Caution – Avoid Forex Scams!
The popularity of the foreign exchange or Forex markets has resulted in an increase in Forex scams as of late. Indeed, it is not uncommon to read in the newspapers Forex scam about individuals losing their entire hard earned savings when their online brokerage houses go bust. A financial instrument initially looked upon as a means to achieving financial freedom had resulted in nothing but misery for such individuals, often throwing their lives into poverty in the process. As such, it is very important for would-be Forex investors to be on the lookout for Forex scams. These scams should be avoided at all costs!
No Governing Body For Forex
Unlike the stock and commodities trading market, the foreign exchange market is organized without a fixed location, in what is often called an over-the-counter market. Instead of having a fixed location such as the New York Stock Exchange or the Chicago Mercantile Exchange, foreign exchange transactions take place over advanced telecommunication networks such as the internet. Simply said, without a centralized authority, there is no single governing authority that can safeguard the interest of foreign exchange traders.
How To Identify A Credible Broker
As such, credibility is very important when it comes to searching for an online brokerage house. Typically, your online broker should be a credible one, having the status of a registered FCM (Futures Commission Merchant) with the CFTC (Commodity Futures Trading Commission). Shady brokerage houses with poor systems of management and accountability often close down in times of trouble, taking their clients’ hard earned money with them before disappearing without a trace. If you are clueless about approaching an online broker with a proven record, you could speak to the customer service manager of your bank, who would provide you with a list of online brokerage houses which have had a credible track record in this business.
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