Are you considering Forex trading as a fulltime or parttime wealth growth mechanism? If so, how do you choose a bona fide, legitimate broker to partner with? And, how do you avoid being caught in a fraudulent scheme or scam? These questions raise essential issues that have to be considered before you embark on your Forex trading journey.
Simply stated, the growth in global access to the Internet via mobile devices has given rise to many new online trading companies opening on a daily basis. The Internet site www.internetworldstats.com notes that “in a matter of very few years, the Internet consolidated itself as a powerful platform that has changed forever the way we do business and the way we communicate.” This article goes on to state that the Internet has added an “international… dimension to the world…. [The]Internet has become the universal source of information for millions of people.”
Unfortunately, this “powerful platform” with global ease of access has also given rise to the increase in nefarious Internet activities such as fraudulent online trading brokers.
Ways to determine whether a Forex trading site is legit or not
Therefore, the question that begs is: “How do you determine which brokers are legitimate and which are fraudulent?”
Here are three tips to help you ascertain whether a Forex trading site is bona vide or fraudulent:
One of the simplest ways to determine whether a brokerage firm cares about the well-being of their traders is to check their website. A site that is complicated, poorly constructed, and very difficult to use is a good indicator of the fact that the company is not in the industry for the long run and it doesn’t care about whether their investors trade successfully or not. On the other hand, an investment house who pays attention to detail by ensuring that their website is well-structured, pleasing to look at, and easy to use, is worth taking a second look at.
Know Your Customer (KYC)
Wikipedia defines the Know Your Customer procedure as the “process of a business verifying the identity of its clients and assessing potential risks of illegal intentions for the business relationship.” The way a business verifies its clients’ identity is to collect documents like identity document, proof of residence, a copy of a bank statement, and a declaration that any monies deposited are from a legal source. To a large extent, these documents prove that the trader a legitimate person, not part of a terrorist organisation, or a money launderer.
Therefore, if the online trading broker does not ask for these documents as part of the process to open a trading account, then its best to stay away from the company as the chances are good that it is a fraudulent company. At the very least, you run the risk of not getting your money back if you deposit money in an account with a brokerage firm that does not ask for KYC documents.
Customer service centre
Does the company you are considering opening an account with have a customer service division? Is there an education centre (or trading academy) that offers a comprehensive selection of educational material, including videos, ebooks, online trading courses, and webinars, available for you to learn to become a successful trader?
These questions might sound as though they shouldn’t be part of the basic package that a legitimate online Forex trading brokerage offers. However, as mentioned above, one of the checks to determine whether a company is legitimate is whether they care about ensuring that their traders learn to trade successfully, and, that they have a customer call centre where traders can ask for help on various topics from the setting up of an account to trading advice. If a brokerage does not offer these two elements, then it shows that they do not care about their traders.
Therefore, its best to avoid signing up with an online trading company that is not interested in their traders’ financial success.
If an online Forex trading firm does not implement all the points mentioned above (and more), it does not necessarily mean that it is a fraudulent operation. However, it doesn’t mean that it is a legitimate company either. Succinctly stated, a genuine online financial trading company will ensure that their investors are looked after, and they will do everything in their power to ensure that their traders trade as profitably as possible.
Surely it makes sense to invest with a company that has your best interests at heart?