Foreign Exchange Market:
Foreign Exchange markets are the global marketplaces for forex traders to trade in currencies. Forex markets are liquid, which means they are unpredictable. The government does not take part in the administration of foreign exchange markets. However, it might be one of the reasons why forex scams occur, and why the number of scams cases are increasing. It is more often than not due to the ignorance of the forex traders. Therefore, forex traders should be aware of forex scams and should take precautionary measures to prevent them.
Classification of forex markets:
Below is the classification of forex markets that may help you
understand more about forex markets.
● Spot foreign exchange market:
Spot foreign exchange market is an "off-exchange market," which is growing. It operates full day. In this type of forex trade, trading occurs at the exact point, and settlement of the business also takes place right away. When you perform spot forex trading, you purchase and sell a pair of currencies at a price that matches the currency market rates. That price is the spot price.
● Forward foreign exchange market:
In the forward forex market, the price for an asset is set for delivery in the future. That price is the forward price. The difference between spot and forward prices is the forward margin or swap points. Additionally, traders can choose their period of delivery according to their convenience.
● Future foreign exchange market:
In the future foreign exchange market, a price and time in the future are set to purchase or sell an asset. Here, there is a contract that consists of the size of the contract and the maturity date.
Benefits of forex trading:
Forex traders enjoy several below-mentioned benefits from forex
trading.
- In the forex markets, forex traders trade for hours
altogether, and people can purchase and sell currencies any time as per
their convenience.
- Foreign exchange markets are excellent platforms for
inexperienced traders. Compared to other markets, a trader doesn't need to
invest a large amount initially.
- Forex traders have the facilities of performing and
completing a forex trade within a day.
- The transaction costs in forex trading are low.
- There are no clearing fees, brokerage fees, government
fees, and exchange fees for forex trading.
- Deep liquidity exists in the case of the forex market as
the market for it is enormous. It means that under normal market
conditions, you can willingly purchase or sell the currencies within a
blink of an eye.
- Forex trading does move in a fixed direction. It means that
if a trader feels that the value of a currency pair will increase, he or
she can purchase it. If the trader thinks that the value of a currency
pair will decrease, he or she can sell it.
- Unlike the stock market, a centralized exchange does not
manage the global forex market.
- You can perform forex trading irrespective of any location.
10. Demo forex trading accounts exist where inexperienced forex traders can practice without any risks.
Disadvantages:
There are several disadvantages of forex trading that pose
threats to traders. Some of them mentioned below;
● Signal seller forex fraud:
Before learning about signal seller fraud, you should first know
about signal sellers. Signal sellers are the companies or experts that make
suggestions to forex traders regarding the best time to sell and purchase
currency pairs based on market analysis. They ask traders to pay a fee for
their services. In signal seller frauds, they charge fees to the traders but
don't advise or provide any trade-related details. Instead, they take the
payments and disappear with the money. For example, A is a forex trader. He
gets in touch with a signal seller, seeking
trading advice. The signal seller asks A to pay fees, and A does as
instructed by the signal seller. However, the signal seller takes the payment
and is never seen again. After some time, A realizes that his money's gone and
the signal seller was a fake one.
● Forex robot frauds:
Forex robots are software programs that perform forex trading on behalf of the traders. They perform with the help of an algorithm. Scammers sell untested-software that suggests or trades randomly. However, these untested software could cause losses to the forex investors.
● Fake forex broker frauds:
Forex scammers pretend to be forex brokers and promote their fake forex investment offers to forex traders through emails or text messages. These offers attract many forex traders, and then eventually these traders start investing their money. After that, as soon as the forex scammers receive the investment amount, they disappear. By the time the victims realize this, their money is already gone. For example, A receives an email regarding a fantastic forex investment offer. That email tempts A and then A gets in touch with the so-called forex broker who is the sender of that email. After conversing with the forex broker, A decides to invest his money. The fake forex broker vanishes after receiving A’s investment. After a few days, A realizes that he has lost his money and the so-called forex broker is bogus.
Warning signs:
Forex traders lose their money in forex scams due to their
ignorance. Therefore, warning signs are helpful in protecting traders from
these scams. Below-mentioned are some warning signs curated by experts;
● If
anybody contacts you regarding a forex investment offer, there is a high
possibility that the person could be a fraudster, as genuine brokers don’t
really make cold calls like that.
●
If a
signal seller contacts you regarding their forex trading advice and requests a
fee before proceeding with his or her advice, Please don't pay any money to
them as you could land in trouble.
●
Please
do not invest in the forex market if any forex broker contacts you about a
forex investment chance. Make sure to check on the qualification and legitimacy
of the forex broker.
● You may
get an email regarding a forex investment opportunity from some random forex
broker. Don't reply to that email or contact the sender regarding the
investment chance as it could be a fraud.
● If you
come across a forex investment offer promising large returns on investments,
don’t proceed further with it.
● A forex broker trying to force you into a forex investment can’t be real but is more likely to be a fake one.
Conclusion:
People interested in foreign exchange trading should have the knowledge about the forex markets, trading strategies and forex scams. Additionally, they should also remember to get in touch with qualified forex brokers before proceeding with their decision on forex investment.
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