Foreign trading or forex trading is the trading of different foreign currencies listed in a pair known as forex pairs. The parties involved in trading could be individual investors or multinational corporations. Trading of currencies takes place in the foreign exchange market and the parties make a profit through fluctuations in the exchange rates of currency. This constant price movement of currencies is the reason why forex traders find forex trading lucrative to gain profits in the short-term.

Though the foreign exchange market is the biggest financial market in the world, it is also highly unregulated. That means it has slowly become a haven for many forex brokers that lure forex traders with fraudulent investment schemes.

Is Your Forex Broker a Scam?

Forex scammers take advantage of the forex traders’ lack of knowledge about forex trading and try to defraud them with unbelievable investment opportunities. They keep evolving with the forex market and coming up with schemes that are nothing but a scam. Therefore, before putting your feet into forex trading, it is essential for you to fully understand different types of forex scams.

1. Robot Scams

This is the most common form of a forex scam. Forex robots rely on the past performances of currencies to place the trade in the forex trader’s absence. Forex scammers use this fact to persuade new forex traders that they can make maximum profits using their bot-based platforms. Ideally, forex traders should avoid falling victim to this scam as most of such platforms have never been tested.

2. Signal-Seller Scams

This is another popular scam where forex fraudsters promise potential forex traders with accurate information about favorable times to trade in exchange for a hefty commission. Forex signal selling is a practice where forex brokers predict the price movement of currencies based on market trend and their trading expertise. Forex traders use these cues to make a trade. But most of the cues are inaccurate and traders end up incurring heavy losses as their forex broker fails to authenticate its information.

3. Shady Forex Trading Scams

There are so many forex brokers that approach new forex traders through impractical advertisements. Most of these brokers are unregulated, but they try to convince forex traders to make investments in forex investment funds and assure them of higher returns. Anticipating maximum profits while not trading themselves, forex traders end up losing their investments just to find they have fallen victim to another trading scam.

How to Spot a Forex Broker Scam?

It is quite common among aspiring forex traders to become successful at forex trading. Even so, they should avoid being misguided by unrealistic expectations promised by the forex broker.

More common hints that your forex broker is a scam include misleading forex trading schemes, unregulated by any financial authority, and overstatement of 100 percent guaranteed returns. Apart from them, here are a few more tips to spot a forex scammer.

• Promises of little or no financial risks
• Claims of guaranteed and overnight success
• False records of success at forex trading
• Unresponsive to trading complains (poor customer service)
• Bad reputation for not allowing forex traders to withdraw funds
• Unable to provide any proof of their trading claims
• Ask you for your personal details (email, contact number, home address)

If you found your forex broker ticking any of the above, it is a sign that you are dealing with a scammer. Besides, you should consider taking some precautionary steps to avoid a forex scammer such as:

• Finding a regulated forex broker
• Doing internet research about the forex broker
• Reading customer reviews and testimonials
• Going through all the fine print of the contract
• Starting trade with a small deposit
• Understanding trading on margin
• Asking for the forex broker’s trading history
• Ensure you can trade when the market is volatile
• Inquiring forex brokers about their policies for placing trades

Conclusion

Forex trading is a legal financial activity across the globe. It allows forex traders to make huge profits in the short-term. However, a slight oversight of forex trading fundamentals can put new forex traders at risk. It is not that the forex market is full of scammers, but you must be better prepared to spot the scam and avoid being a victim of it.

The best way to do that is knowing how forex trading works and conducting due diligence on the forex broker. Remember, you are into forex trading to make money, do not waste this opportunity because of some unscrupulous forex broker. To avoid all the scams and frauds, you should check the list of Top Forex Brokers and choose one from it. Also, you can click here to compare the top Forex brokers in UK.

Weeks ago, a challenge was put out amongst the trading community: try to become the first five-star Covesting trader. At the time, the feat hadn’t yet been accomplished, but after some of the best the world has to offer began to learn of the challenge, there are now not just one, but two of these five-star traders.

Interestingly, neither have made it into the top ten by total profit, but when you dig into the success and risk metrics, and come to understand what the fully transparent five-star system truly means, the achievement becomes that much more impressive. And it also puts a spotlight on why the strategies that earn the accolades are among the safest follows on the platform.

Learn all about this one ultra-successful strategy manager’s road to glory that also brought riches to their followers.

What Is Covesting? A Quick Recap On The Copy Trading Platform On PrimeXBT

Covesting is an innovative copy trading platform that connects traders turned strategy managers with followers looking to take the worry out and time investment out of trading and let the professionals do it for them.

Followers copy the trades of strategy managers who are doing what they do best: building positions, managing risk, and trying to book profits consistently. But by becoming a strategy manager on Covesting, success fees are earned from follower equity in addition to the profits from trading, resulting in the ultimate income-generating solution.

For that reason, as well as making a name for oneself on the global leaderboards that so many traders have registered and are sharing their PnL screenshots from within the platform online.

After months on PrimeXBT, Covesting has amassed a substantial user base of strategy managers and followers. Single strategy managers are now trading with as much as 100 BTC in follower equity and using it to generate over 2,000% ROI.

But as you can see in the list of top ten Covesting traders by total profit, there’s a notable lack of five-star traders. If even some of the greatest and most profitable traders can’t reach the stars both literally and figuratively, then how challenging is it?

Reaching For The Stars: How One Strategy Manager Built Steady Success On Covesting

It is achievable, as two traders have now done so. However, for months the full five stars were left unfilled until a challenge went out calling out all top traders and pushing them to give the then never-before-done feat a try.

Traders lined up to give it a chance, but strategy manager Joao Strategy was the first to get the job done.

To become a five-star trader, certain conditions must be met and maintained. To start, the easiest achievable star requires at least 0.5 BTC in equity. The equity can be deposited or built up from a low starting deposit and proves the strategy manager is serious about trading.

Next, a trader must be active more than 30 out of 60 trading days in a rolling period. If the trader falls under 30 at any point within the current 60-day timeframe, the star will be removed. The reason for this star is to ensure any traders are active enough to warrant the follow.

The third star starts to foray into safety and strict risk management. This star is awarded for keeping margin allocation at 60% or above. Traders that consistently fall below these levels are risking more capital than they should be. Any trader that has this star is a safer bet than others.

Notice how Joao Strategy’s margin allocation barely ever fell below 60%. Only one spike down broke the streak of safety, but this also shows that even the safest and most consistently successful traders still are taken by surprise by unexpected moves.

The fourth star requires traders to maintain a win:loss ratio of 70:30 within the last 30 trading days, which is an extremely difficult number to achieve, as almost any trader will attest to. Only the most successful of all are able to earn this star and maintain it.

Joao Strategy is one of those traders. By sticking to proper risk management, only taking trades when confident, and clearly having natural technical analysis talent, they consistently grew their capital and profitability.

Other profitability indicators and success metrics show how successful the strategy manager is, with full transparency. Followers can use this intel to choose the best trader to suit their needs.

The fifth and final star is given to those with over 50 BTC in trading turnover over the last 30 trading days. This is no problem at all for Joao Strategy, who is now trading with over 40 BTC in capital.

Notice that as soon as Joao Strategy reached the five-star rating system, their follower equity went more parabolic than Bitcoin has recently.

Not only is Joao Strategy the first trader to achieve five-stars and enjoy all the fame and followers that come along with it, but they are also a great example of a community within a community brewing and the network effect and power of a peer-to-peer copy trading platform.

Joao Strategy on Covesting even hosts its own Telegram channel, with more than 300 members currently. These members make up his follower base, who follows not only the trader on Covesting but also his every chart and call.

By always sharing details of their trades with their followers, followers can be more comfortable in their equity in the hands of others. And when combined with the transparency of the COvesting leaderboard and the success and safety of the five-star rating system, sleeping at night gets a lot easier than compared to HODLing alone.

Can You Become A Five-Star Trader With Covesting On PrimeXBT?

Covesting is available on PrimeXBT, an award-winning margin trading platform where users can long and short Bitcoin-based CFDs on index trading, gold, silver, crypto, forex, and more.

The platform’s professional yet easy to use trading tools are provided to Covesting strategy managers to increase profitability and minimize risk.

After seeing such success unfold before your very eyes, do you have what it takes to become the next five-star trader on Covesting?

The Reserve Bank of Zimbabwe announced on August 21 that it had set the threshold for foreign currency retention at 70% for all exporters. The bank has said that the decision comes into effect immediately. The announcement is a part of the broader measures that have been drawn up to promote productivity in the country and sustain the system of foreign currency auction. The retention threshold for the exporters was set at various levels previously and was dependent on the degree of lobbying from the different sectors.

In early 2020, miners were allowed to keep up to 70% of their hard cash. It increased from 55%, and the farmers were allowed to retain only 50%. The rest was cleared off at the ruling exchange rate. Dr. John Mangudya, the Governor of Central Bank, has clarified that the period of liquidation of the unutilized balances of foreign currency has shot up to 60 days from 30. The extension of the liquidation period will help the exporters to manage their cashflows better.

The foreign currency auction system was introduced in June. It has received rave reviews for bringing about stability in the country’s economy through facilitating hard currency to the productive sectors at an affordable rate. Earlier, the primary source of foreign currency for the companies was the parallel market, but it came at a high price.

To sustain the auction system, the central bank has decided that 20% of the foreign currency receipts of the providers of goods and services will get liquidated when deposited in the domestic foreign currency accounts. However, the existing balances in the domestic foreign currency accounts will never get affected by the implementation of this policy. The central bank has confirmed that the foreign currency account balances have grown to USD 405 million from USD 352 million in January. The swelling of the foreign currency balance is excellent news as these are sure signs of the growing confidence in the economy.

The dollar moved higher today, snapping a seven week-long losing streak. It was supported by stronger jobs data and global currency market demand for safe havens while there are concerns regarding COVID-19 recovery.

Dollar Drifts Higher

In the Asian session, early moves were modest since traders were waiting for data from Chinese trade, which was due at about 0200GMT. The positive sentiments about the dollar are because of the expected increase in industrial output as well as good recovery in retail sales.

The dollar also traded strongly against New Zealand and Australian dollars, which are more risk-sensitive. Another reason for the strong performance of the dollar is the subdued Australian dollar because of the testimony by the central bank governor that economic recovery will take more time.

Similarly, the New Zealand dollar was also under pressure due to the fresh outbreak of coronavirus cases.

Imre Speizer, the FX analyst at Westpac, said that it is clear that there is a slow down in the risk sentiment, but it is way too early right now to comment that downtrend we were witnessing is over.

The Positive Indicators

Presently, there is a drop in the weekly unemployment benefit applications. Such applications dropped under 1 million ever since the pandemic started and there were 9,63,000 claims compared to the expected 1.1 million unemployment benefit claims.

However, there is still a long way to go as about thirty million people in the U.S. are presently unemployed and the aid package aimed at keeping the stimulus flowing got stalled. However, due to the positive sentiments in the economy dollar has been able to slow down a slide that took it down by 9.5 percent from where it was in March.

As U.S lawmakers, the Republicans and the Democrats fail to reach a consensus on the way forward for an economic stimulus package, the dollar recorded losses against the major currencies.

On the other hand, European Union leaders have finally got their act together. Spearheaded by German Chancellor Angela Markel and Emmanuel Macron, President of France, the EU leaders have agreed to a 750 billion Euro stimulus package for the coronavirus hit economies. As a result, the Euro went at its highest level in more than a year as the dollar wobbled on the uncertainties in the U.S.

Shane Oliver, the chief economist at AMP Capital Investors in Sydney, explains,

As a result, the greenback went at $1.2727 against the British pound. It has fallen to 0.9323 for the Swiss franc, again a four-month low. AUD rose to $0.7144, the highest since April, while NZD closed at $0.6649, the highest since January. However, it has been intent at 106.79 on the yen.

The deadlock by the U.S lawmakers is not new. The House of Representatives had, two months ago, proposed a $3T relief package, which was ignored by the Republican-controlled Senate. Now, the Republicans are considering a $1 trillion package which the Democrats led by House Speaker Nancy Pelosi say is grossly inadequate.

Even as late as yesterday, there has been no clear understanding between the Republicans and the Democrats on the quantum of COVID-19 relief, especially for extending unemployment insurance to those retrenched during the ongoing pandemic.

There is hope that the dollar might soon get out of the trench it is in now. Investors are optimistic about U.S. home sales and jobless declarations.

The dollar came under sustained pressure as a fiscal package to rescue the economies in the European Union and the positive progress towards a Covid-19 vaccine appeared to be a reality today. Even though the summit of European leaders dragged beyond the fourth day, there appears to be a consensus on a huge stimulus package for the bloc.

This optimistic outlook achieved a breakthrough for the Euro as it ended on a 4-month high at $1.1467 and held a shade below at $1.1460 in the trade of Asia. Apart from the stimulus package, news filtered in of encouraging test results of a COVID-19 vaccine. Scientists at Oxford University seem to have finally broken the glass ceiling and a vaccine to this dreaded disease seems to be on the cards.

A combination of these factors is responsible for the pressure being exerted on the greenback and the Euro giving off positive signals.

It is not only the Euro that has seen a positive trend against the dollar only; other currencies have been similarly affected with the dollar trading at 95.687. The pound finished with a gain of $1.2683; the AUD rose by 0.1% to above 70 US cents and the same is the case with the NZD. The Yen, though, held ground at $107.23.

The Commonwealth Bank of Australia FX analyst Joe Capurso while commenting on the development, said,

The market optimism is largely attributed to the development of the Covid-19 vaccine too. In a collaboration between AstraZeneca of Britain, Oxford University, and China’s military research unit CanSino Biologics, the drugs developed have come out successful and have triggered a reaction in human trials.

In the meantime, talks on the European package are slated to be resumed today when Britain’s negotiator David Frost hosts Michael Barnier, his EU counterpart, to dinner.