Tips to Avoid Scam Financial Market Trading Brokers

Tips to Avoid Scam Financial Market Trading Brokers

There is no doubt that getting involved in online financial market trading, especially as a novice trader, can be challenging. There are many new concepts to learn such as trading terminology, what financial instruments are available to invest in, as well as fundamental and technical analysis. However, the starting point of any successful online trading career is the correct choice of broker.

Thus; the first question that begs is how to tell the difference between a scam operation and a genuine bona fide broker?

What is a scam?

Before we look at ways to discern between a fraudulent broker and a legitimate broker, let’s look at a succinct definition of a scam. We will then build on this definition to form a complete picture to help us distinguish between an honest company and a dishonest business.

According to www.jonesmutualscam.com, “the quintessential definition of a scam is a dishonest scheme or fraud”. Furthermore, it is also important to note that the terms “scam” and “fraud” have similar meanings and are often used interchangeably with each other.

At this juncture, it is vital to be cognisant of the fact that it is not only beginner or novice traders who run the risk of being scammed. Experienced traders can also become victims of a scam because they can become overconfident, and therefore, complacent.

Tips to help you avoid scammers

Now that we have a clear understanding of the meaning of the word “scam”, let’s look at several pointers to help you avoid being caught in a scammer’s trap:

Don’t be gullible

One of the most important points that it is worth taking note of is that, as quoted by Anthony T. Hincks, “a scam is only a scam when it is discovered by the gullible that were taken in by the lure of making easy money in the first place.”

In other words, if people did not pursue the concept of “easy money”, there would be no reason for scammers to operate. The fact of the matter is that there is never a quick, easy way to make money. So if anyone advertises an effortless way to make money, it’s almost certainly a scam.

High-risk trading notifications

The reality is that online financial market trading is a high-risk venture and should be practised with care. Therefore, the following disclaimer (or something similar) will be prominently displayed on a bona fide online trading broker’s website. As an aside, it is usually found at the bottom of each page.

Risk Disclaimer: Online Trading has the potential to yield high profits, but it also involves significant risks. For this reason, [broker’s name] advises consumers not to trade funds that they cannot afford to lose. The trading outcome is dependent upon an unpredictable market. It is possible to lose one’s initial investment, and we…. recommend that traders devise a money management system, including seeking professional advice, to protect their investments.”

Therefore, if the broker’s website that you are considering opening an account with does not have this disclaimer, then there is a good chance that the website owner is interested in gaining access to your money through nefarious schemes.

Customer support

What level of customer support does the broker you are considering opening an account with offer? Does their website offer more than one way to contact customer support? Or, is there minimal indication that the brokerage firm has a customer support division?

These questions might sound trite and tedious. After all, who wants to delve into a site’s content looking for phone numbers or email addresses?

In essence, a company who is legitimate and cares about their clients (or traders) will make sure that their customer support contact details are readily available and easy to find. On the other hand, if it is challenging (if not nearly impossible) to find the customer support number, then it’s better to assume that this company is a fraudulent operation.

Final thoughts

The three tips mentioned above are just a few of the many pointers that you can look at to determine whether a broker is a scam or not. Other factors to consider, include the quality of the website, the ease with which you can understand and navigate around the online trading platform, and the internet security (including firewalls) which the company employs to protect both your funds and personal information.

However, if all of these tips can be summarised into the top tip it is as follows:

If anything concerns you about a particular broker, rather be safe than sorry and stay away from that online trading brokerage firm.

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