People are not asking anymore if the forex options industry is on fire. What they are asking instead is who is responsible for the industry being on fire?
Most of us have either heard about or personally been the victim of an options scam. The internet is flooding with brokers day by day. To a new user, all this is confusing. So, if someone receives a convincing phone call from a forex options broker, they will most probably sign up. Little do they know that they are being ripped off of their entire savings. Trading is a very lucrative field and has made the most billionaires and millionaires combined. To have the option to invest your capital in some stock with an online broker and be able to withdraw your profits whenever you like is a great opportunity to many. Being able to generate insane profits just with the click of a button almost sounds almost too good to be true. People who have little knowledge of the stock market but have heard about it from some friend, co-worker or through a phone call from a broker are easy victims. It’s a zero sum game. Somebody wins because somebody else loses.
Many new traders don’t see all that. All they see is the big money that’s waiting for them to be cashed in. They see a stock moving up and they throw all their money at it. Eventually, they end up losing big time. That’s when they start thinking that trading is probably a scam and they eventually give up on everything. They don’t even try to learn about it or have the will to place another trade.
However, it’s not as simple as that. Over the years, a lot of people have been involved in this business. People have been keeping a close eye on the kind of money that changes hand. This has attracted a serious lot of scammers and frauds who use different tactics to devour their prey. It may be in the form of individuals, fake companies or unscrupulous brokers. With the evolution of trading, they have diversified their scamming techniques. Some make you invest in fake companies. They make you think you are investing in a public company which is just about to receive its FDA approval and you will be a millionaire overnight if you invest a certain amount. Then they have their group of scammers who make sure of it that it’s presented to you like a one time opportunity, as if this is something you can only avail now and that you will be giving up on a big opportunity if you don’t invest. They set up traps like maximum investment limits and tell you that you cannot invest more than that because they want to give everybody an equal ‘opportunity’. You throw all your retirement money into it just to find out later that the company doesn’t exist in the first place.
All such practices have brought a bad name to the forex options industry over the years. This can be attributed to a lot of factors, for which a lot of individuals and organizations can be held accountable.
Aloof Platform Providers
It all began with a handful of firms who saw an opportunity to facilitate brokers and provide them with a trading platform. This was a good move but the volume of trades and the money exchanged on these platforms quickly caught the attention of quick buck artists who wanted to make some quick money and did not care about long term prospects. However, there were also successful entrepreneurs who built reputed platforms and are still in business, providing quality services to their clients.
The solution to this problem lies in check and balance. The companies that provided the brokers with trading platforms and other resources should also have taken measures to reduce chances of fraud and scamming but for the most part, they have stayed out of their business.
Brokers, for the most part, have done a good job in providing excellent resources to traders and by providing them transparent services. However, shady practices of some brokers have brought much notoriety to the entire industry. Some of them with a short-sighted approach have scammed their clients by promising the impossible and charging no fees. Their intent is to squeeze every last buck out of you and then pull the trigger on you. We are lucky though that even in today’s complicated world of forex options, we are able to trust a handful of authentic brokers that have held a stellar reputation over time.
Financial regulation for the most part when it comes to these companies or brokers is reactive, not proactive. Actions are only taken when there is a serious breach of rules. Many forex options brokers don’t even mind adjusting to the new rules and regulators don’t feel obligated to make them follow those rules. The only time such organizations pressurize these brokers or companies is when either there is a direct pressure from the government for the sake of some political agenda involved, when there is a personal vendetta or when they have other vested interests. Some even do it just to advance their careers and if the case is not big enough for them, they don’t bother to pursue it.
Affiliate marketers are equally responsible for promoting stocks for bleeding businesses and fake companies using fake information and attractive headlines to trick prospective investors. Trying to make their commission by hook or by crook, fraudulent affiliate marketers have used all kinds of hooks and baits.
The companies that issue trading software to brokers or provide other forms of support should keep an eye on their activities. The brokers should also take action against a shady competitor as it brings a bad name to their own community. The user’s obligation is to report any suspicious activities to financial regulatory authorities. Apart from that, they can also make a difference by writing reviews about their experiences with various forex options brokers.