Investing in the Forex market is not something that is as easy as it seems. The market is a huge place and there are a lot of fraudulant brokers. These brokers make fraudulent claims about the profits that they can make. They also fail to report their profits to the governing body. This can lead to a lot of money being lost.
Exaggerated claims of massive profits
Traders must be armed with a bit of foresight in order to avoid being suckered into a forex broker's latest fad. While there are a number of reputable brokers out there, there are also a number of scams to beware of. It's important to remember that not all brokers are created equal, and the best brokers are those who take the time to educate newbies on the basics of forex trading.
While you're at it, be sure to check out the country-specific forex broker guides. These are helpful if you're just beginning to dip your toes into the water, and they can be a valuable reference source for more experienced investors. These guides will also help you find the best brokers for your money.
It's a good idea to find out whether your broker has a money back guarantee. Many scammers will try to entice you with free money before they try to rip you off, so if you're interested in investing your hard-earned cash, make sure your broker has the ability to recoup your deposit.
Lack of regulation
Having a broker that is not regulated can be extremely dangerous. This is because lack of regulation exposes you to the risk of outright fraud.
There are two types of regulatory agencies that monitor the Forex industry. One type is local. The other is international. Each country has its own set of rules and laws that firms in the forex industry must adhere to.
Regulation in the forex industry is designed to protect consumers from financial loss, fraud, and abusive practices. It also provides a strong incentive for companies to adhere to their legal obligations.
In Europe, most country regulators have adopted ESMA regulations, a set of basic protection clauses that ensure fair business practices. ESMA is a European agency that oversees all of the Financial Services business in Europe.
Depending on the jurisdiction, a broker's license may be revoked, which prevents them from operating in the jurisdiction. A regulatory body can also issue fines and disciplinary action. It can also publish notices to inform the public about its decisions.