It is no secret that the foreign exchange (forex) market has been plagued by scams and frauds. From hackers to Ponzi schemes, fake forex brokers and signal providers, there are many ways in which unscrupulous individuals and companies can try to take advantage of unsuspecting investors.
While it is impossible to completely eliminate the risk of being scammed or hacked, there are certain measures that you can take to minimize your chances of becoming a victim.
In this article, we will look at some of the most common forex scams and how to minimize the chances of becoming a victim.
How To Spot And Avoid Forex Scams
One of the most common forex scams is the so-called “Ponzi scheme”. For instance, you would be forex trading in the UK, and you come across a fraudster that promises high returns with little or no risk.
The fraudsters will then use the money invested by new investors to pay out profits to earlier investors, giving the appearance of a profitable and sustainable business.
However, eventually, the scheme will collapse as there are not enough new investors to keep it going. If you are approached by someone offering guaranteed high returns with little or no risk, be very wary, as this is likely to be a Ponzi scheme.
Another common scam is fake forex brokers. These companies will claim to offer to trade in foreign currencies, but in reality, they will simply take your money and disappear.
To avoid becoming a victim of such a scam, make sure that you only deal with regulated forex brokers who are members of an industry body such as the Financial Conduct Authority (FCA) in the UK or the National Futures Association (NFA) in the US.
You can check whether a broker is regulated by looking at their website or contacting them directly.
Finally, be very careful of so-called “forex signal providers”. These companies claim to offer expert advice on when to buy and sell different currency pairs. However, they are just selling you worthless information they have probably obtained from free online sources.
To avoid being scammed by such a company, make sure that you do your own research before investing any money and only use well-established and reputable signal providers.
How To Protect Your Forex Account From Hackers
While the foreign exchange market is one of the most exciting and potentially lucrative investment opportunities available, it’s also one of the most vulnerable to attack from hackers.
That’s because the forex market is entirely digital, meaning all transactions are done online – and that’s precisely where hackers excel. So, if you’re looking to invest in forex, it’s important to take steps to protect your account from being hacked.
Here are just some of the things you can do to keep your account safe:
1) Use A Strong Password
This might seem obvious, but it’s worth repeating. Your password should be at least eight characters long and include a mix of upper- and lower-case letters, numbers, and special characters.
2) Enable Two-factor Authentication
This is a great way to add an extra layer of security to your account. With two-factor authentication enabled, even if someone manages to guess your password, they won’t be able to access your account unless they also have access to your phone (or other second factors).
3) Use A VPN
A VPN (a virtual private network) encrypts all of the data sent between your computer and the forex broker’s servers. This makes it much more difficult for hackers to intercept and steal your information.
4) Keep Your Software Up To Date
Hackers are always finding new ways to exploit vulnerabilities in software. By keeping your operating system and other software up to date with the latest security patches, you can make it much harder for hackers to get into your system.
The Importance Of Choosing A Secure Forex Broker
When trading forex, it is of the utmost importance that you choose a broker that is both reputable and secure. This is because you will be entrusting your hard-earned money to them, and you need to be sure that they will not only trade responsibly but also keep your money safe. There are many ways to determine if a broker is reputable and secure.
One way is to check if they are regulated by a financial authority such as the Financial Conduct Authority (FCA) in the UK or the National Futures Association (NFA) in the US.
These organizations have strict rules and regulations that brokers must adhere to to be granted a license to operate. Another way to check if a broker is reputable is to read online reviews from other traders. You can also ask around in online forums for recommendations.