Learn To Spot a Forex Scam To Protect Your Hard Earned Money

Forex or FX is the short form for foreign exchange which involves buying, selling and trading of currencies. The most widespread foreign exchange scams are forex schemes which usually promises very high returns or profit rates. Learn how you can spot a forex trading scam so you don’t fall victim and lose your hard earned money.

1. They Offer High Initial Returns

To lure investors and get them to pump in more money, scam operators may initially offer extremely high returns for your initial investment. This is to convince you to increase the amount of investment when you reinvest again during the second round. But what usually happens is the victims will lose everything when the illegal foreign trading scheme operators don’t give the promised profits. The victim will also find that the illegal foreign trading scheme operators have cut off contact completely when they do not receive the profits.

2. They Claim To Be Small Scale

Illegal foreign trading operators may tend to operate on a smaller scale and will claim to do so to provide more efficient remittance services. They will also say you don’t need any documents or identification. These illegal operators will be reluctant to use documents to validate and verify transactions. They will usually give various excuses or even delay processing the documents for verification. By engaging with these types of operators, investors risk being cheated as a result of the lack of documentation as proof if anything happens to your investments.

3. They Operate “Overseas”

Many forex trading scam operators are based overseas in order to take advantage of their victims. The operator usually informs his or her ‘investors’ that they have to send the contract and documentation of the investment to their headquarters located overseas to get it signed.

But victims will usually later find out that the contracts were left unsigned from the operator’s side. Because there is no binding contract between the two parties, legal action cannot be taken even though the investors are unhappy with the transactions. Furthermore, as the forex scam companies are based outside the country, Malaysian authorities cannot do much for the victims.

There will always be some risks involved when it comes to investing. If it promises an excessively high returns within a short span of time you should be wary. Stay safe by dealing with licensed companies or individuals for your investments. Another tip is to only deal with licensed onshore banks in Malaysia. This is because in the event that anything happens, it will be difficult to recover your money when dealing with offshore banks.

This article is contributed by CompareHero.my.