Ways to avoid trading and investing scams


Anyone, be it a novice or an experienced trader is open to trading and investing scams. But for beginners, it is a bit difficult to analyse these scams. Not only do they have to learn the whims and fancies of the trading world, but also safeguard their capital and themselves against such malicious scammers. 

Here are some ways to avoid trading and investing scams. 

Red flags and signs that it is a scam 

  1. Scammers pretend that they are from a renowned organisation. Most of the time, they say that they are talking or contacting you from a governmental organisation. They might use any official organisation’s name to seem real and legitimate.
  2. Trading scammers will promise high returns with very minimal risks. That is not possible. If you want high returns in the trading world, you need to assume high risks. Yes, risks can be mitigated but cannot be escaped.
  3. Such shams and scammers are pretending to be something they are not. So they would go to extremes to publicise and invite aggressive sale techniques. They would mail or call you several times to persuade you to invest with them.
  4. The website of such brokerage firms will be suspicious if you look closely. Notice if there is very little or no information regarding management. Are there any typos or errors in the information published? 

Do you think that the prideful claims that they have made seem boastful? Most of the time, in such cases, your intuition is right. 

Focus on real success

Instead of focusing on high returns with no efforts, try to measure your success in the trading world with regular profits and growth. Trading and investing is not a miraculous methodology that will make you money just like that. 

  • Do your research: Do not rush while making any investments. You are putting your money in someone else’s hands. Decisions like this should be taken with pursuing detailed research and analysing all the significant factors before diving in. 
  • Checking the trial period: A trading and investing scam does not imbibe trial periods or focus on the satisfaction of the users or customers. You should read and re-read the terms and conditions. 
  • Broker report: This is one of the best ways to reduce risks related to trading and investing scams. When a broker is registered with a regulated authority, then you can get a broker report. Such a report includes the qualifications, history of employment, and how reliable the broker is. 
  • Identifying Ponzi schemes: Such sham plans take money from one investor and pay to the other. In the end, such schemes collapse because there is no real income made. 

Escape the asset bubbles 

When the prices of various assets like Bitcoins, property, or gold become over-inflated, the asset enters a bubble. Here, the prices increase aggressively and also decline with the same extremity. When the security of an asset is in a bubble, the underlying value does not rise.

They are not actually a type of scam or fraud, but it was necessary to talk about it as many traders fall for it.

Moreover, the task for scammers becomes easy with such bubbles because traders become more vulnerable to capitalise on the increasing prices.

One of the most famous examples of asset bubbles is the infamous dot com bubble in the 1990s.

In current times, Bitcoins and other cryptocurrencies witness many bubbles. This allows scammers to take advantage of innocent investors and traders.

Investors should take utter caution when prices of the securities are rising on extremes. One must do diligent research and investigation. 

Get a callback from a trusted broker today.

Conclusion: Things to keep in mind

Investing and the trading world is full of malicious activities and shams. But the key is to be aware of them and do not fall for them. Here are some things that you should remember while pursuing any broker or investment. 

  • Stop and think: Do you think that the promises or the opportunity are too good to be a reality? Then chances are, it is. 
  • Research: You must cross-check the individual or the brokerage firm. Look for history, reputation, and qualifications.
  • Ask questions: If you have any confusion or concerns regarding the firm, then ask. Righteous and legitimate companies would always help. 
  • Verify the information: Cross-check all the information with the regulatory bodies or governmental organisations. 
  • Ask about the risk: Any legitimate firm would be honest about the risks involved, no investment opportunity can be risk-free. Yes, you can minimise the risk, but cannot escape.

Take your time: Do not handover your hard-earned money just like that. Take your time, do your research, analyse, and then make a sound decision.

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