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Sunday, 1 July 2012

Offshore Forex Brokers

What You Need to Know about Offshore Forex Brokers

There are lots of disturbing developments with Forex brokers. You can find some reports of it on the Internet forums, and it is worse than merely manipulating numbers - it is downright fraud.

I'm referring to Forex brokers that are based offshore or in Third World countries, and because of their location they are very difficult to pursue legally. It is very easy with the Internet to virtually copy a refined and elaborate site, and appear to be a large corporation even if operating from the kitchen table.

Appearances are deceptive.

The foreign or offshore broker may be more concerned with taking your money than paying back your winnings, and there have been reports of brokers who literally have held onto successful accounts and not paid out anything to the winning traders.

You can fight this sort of scam by seeking recommendations from friends, and by taking great care with anyone who you do not know. Even if the broker has an American address, it has been known for this to be the residential address of an unconnected person-in one case it was a foreclosed house. If you can't visit the broker's office, then at least you should make calls to the telephone numbers given, and see if the phone is answered in a businesslike manner, or whether it might be a personal line. Most reputable brokers will be included in business listings, and perhaps registered with the Better Business Bureau.

In case you think that this is mere scaremongering, you should note that the Federal Trade Commission states that typical broker scams cheat clients out of an average of $15,000. In fact, the National American Securities Administrators Association has called Forex trading at best risky, and at worst outright fraud. You have reason to be very cautious when starting to trade Forex.

As so many people find Forex trading works for them, you should not let this put you off; but you should take it as a stern warning to do your due diligence thoroughly when selecting a broker, and not just take the cheapest one that comes along.

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