By Michael B. Cohen
Vice President of Global Operations
Forex trading is considered risky. Forex is also the largest financial market and a total of $3 trillion is traded in foreign currency daily. At the same time, the term ‘forex’ is associated with dodgy trading and false brokers. So what is the truth about forex trading? Is it possible for individuals to trade foreign currencies safely?
There is nothing wrong with forex itself. The term ‘forex’ simply stands for ‘foreign currency exchange.’ Governments and large institutional investors buy and sell foreign currencies, and that is one of the reasons the forex market is so volatile.
Without warning, a major investor could buy or sell massive quantities of certain currencies, which can dramatically alter the value of individuals’ holdings. The forex market is, therefore, hard to predict and quite risky.
However, many aggressive brokers try to make the forex market seem like it is easy to understand and use to make money. The fact is that most forex traders lose money until they gain experience trading forex and learn the ropes. Seasoned forex traders can make money, but it is a skill that requires trial and error and first-hand knowledge of how foreign currency markets work in real-time.
Nevertheless, there are dishonest brokers who manage to fool consumers into using their platforms and trading services. They lure them in with false guarantees of gains, urge them to fund accounts, and do not allow withdrawals. Recently, ROFX which claimed to run an automated forex trading platform was taken to court in a class-action lawsuit for stealing millions from clients.
If you have lost money in a forex broker dispute, consult with a financial company that offers fund recovery services. MyChargeBack experts give guidance to consumers who are trying to recover their funds from broker disputes, forex scams, or other types of fraud. Talk to MyChargeBack if you have been the target of fraudulent activities or are involved in disputes.
Five Forex Safety Tips
The following are important tips to trade forex safely online.
- Understand forex trading.
- Choose a reliable, regulated broker.
- Use a demo account.
- Use stop-losses.
- Ask for a withdrawal early to establish trust.
The first step is to understand forex trading. This means reading not only the Wikipedia definition of forex trading but spend a week or two reading articles on financial sites written by actual forex traders. Thinking about the market theoretically is very different from trying to get an understanding of what forex traders face on a day-to-day basis.
It may be a challenge to understand the lingo at first, but this reading can help you avoid the initial mistake made by many novice forex traders that forex is simple. Reading blogs and articles by experienced forex traders will help you understand how complex and risky the market is and that it takes time to earn money in forex trading.
One of the most important steps to successful forex trading is to open an account only with a regulated and reliable broker. First, look for a licence and ensure the licence was granted by a top regulator that is well-respected and provides oversight. Look carefully at the licence to ensure it is up-to-date and check on the search box on the regulator’s site that the broker still holds a licence.
Do more research on prospective brokers and read reviews from reliable sources. Don’t just rely on customer reviews, because many of these are fake. Financial publications regularly have lists of top brokers compiled by financial experts with meaningful advice.
It is impossible to get a real grasp on forex trading without actually trying it yourself. The way to do this without using money is to practice with a demo account. Many forex brokers have demo accounts so prospective clients can get an idea of their services.
Give yourself some time to understand forex trading through a demo account so you can learn by practicing. It will also help you narrow down which broker you want to choose by testing out its platforms.
The forex market never sleeps but you can if you use stop-loss features to protect your position. A stop-loss will stop the holding when it reaches a certain amount and can keep a position from falling through the floor. Not all brokers offer a stop-loss feature, but find a broker who does because it can rescue your initial investment from huge losses.
Many traders do not realise they are dealing with an unreliable broker until it is too late. Dishonest brokers often hold onto clients’ money and refuse to release funds for withdrawal. They do this before shutting people out of their accounts and disappearing with their funds.
One way to test whether or not you are dealing with an honest broker is to ask to withdraw your first returns. If you are told that you need to reach a withdrawal minimum that was not stated before or that you need to pay a huge withdrawal fee that was not listed in the terms and conditions, then you can reasonably suspect that you are not working with a trustworthy broker.
Trying this early can be the difference between losing £100 and thousands. Avoid the temptation to follow the broker’s advice and deposit more money before you have withdrawn the initial amount. This will minimise your losses in case you have chosen the wrong broker.
However, if there is a large amount of money you need to recover in a forex broker dispute, you will need to enlist the aid of a financial agency that offers fund recovery services. Be selective and look for a financial company with a long track record of retrieving money on behalf of its clients.
If you have difficulty with a forex broker, have lost money in a forex scam and need assistance with a dispute, speak to MyChargeBack experts. We consult with clients and give them information on how to negotiate in a fund recovery dispute. We have a working relationship with regulators and authorities and help you recover your funds.