As the popularity for forex trading grows, so does the reputation that forex is just another online scam. There are so many ‘get rich quick’ schemes plaguing the Internet, it’s easy to lose faith and turn cynic. With that being said, is forex trading legit?
Forex trading is completely legitimate. There are a huge amount of scammers and unregulated brokers within the industry, which need to be avoided. However, the industry itself is highly regulated and completely legitimate, much like the stock market.
Is Forex Trading Legit Or Just Another Scam?
Many people have the wrong misconceptions about the trading industry as a whole. It’s known for being a get rich quick scam, which isn’t the case at all. In fact, there are so many successful traders that make a living trading currencies. Is forex trading legit? Yes. It’s the largest market in the world with over $6.6 trillion changing hands daily.
The forex market is actually the most liquid and hard to trade market in the world. The forex trading market operates 24 hours a day five days a week with no holidays. It’s really unlike any other market out there, making it very interesting to trade.
It’s easy to think that the forex market is a scam because frankly there are a lot of scammers in the industry. The market is also very hard to succeed in, with 80% of traders losing money in the long term. With these two factors, it’s easy to just assume that the whole industry is a scam – but this isn’t true.
Think of the forex market like the stock market. There are differences of course but the core value is the same. Instead of buying shares in Tesla, you’re buying the EUR using the USD. It’s this simple. How could that be a scam?
Forex Is Legit, But Not As Easy As You Think
Now that we know the forex market is legit, that doesn’t mean you’re going to make money. In fact, it’s harder than most markets to succeed in. This doesn’t mean that it’s a scam, but there are more challenges involved with trading currencies than the stock market.
It typically takes forex traders over 1 year of intensive studying to learn the technical analysis (chart work). It then takes a few more years to learn the fundamental and psychology side of the markets.
Not only that, acquiring trading capital is tough. Most profitable forex traders are averaging a few percent gain per month, so unless you have £100,000 in funding, this isn’t an industry worth getting involved with.
There are tons of forex scams out there plaguing the industry, making it hard for new traders to get started. With any investment opportunity, there will be scammers and brokers looking to make a quick buck.
My Experience With Forex Scams
I started trading forex many years ago and I fell victim to the scams of the industry in the first few years, as most do.
First, I signed up with a signal service after being recommended by a friend. I had no idea what I was doing and didn’t ask for any proof or track record from the signal seller. I was told to get setup on a random offshore broker and deposit £500. I was then told to trade 0.05’s on every trade, no matter the stop loss size. In hindsight, this is completely comical.
I, of course, lost all of my deposit within a few days and ended up deciding that I wanted to learn this for myself. So I paid for two forex trading courses, both being absolutely useful information that I could have found on Google or Babypips.
I blew through a few more accounts before learning risk management and spending 10 hours a day (for months), studying and learning the fundamentals of the markets – how liquidity works and the intricacies of the financial markets.
If we fast forward to these days, I take higher time frame trades in the markets and average a few percent per month – no getting rich quick over here!
At no point was the forex market ever a scam, I was just being scammed by various participants and marketers.
Forex Scams To Look Out For
Although the forex trading industry isn’t technically a scam, there are a few scams you need to look out for.
1. Scam Forex Brokers
There are a huge amount of unethical forex brokers in the industry. These brokers are typically offshore and unregulated, meaning that they provide false information or flat out lie to their clients. They also require low minimum deposits, bringing in beginner traders. Unregulated forex trading brokers are able to manipulate the spreads, commissions, costs and leverage to provide an awful trading environment for their clients.
There are a lot of regulated forex brokers that you would be safe trading with, however.
2. Scam Forex Mentors
One of the biggest scams in the forex industry is education. There are so many traders that have never made a penny in the market, but they want to. They then start selling education, trading on demo accounts and flexing huge fake profits. They prey on the beginner trading population and get them to pay huge amounts of money for false promises.
Forex trading can be a great, financially rewarding industry for traders that are dedicated and willing to learn the technicals of trading. It takes years of experience and dedication but it’s not too bad at all. Having an unprofitable forex mentor will ruin your chances of success within the industry.
3. Scam Forex Signals
Forex signal groups plague the industry, sadly. They’re especially prominent on social media. I’ve recently published a whole article covering this topic in detail. In short, forex signal sellers are all unprofitable forex traders. They are merely marketers, that have never made a living from actual trades. Rather than marking money in the markets, like the rest of us, they charge newbie traders for unprofitable trades that result in losses.
In Conclusion, Is Forex Trading Legit?
In summary, forex trading is legit. Sure it has a few scammers and unprofitable traders, but these are easily avoidable. It’s the global currency market! How could that be a scam?
The forex trading industry is great for both beginner and experienced traders wanting to make money online. Understanding the dynamics of the market takes time – there are no shortcuts – but it is possible.
Forex trading can be a great way to make a living in your spare time, but it’s not easy and it isn’t a scam!
I hope you enjoyed my article on the legitimacy of forex trading. Now that I’ve covered that topic, if you have any further questions please do let me know in the comments down below.