How to Avoid Day Trading Scams
Day trading and investing in general is one of the fastest growing industries today. People are enticed into the trading world because of the promise of working from home and making money without much effort.
A recent report indicated that many people – especially in the United States – are now allocating money to stocks as institutional investors stay away. They are enticed by the superior returns that have come with the new administration. With these opportunities, many people have fallen prey into online scams.
In this article, We will highlight a few ways of avoiding trading scams.
Research about any company
The first thing you need to do to avoid trading scams is doing intensive research about any company that you use. There are companies that promise low-cost brokerages, other companies promise to trade for you or to provide trading signals that are mostly ‘accurate’, while others on the other hand promise unparalleled news that is essential for trading.
In all these, you need to be very careful before falling prey into these companies. You need to do intense research about the companies by considering several factors:
- Read online reviews about these companies (our testimonials). There are many platforms like BBB that provide platforms for customers to leave reviews.
- Confirm whether the company is registered or regulated by any regulators
- Use companies that you can track. In this, you can find the registered office of the company and its top leaders.
Find more about the people
Often, a ‘successful’ trader will come to your town to have a free seminar with traders. In their marketing, they will show you the lavish lifestyle that they live. They will show you the high-end cars they drive, their choppers and yachts, and their mansions.
In the seminar, they will talk about how they started trading, the losses they made, and how a system they developed has helped them. At the end, they will ask you to become their student.
As a student, you will be required to pay thousands of dollars to access the signals and the trading systems they use. Unfortunately, most of these people are usually scammers. Trust us, if they were so successful, they would focus on trading, instead of selling courses.
You should take time researching about them.
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Test the systems
If you have bought or subscribed to a system, before you spend any money on it, you should backtest it. This is where you use past data to see the performance of the system. The logic is that if the system worked in the past, chances are that it will work again.
Therefore, before you deposit your money on a system, you should test it. If it is accurate, you can go ahead and use it.
Learn the basics
Unfortunately, most people who are interested in trading don’t know how to trade and don’t understand why the assets move up and down. As a result, they implement the strategies they are told by the ‘experts’ without interrogating them. This is wrong!
Instead, you should take time to learn the basics so that when you are told to buy an asset, you know what you are doing.
Luckily, there is a lot of material on how the financial assets work. Just take time to read these materials to get the basics.
You need to consult people who have experience in the trading world. If you are a beginner, you can learn a lot from people who have been there, and done that.
By consulting these people, you will be at a good position to separate the truth from fiction. They will guide you on how to be successful by taking the long path that many people avoid.