Is Forex market a scam? If you are new to the game you must be searching for the answer to this question. Forex trading is a vast field that requires excellent knowledge to be successful. Yet, many traders think this is the perfect way to make quick wins, and naturally, they end up losing money. As the number of its traders is quite large, it is quite normal to come across testimonials of fake forex brokers. They exist to inform and prevent you from dishonest Forex brokers and their fraudulent trading schemes.
What is the Forex market?
To answer the question such as what is a forex scam or “is forex market a scam or not,” let’s first look at its very nature? The Forex market, known as the FX, has grown significantly in popularity over the past decade. Right now, one can find several companies that work exclusively in this area of business, and several independent traders have managed to become immensely wealthy by limiting themselves only to this market. The growing number of seminars is proof, as well as the number of trading platforms that specialize in this sector.
However, many of these have been exposed and investigated by financial authorities, and they have turned out to be sophisticated scams. Of course, this causes panic among many traders, especially newbies. Despite some unfortunate events, public opinion remains favorable to the Forex market, especially for many of its traders’ tangible success.
In short, we can say that FX is the market where currencies are traded. It is a vast and incredibly dynamic space, especially as fiat currencies from all over the world participate in this market activity. The buying/selling of currencies in this decentralized market is determined by the rise and fall in currencies’ value. The job of traders is to anticipate these movements and bet based on their forecasts.
These market conditions have a direct influence on the speculation of the majority of traders, and on how they approach the market. Even so, the goal remains virtually the same, and it is to resell currencies at their highest prices and repurchase them at the lowest prices.
Thus, it is possible to make a profit on the price difference.
Why do many think Forex is a scam?
65 - 79% of retail investor accounts lose money when trading CFDs with forex scam brokers. You should ask yourself if you can afford to take the risk of losing your money. You probably can’t so choose wisely your Forex broker to avoid many adversities.
There is an important point to clarify. It is an OTC market meaning that the participants must defend their interests. For example, if you get fooled by dishonest prices, hidden fees will be your fault. Even regulators don’t have to protect you from these kinds of practices. Even on a legal level, your chances of winning the lawsuit will be absolutely zero since there are no laws that place limits on brokerage fees.
Besides, with most brokers currently existing on the market, only large institutions, such as banks and investment banks, can negotiate favorable rates. With this kind of broker, and unless you are a bank negotiating office or an institutional investor, you will suffer much because of the too high pricing.
Moreover, concerning manipulating monetary values by central banks, yes, they exist. These generally cause big losses for independent traders in the Forex market. Also, this explains why many of the more seasoned traders ended up migrating to the cryptocurrency market. It makes them invulnerable to manipulation, unlike fiat currencies. The problem with this interventionism comes down to the fact that it is legal. So even if you work perfectly, you still risk losing money, and you won’t turn to anyone for justice.
As a conclusion forex is not a scam as such but as in all areas of the financial markets, the risk of running into scammers is always present. Therefore, it is up to you to take the necessary measures to protect yourself from it,and avoid the worst. Forex trading is a risky business, but you can limit your losses and maximize your gains by following specific trading rules and carefully choosing your Forex broker.