How To Spot A Scam

No, Forex, itself, is not a pyramid scheme. However, there are scams of different sorts within the world of Forex trading. The most important giveaway of a Forex scammer is a guarantee of unusually large profits with little or no financial risk.

First of all: there is no such thing as a 100% guarantee. If there was, there is no way traders would share it with other market players. Some of these offers may sound very attractive, especially to beginner traders. But as the saying goes, the only free cheese is in the mousetrap. The bottom line is this: if something sounds too good to be true, it probably is.

For some more insight into the trading 'dream' that a lot of scammers sell, and the trading reality that most traders experience day-to-day, check out this video from professional trader Paul Wallace.

Here are a few simple rules to follow to avoid scammers:

• Remain safe and do not run after empty promises

• Be especially wary of software that claims to have found a 'secret formula'

• Do not install any programs until you are certain they won't damage your computer

Another giveaway is that scammers never register with any regulatory authority. Remember - true brokers always provide proof of their legitimacy. If you suspect that a Forex broker is lying about their regulatory status, you can contact a regulatory authority who may be able to provide a list of regulated companies, and a list of cases opened against regulated companies. This will help you understand which Forex brokers to avoid.