform is showing on that particular day and time? Thirdly, do the results look fictitious; are there too many gains and no losses? Remember any good trading system should have reasonable gains and losses. If only gains are being shown then consider looking for a different provider. Some providers are notorious for updating their historical data; take screenshots of their results and confirm that it doesn’t change after a week. If a week ago their results had a lost trade but today the loss has magically transformed into a win, run! It’s a scam.
Educative and non-conflicting advice
A good signal provider will not just give you entry and exit signals, they will educate you. They will include details on how they trade. Good signal providers will guide you on the right account balances, lot sizes according to your account, margins as well as exit and entry points.
Rule of the thumb is to avoid free signal providers who insist on traders choosing a certain broker. Such signal providers are simply working for that broker, they give low-quality signals, you lose money and in return they earn commissions. On the same note, please quit using signals provided by the broker. Most are misleading and low in quality.
Trial periods and a money-back guarantee
If a signal provider believes his/her signals are good enough, then there should be a trial period or at least money back guarantee. A trial period will give you a few weeks to see if the signal works while a money back guarantee ensures that if you are not satisfied with the product your money will be refunded within a specified period. If none of these options are available, chances are it’s a scam.
Key information should not be hidden on Myfxbook and Forex Peace Army
We discussed how important it is to make sure historical data is shown on key reputable Forex sites. However, the manner and the form in which the data is published on those sites also matter. All information relating to trading should be kept public. If a signal believes in what it’s offering, then no trading related information should be kept private.
Information such as equity, withdrawals, and balance should be readily available for your decision making. Some providers will not show all open positions, they will keep details of the profitable deal public but the losing deal private. All open positions should be public, clearly indicating entry and exit points.
Signal provider with anonymous payment methods
As you do your research on the best provider for you, most often you will come across some signal providers in locations you have never heard about. That is the first warning sign. Then they will request you make payment through wire transfer or even RTGS and promise money back if you are not satisfied with their services. Always work with signal providers whose payment is made through normal online payments such as card or PayPal.
Read through genuine reviews – to avoid Forex scams
Another way to avoid being scammed by signal providers is by reading reviews from users. However, one needs to be careful as some of the reviews that are shared are not real. Some of the signal providers will pay individuals to give them favorable reviews. To get this right, try to read independent reviews by reputable forex sites. Another way to know if the reviews are genuine is by reading through them to see if they appear natural. However good a provider may be, there should be a few negative feedbacks. If all reviews are positive then one needs to be careful. Reviews should only be used to complement the other points listed above. Depending purely on reviews can be misleading as it’s hard to distinguish genuine and fake reviews.
Conclusion: How to avoid huge Forex losses
Although we have given you many valuable suggestions in this article, maybe you still wonder: How can I avoid Forex scams? When working with signal providers, it is worth noting the quality of signals is more important that the frequency of the signals. The frequency will vary based on market volatility, with high market volatility more entry and exit signals will be availed and vice versa is true for low volatility markets. Most newbies believe that the more the trades entered, the more the earnings. This is a major misconception that can lead to huge losses.
Then… How to avoid Forex scams? When deciding on the best signal provider, I would go for the one with few but high-quality signals as opposed to one with many but inaccurate signals. Always remember forex is not gambling; forex is not a game of chance; forex is about picking a decision out of reason and giving it time to play out.
Forex And Profits wants to thank Edith M. for contributing in our Forex community. Edith M. shares her hard earned lessons in the area of trading. Her trading journey began more than 5 years ago. She has been scammed severally, subscribed to signals that led her to blow her account. Her journey to achieving the “holy grail” trading system has been full of ups and downs and she feels is best suited to handle this. Edith M has also studied “trading psychology”. We are looking forward to having more articles from Edith M. in the future.