Every trader in the Forex Market trades with the objective to earn profits. While profits are definitely earned by experienced traders who trade with a realistic approach and in-depth market knowledge, the risks involved are also very high. The risk is not only limited to losing money in Forex trading but also the existence of various Forex scams that can devastate you.

The fraudulent activities exist in different forms in the Forex market. There are several fake companies existing in this trade with fake credentials, false testimonials and hidden terms and conditions, who promise to offer huge profits in a short time period. There are companies who conduct phony marketing, tempting investors to go for experienced Forex traders who can manage their funds and generate profits. Inexperienced traders with the intent of gaining huge profits in short term often fall for it, losing their money. There are Forex scammers who are smart enough to convince the customers to buy automated software systems to help them earn 'huge profits'. And, several Forex brokers exist in this market that are not fair in their practices, and can make their customers lose their funds. Other types of Forex scams are managed accounts, copy trading, and signaling services.

These scams are so prevalent that you should be aware of them and also know how to keep yourself protected so that you do not incur losses or blow up your funds completely.

Here are 9 ways to avoid Forex scams; which will help you to be aware of fraudulent activity in the Forex market and prevent you from losing money.

1. Know how Forex trading works

Before you get into Forex trading, you must be aware of how trading in Forex markets functions. Successful Forex trading happens gradually and if you want to earn profits in this business, you need to gain experience and knowledge, and practice trading.  Remember, there are no shortcuts in Forex trading. If any company or broker offers you easy ways to earn profits, it is a possible scam and you must do all possible research to check their credentials and authenticity.

2. Do not trust websites that offer early profits.

It is always easy to set up a website and promote false claims of giving you early returns. There are several websites online which are created based on fake credentials. You should always refrain from the websites which promise you to earn huge profits in a short span of time. You should always read their terms and conditions before entering into any deal or agreement.

Do not be carried away with their flashy look, creative content and testimonials as they all can be false. Before you wish to put your investment decisions in someone else’s hands, you should thoroughly investigate. Always go through the disclaimers and ensure that there are no hidden terms and conditions. All authentic websites are members of NFA or CFTC. Verify the authenticity of the websites you are considering.

3. Beware of phony marketing

There are several swindlers who pose as authentic investment houses and companies and call investors in order to lure them to invest with them with the guarantee to offer them huge profits in no time. These swindlers often try to convince the investors that they can offer them experienced Forex traders who can manage their Forex trades and generate outstanding profits. In such cases, the scammers ask the investors to completely give them the control of their funds and if you fall for it, you are at risk. They have absolutely good sales pitches and are convincing, but do not fall for it. Never transfer money online if they ask you to, as they are all swindlers located overseas trying to turn your money into their fortune.

4. Beware of fraud companies

There are several companies who guarantee surprising profits. Any company doing so must be trying to cheat you by offering you opportunities that are unrealistic. Remember, Forex trading is not easy and you cannot be rich overnight. Companies that claim to guarantee you unexpected profits and low risks, be wary of them. Any company that promises to cover all your losses is surely making a false promise as Forex trading has lots of risks.

Always verify the authenticity of these companies and check with CFTC or the NFA to know if the company is genuine. Always try to read the reviews and rating of such companies.

5. Avoid dishonest brokers

There are several brokers in the Forex market who are actually not genuine and may try to use their client’s money to earn money for themselves. There are several brokers who claim to earn good profits and make you rich overnight. Be careful of such brokers as they may make you lose your funds. Many swindlers try to pose as authentic ones by setting up a grand office. But never fall for these appearances.

Whenever you choose a broker, always validate his license and do a background check. You should also check if he meets the basic financial requirements to be a broker. Check out websites that tell you about the best broker, their business authenticity and market reputation.

6. Avoid companies trading in interbank markets

Any company that asks you to trade in the interbank market is actually scamming. The interbank market is not a physical entity but a system in the Forex market that allows currency trading between financial institutions and big companies. Stay away from such fraudulent companies.

7. Know the margins

If you’re inexperienced or not able to monitor the trade, do not get into margin trading as it may cause you losses. Also ask your broker or financial adviser how margin and leverage works in trading.

8. Avoid being unrealistic

If you are realistic and you know how Forex trading works, you will never fall into any trap laid down by the scammers. These swindlers will always try to propose attractive offers to make you earn huge profits, but if you are not affected by greed of earning profits quickly, you will stay safe. Do not be carried away by the swindlers who promise big profits at no risk. Remember, consistent practice will make you experienced in trading and help you gain profits in the long run.

9. Value clarity in communication

If you are trying to appoint a broker or company to handle your investments, always ensure that they are transparent in their business conduct. If you are deciding upon an online broker, make sure the fees and commission structure is available on the website. There should be information about how you can withdraw your funds. Check for their income proof on the website. Investigate  all information they provide on the website. If you are in doubt about anything, do not go for it.