Online Forex Trading – How Honest is Your Online Forex Trading Broker?

 

For many online forex trading novices, online trading brokers possess experience, wisdom, and knowledge that they don’t. So they fall into the trap of following them blindly, regardless of whether they are regulated or not – and in the course of doing so, unknowingly place their money in the hands of some that are unscrupulous and dishonest.

The Wall Street Journal has reported in the past that the average individual foreign-exchange-trading victim loses about $15,000, based on figures quoted by the U.S. Commodity and Futures Trading Commission (CFTC) in Washington D.C. In August 2008, the CFTC was compelled to set up a division specifically to cope with the increasing incidents of online forex trading fraud.

The most common methods of unscrupulous online forex trading activity seem to be those that promise novice forex punters low-risk, high yield returns over the course of only a few weeks, mismanaging ‘managed’ accounts in order to gain brokerage commissions, and selling software implied to earn an investor high profits.

Traditionally banks have held the responsibility of making sure that their customers understood the risks at hand when delving into the online market, however with more and more individuals having access to non-banking portals online, it is impossible to expect them to be able to do so now. In this way, the risks for online forex trading novices are increased dramatically due to their inexperience.

The good news is that not all online forex trading brokers are the same. There are a number that have achieved very reputable standing and have been rewarded for doing so via various licenses and accreditations which are issued by monitoring bodies. In Cyprus, for example, in the Mediterranean, brokers are regulated by the Cyprus Securities and Exchange Commission (CySec), whose license is awarded only after stringent criteria are adhered to.

When searching for an online forex broker to manage your accounts or to offer advice, it’s imperative to check for applicable country licenses and accreditations that can only be gained by brokers doing their due diligence. Online software should be secure and easy-to-use, and any payment schemes verified. Additionally, you should be able to contact your broker easily.

Finally, do not feel that it is neither your place to ask for the status of your accounts nor to see proof of action by your broker.

After all, it is your money.

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