The average forex broker is completely legitimate, offering forex trading services that present the tangible opportunity to make a return on investment.

Nevertheless there are companies out there posing as legitimate forex brokers which are actually completely fraudulent. Spotting these companies early on will save you a major headache and more importantly, a major blow to your forex trading account.

What is a Forex Scam?

A forex scam involves fraudulent forex trading. This essentially means that once you begin trading forex with the company there is simply no way to get your money back once it is invested. A company of this nature will entice you with its unusually high returns on investment. Once you are lured in and your funds have been deposited you will either never hear back from the broker or, as is the case in some instances, continue to deposit funds and trade unawares until you notice something suspicious.

Another type of forex scam that has evolved over the years is a software scam. A software scam claims to be able to help you with tackling the forex market. It also affirms that by using this particular software you will be able to learn all about forex trading whilst practicing on a demo trading account .

Who are the Victims of Scams?

Individuals hoping to make big money are usually the victims of scams though small businesses are also targeted. This is because fraudulent companies glorify online forex trading, stipulating how easy it is to make lots of money almost overnight.

However successful forex trading is down to a lot more than good luck; it requires patience, skill, resilience and commonsense, along with plenty of other characteristics. Because of the seemingly straightforward and lucrative nature of currency trading, many people end up losing everything that they have invested into one transaction in just a matter of moments.

Avoiding a Scam

To avoid getting involved with a fraudulent broker it is essential to read the company’s small print. Are the genuinely permitted to do business in your country? Is this clearly stipulated in the company’s legal documentation?

Another essential feature is the licensing and regulation of the broker. Are they legitimately licensed and regulated by a prestigious regulatory body? If there is no sign of a regulatory body, steer absolutely clear of this broker. Registering with an unregulated broker means that the ability to retrieve your funds is near-enough impossible, and this is quite the opposite of what you intend to achieve from online forex trading.