How to Spot Scam Online Trading Platforms
In recent years, online trading has grown in popularity. Millions of people trade currencies, stocks, and other financial assets daily. They use online brokers to carry out this. Unfortunately, a lot of these are scam online trading platforms.
Internet trade can serve as a haven for fraudsters and scammers.
These frauds frequently target newcomers to the financial industry who are novice investors. The recent FTX debacle, which cost thousands of individuals millions of money, is the most recent illustration of this.
It’s critical to understand how to avoid scam online trading platforms if you want to keep your money secure. Now let’s discuss how you can identify these scams and prevent falling for them.
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The most obvious sign of scam online trading platforms is when the broker promises unrealistic profits.
If it sounds too good to be true, it probably is. No real trading platform or broker can guarantee profits. Consequently, any trading platform or broker that claims to do so is likely a scam.
Another warning sign of a scam is a broker or trading platform that is not regulated. Often, a good trading platform is verified by a trusted financial authority.
These financial authorities include:
- Financial Conduct Authority (FCA) in the UK
- Securities and Exchange Commission (SEC) in the USA
- Australian Securities and Investments Commission (ASIC)
These authorities require online trading platforms to follow strict rules to protect them from fraud.
Lack of Transparency
A credible online trading platform or broker should be transparent.
They readily tell you about their fees, charges, and trading conditions. If a broker is not transparent or provides confusing information, it could be a sign of a scam.
Pressure to Deposit More Money
One of the most common tactics used by scam online trading platforms is to pressure traders. For example, these brokers insist to deposit more money into their trading accounts.
To make you do this, they offer special deals. In addition, they may also offer promotions to entice you to deposit more funds.
However, a real trading platform will never pressure you to deposit more money.
High-pressure Sales Tactics
Scammers often push traders to invest more money or make risky trades. If the broker is using high-pressure tactics, it is a sign that they may not have your best interests at heart.
Lack of Customer Support
Reputable online trading platforms and brokers will offer several choices for client support. It includes customer support by phone, chat, and email.
As a result, if the broker or platform is slow or unresponsive, does not give customer service support, or both, it may be a sign of a scam.
Which Online Platform is the Best for Trading?
Investing in the stock market can be exciting and profitable. But, as I mentioned before, it can be a daunting task for beginners. Plus, beginner investors are more open to scamming online trading platforms.
With so many online brokers available, it can be challenging to determine which one is the best for you. Here, I have compiled a list of the best online trading platforms for beginners to help you make an informed decision.
E*TRADE is a popular online broker that is great for beginners. The platform offers a wide range of educational resources. They include videos, articles, and webinars to help beginners understand the market.
Moreover, you will also be able to develop your trading strategies through their resources.
The platform also offers a demo account to help beginners practice trading without risking their money.
E*TRADE charges $0 commissions for stock and ETF trades. Thus, this makes it an affordable option for beginners.
A great online broker for novices is TD Ameritrade. Its extensive instructional resources are valued. Also, the platform is quite simple to use. Beginners are therefore not left in the dark about what to do.
The platform also offers a wide range of educational tools, including articles, videos, demo accounts, and webinars. They also conduct live events to help beginners learn about the market and develop their trading strategies.
These educational tools help beginners practice trading without risking their money. The platform charges $0 commissions for stock and ETF trades.
Thus, this app is another affordable option for beginners.
Fidelity is another great online broker for beginners. It offers a wide range of trading educational resources, similar to the other platforms. These educational resources are easy to understand.
If you invest time, you can understand the market and see which strategies might work the best for you.
As a beginner investor, you will also get a practice account from Fidelity. Again, you can invest without risking your money.
Charles Schwab is another online trading platform that beginners investors can take advantage of due to its comprehensive educational resources and user-friendly interface.
Thanks to its affordability, user-friendliness, and great educational content. It is also a great platform that allows international trading.
If you are starting in the investing field, you can consider starting with swing trading. This type of trading involves holding an investment for over a day but less than a few months.
If you find day trading stressful, swing trading is a better option for your trading style. Before you decide to make a trade, you need to know what kind of trading personality you have. Knowing your trading personality can be paramount to your success as a trader.
If you have doubts about what trading strategy fits your trading personality, my book will come in handy. In Chapter 8 of Trading for Success, you will find a trader personality test. This test will help you determine your trader personality type, helping you make the best traders according to your personality.
Further reading: How to Improve Your Trading Mindset
Trading can be a rewarding and profitable activity. However, it is essential to be careful and avoid scams. By being aware of the warning signs of scam online trading platforms, traders can protect themselves from fraud.
Remember, if a platform promises too much, they are likely trying to take advantage of you. Therefore, it is recommendable to research before you hand over your money to a broker or trading platform.
If you enjoyed this article on How to Spot Scam Online Trading Platforms or have any questions for me, please feel free to leave them in the comment section below!
Recommended Resources: If you’re interested in learning more about online trading, check out my book “Trading for Success; 8 secrets why women are better forex traders” and take a deep dive into my blog.
And if you’re concerned about improving your finances, I have developed the best money tools based on my expertise and extensive experiences such as educational books on personal finance and trading basics, and a range of digital and audio products. All of these are to help you achieve towards getting you your desired outcome most efficiently and enjoyably, enhancing the learning process.