Can I trust forex trading?

Trust and security are major points of contention in the online finance world. Normally, a lot of money moves around, so it’s sadly natural that bad actors who want to get a cut unfairly are present.Many traders have fallen victim to such a scam, losing their hard-earned money from an account breach or dishonest broker. While trading can already be frustrating, this situation can be heartbreaking, since it’s not the trader’s own fault.

It may turn people off from perdagangan Forex as a whole, and even sour their experience so much that they start believing trading as a whole is unsafe.

However, that notion comes from an emotional charge rather than a rational space. The forex market is huge and highly regulated. Major global institutions like commercial and central banks, hedge funds, and multinational corporations all participate here. As such, safety is not an inherent issue in the forex market.

Still, it’s undeniable that retail traders operate through different means than these institutions. Most trade through online brokerages, which come with their own set of conditions and concerns. This article will deal with how traders can protect themselves in that trading context and hopefully, go through their entire trading process unscathed.

False positives: Traders who think they were scammed, but actually weren’t

Before going into how to avoid actual security issues, let’s take a short look at this phenomenon.

A lot of the time, newer traders rush into things without doing enough research. They see a 100% bonus and assume that it doubles their money, or they see spreads starting from a low point and believe they are always at that point. When that turns out not to be true, they get frustrated and believe they’ve lost something.

However, that’s not the case. In these two examples, bonus conditions are often clearly underlined, and spreads usually shift, depending on a broker’s account structure. That is usually clear, but newer traders may still not fully comprehend trading terminology and how brokers operate.

Forex Brokers dislike these mishaps as well. They don’t want a misunderstanding to lead to one-star reviews on trust rating websites. That is why they usually have multiple structures set in place to prevent this.

FAQ pages, terms and conditions, and support teams are in place specifically to help traders fully grasp what they are getting into. Brokerages are glad to answer questions since, to no surprise, they want new customers, and they’re more than glad if clarifying something that a trader doesn’t fully understand leads to that.

A notion that we’ll repeat in this article is that information is key. When traders don’t feel like something is fully clear, they should ask, research, or test it on a demo account. This may be boring, but it’s the primary way of staying safe in forex trading. That way, they can address misunderstandings before they become issues, and before any of their capital is at risk.

Cybersecurity measures for forex traders

Another layer of safety comes in the form of practising solid cybersecurity measures. Commonly, traders use emails that they created when they were in high school, and those have often been compromised in one way or another. This makes it much easier for cyber criminals to attack and eventually breach forex brokerage accounts.

The first measure traders can take to prevent this is to use a safe (preferably fresh) device, email, and password. Keeping track of multiple emails can be tedious, but that tedium pays off if it keeps traders safe.

Strong passwords, which don’t include names, surnames, or years of birth, are also an effective measure. Password management tools may help with that, since they generate and store very strong combinations. Lastly, devices should be secure and malware-free, which can be achieved by regular updates and antivirus software.

Next, forex traders should avoid public wi-fi networks for their routine. The chances of getting breached this way are fairly slim, but it is a possibility. For traders on the move, phone data or portable internet devices for laptops are a good idea.

Other general good cybersecurity practises are logging out of accounts, enabling 2FA if available, and avoiding connecting brokerage accounts with services that aren’t 100% safe.

Preventing phishing at forex

However, the biggest cybersecurity threat for most people is phishing. When traders receive any communication from their broker, it’s necessary to check whether it’s actually the company and not a phishing attempt. Traders should never click dubious links, and should always check whether the email or phone number is one that the broker normally uses. Another tip is that if an email is proposing urgent action, it’s likely a phishing attempt.

In trading, phishing normally takes the form of false account suspension, margin calls, withdrawal attempts, or ID expiry. All of these aim to cause a strong emotional reaction and capitalise on panic. Traders should be wary of these and, again, feel free to ask brokers whether it’s actually them.

Choosing a safe forex broker

The final, yet perhaps most important step a trader can take to protect themselves is choosing a brokerage that’s actually secure. Even when protected from all external threats, a malicious broker nearly guarantees some harm for the trader. To wrap this article up, here are some of the things to look for.

Regulation

Licenses from regulators are the first thing traders should look at when choosing a company to trade with. They are formal institutions that provide a very specific and straightforward way to resolve disputes. Usually, regulatory information is found in the footer of brokerage websites.

It’s wise to also verify whether the regulation is real, since malicious brokers will readily falsify licenses. Traders can do that by going to the regulator’s website and verifying the license number. A broker with fake regulatory information is often more dangerous than one with none.

Lastly, it’s important to ensure that a forex broker doesn’t appear on any Banned lists. Typing the broker’s name and adding Restricted list or warning on a search engine will typically yield results if any regulators have noted them as dangerous.

Clarity

Again, information is key. If a broker’s website seems intentionally vague, or their support team is withholding information, that may be a red flag. Most of these brokers have ludicrous promises, that being another way traders can use to tell if something dishonest is going on.

Online reviews

Review websites are often a good indication of whether a broker is safe or not. Reviewers look at a lot of brokers, so they are usually better than newer traders and even more experienced ones who don’t switch brokers often, at sniffing out dishonest behaviour. Looking at a lot of reviews and seeing the total impression is key here, as a single review may be sponsored.

Trust review websites

Finally, websites like TrustPilot let users rate brokers and post their impressions. Here, things often get muddied since, as noted earlier, some traders think they were scammed when they just didn’t fully understand what they were getting into.

However, a large volume of negative reviews, or conversely, reviews that sound suspiciously positive (which means the broker may be inflating their rating), can set off alarms. It’s also recommended to comb through testimonials rather than just looking at the rating. Depending on the situations described in user statements, it can become clear whether the broker is dangerous or if it’s just general trader dissatisfaction.

Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.