Forex is an industry in which participants exchange, sell, buy, and guess about the currencies of the world. These people in the Forex market typically comprise of investors, brokers, commercial companies, investment management firms, hedge funds, and banks. Despite its popularity, many are wary of it and asking, is forex legit? One thing is for sure, this market is legitimate, but it is associated with various scams; hence, it is getting a bad reputation. In general, honest traders engage in the Forex market regularly.
The exchanges on Forex trading usually happen directly among the traders in an OTC marketplace. A network of banking institutions in different parts of the world runs the Forex market, based on the different time zones of the four major trading centers. These are Tokyo, Sydney, New York, and London. It makes it possible for anyone to trade anytime throughout the day because Forex has no central location.
How Does Forex Market Work?
Forex consists of different currencies across the globe. With this, a lot of factors can impact the price movements, making it difficult to predict the exchange rates. But as with the majority of financial industries, supply and demand are one of the driving forces of Forex trading. It is useful to understand the contributing factors of its price fluctuations.
In 2019, over $6.6 trillion traded on the spot market every day. Currency trading has no centralized governing body, and this somehow enables some operators to conduct illegal activities. With huge amounts of money involved over the counter, in an unregulated market, and without accountability, these unscrupulous people use this opportunity to scam and earn money out of it. Fortunately, the National Futures Association and the Commodity Futures Trading Commission conducted enforcement actions, which ceased the Forex scams. But be wary that old and new scams continue to pop up every now and then.
Common Forex Scams
One specific scam about the Forex market since retail traders started participating in it in 1999 involved brokers. These brokers would get money from customers as Forex fees and then disappear. There is no way of prosecuting them as most of these brokers were operating in unregulated nations.
Scammers used another deceit by taking advantage of AI innovation. It is known as the robot scam, involving people who say that they can guarantee an optimum profit by generating automatic Forex trades due to a type of software they have developed. These con artists lure unsuspecting traders to purchase this software from them. What the software actually does is give random trades, which is like gambling more or less, and definitely not what the scammers promise.
So, is forex legit? The answer is yes. However, as a trader of this booming market, it is crucial to be careful not to fall victim to different kinds of Forex scams out there. Research Forex brokers and choose those in regulated countries. There is no perfect strategy to trade, so be wary of those who claim to have accurate trading techniques. Learn more about Forex trading and do your due diligence, so you can fully enjoy this highly profitable industry.
