How Not To Fall For A Forex Scam
Foreign exchange trading, or forex trading, is a legitimate way to make extra money. However, with its growing popularity, there has also been a rise in forex scams.To get more news about
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It’s important to know how to identify a forex scam. You should do this before you decide to engage in trading. So in this post, I’ll share exactly what to look for to avoid falling prey to a forex scam.
What is forex trading and is forex trading legit?
Forex trading is simply the practice of exchanging one currency for another. Currency trading is important for things like international travel, conducting international business, and foreign trade.
Because there is no one universal currency, there must be a way to exchange the equivalent value of one currency for another. So this is where foreign exchange comes into play.
With that being said, you may still be wondering, "Is forex legit, and is forex trading legit?" Yes, they, but there are many scams to be aware of. Let's dive in and discuss the details of how forex trading works.
Is Forex legit?
For the question, "Is Forex legit", the answer is yes, Forex is legit. The Forex or FX is essentially a global marketplace where international currencies can be exchanged. Currencies from every country make up the foreign exchange market. So as a result, it is the largest and most liquid market in the world and it is also a legitimate marketplace.
Currencies are traded based on what is known as an exchange rate which is the value of one currency for another.
So, for example, say you purchase 1,000 Euros at a EUR/USD exchange rate of 1.18. This means that you will pay approximately $1,180 (USD).
Later, the exchange rate increases to 1.20 and you exchange those same 1,000 Euros back for US Dollars. In this case, you will get back $1,200 (USD)—for a profit of $20.
How Forex trading works
Forex trading takes place in the Foreign Exchange Market or Forex (FX) and traders seek to trade foreign currencies for a profit. The market is however a mostly unregulated, over-the-counter market and not tied to a formal "exchange" despite the word exchange in its name.
This means currencies are bought and sold through a network of banks and trading can take place 24 hours a day. Unlike with an exchange where financial assets are traded based on specific rules, regulations, and times of the day. With that said, the answer to the question, "is forex trading legit?" is yes.
The Forex is also the largest global trading market with $5 trillion on average being traded by Forex traders each day.
Like many things, the internet has made forex trading accessible. Individual investors who engage in forex trading are doing so in hopes to create profit from their trades. So the whole point is to exchange your currency for one that you expect to go up in value, earning you a profit.
As simple as this may sound, forex trading is actually quite complex. Many factors play into the value of a currency and, ultimately, exchange rates. Some of these factors include a country's inflation rate, interest rates, economic and political stability, national debt, and more.
These factors make the market very volatile and risky to engage in if you don’t know what you’re doing. So new investors should probably avoid this.
What kind of forex scams exists?
With so much activity and no centralized governing body, there is ample opportunity for individual traders to fall prey to a forex scam. A few are fairly common that you should be aware of if you decide to trade.
Robot trading systems forex scams
The promise of earning money in your sleep is alluring. After all, we all want to earn passive income. Well, in the case of forex, there are scammers who will promise trading systems, or robots, that will do the hard work for you.
Computers conduct this trade and automatically make buy and sell decisions based on specific parameters. Needless to say, these forex robots aren’t tested and vetted by any outside source to confirm their legitimacy.
In any case, it isn’t a good idea to fully rely on any system to make decisions about your money and investments. As much as we tend to believe that computers are mistake-proof, they aren’t.
Furthermore, no one (not even a computer) can predict world events or other economic signals that will impact the market. So although having a robot trade for you may seem appealing, you may want to avoid them as it could be one of the robot scams.