- Beware of Bogus Results: When results look too good to be true they probably are. A few very successful trades do not mean the strategy works. The results the brokerage is showing you can be falsified also. There are no guarantees that those trades actually happened. The astronomical profits can be either foraged or a tiny piece of the big picture.
To avoid falling for these inflated results, do your homework. Get neutral confirmation of that brokerages results. Speak to clients, find out what results they have received. Check if the results the firm is bragging about are on a real account or a demo account. Find out what happened in the time before or after the one they are wowing you with. For example, they could have made millions last week but lost more than that the week before. This strategy might have worked one day but been responsible for millions in losses for the preceding several months. Attempt to have the brokerage show you their results over a long period of time, a year at least. Even several years’ worth of their results is worth asking for and be extremely wary of a brokerage who won’t provide you with their history.
- Watch Out for Fake Testimonials: The testimonials you see on a brokerage’s website can easily be fabricated. It is not hard to write a quote from a fake person raving about the tremendous success that he has experienced while working with this firm. Even very real looking video testimonials can be staged. What you want to see is real full names, locations, professions, etc. You can then google those people or look them up on Facebook to see if they really exist. Check neutral groups and forums to get opinions about a brokerage firm. Do not rely on the few handpicked positive reactions even if they are real. There are many different places to get information about brokerage firms that will give you a more realistic idea of public opinion. It’s important not to take the brokerage’s word for it. Every brokerage will tell you how amazing they are and have several testimonials to “prove” it.
- Have Realistic Expectations: Just because a brokerage firm will make it seem like the sky’s the limit and you can become a billionaire instantly, does not mean it is true. Read and research neutral sources that will tell you what a realistic amount of profit is in a certain period. The old saying about no such thing as a free lunch comes to mind. The people who profit from Forex are people who learn the system, establish a tried and tested and tweaked strategy and exhibit patience and wisdom in using their strategy. If a brokerage is making it seem like you can just jump in and become rich, it is extremely unlikely to be trustworthy. When a brokerage offers to teach you, and help you develop your strategy, and allow you to test it for as long as you need to perfect it, they are more likely to be offering something real.
The bottom line is that when something looks too good to be true it usually is. Trust your instinct and heed the warning signs. Do your research and speak to real people who have real experiences before trusting any Forex Broker with your money.