Complete Guide to Avoiding Online Trading Course Scams
The foreign exchange (forex or FX) trading market is the largest in the world with over $6 trillion in trades per day. Investors and traders have a growing interest in forex because it has high liquidity, 24/7 trading capabilities, and offers significant leverage. In short, forex trading can produce a significant return on investments.
Forex trading saw a rise with the onset of the COVID-19 pandemic. According to Financial IT, trading in the forex market increased by 300% between March and June 2020. Developing countries saw the largest growth rates with accounts in Africa, Eastern Europe, and Southeast Asia accounting for 60% of new traders.
A reason for this increase is explained by Andreas Efstathiou, a senior analyst at the online trading platform IronFX:
“Working from home has given traders more time to focus on trading. Also, in the shadow of a looming financial crisis, people are actively looking for new income channels. They have time to learn more about trading and may feel like global events present a unique opportunity to make a profit. Naturally, this means a higher interest in the market and more trading activity. Forex trading has also been done online for many years, making it one of the most natural courses of action for new and dormant traders looking for profitable avenues.”
The rise in new traders caused online trading courses to grow in popularity too. Clearly, there was a demand for what these seminars offered: strategies that will quickly and easily bring in money.
Forex Online Education Scams
Forex online education scams are nothing new. Notably, the Federal Trade Commission (FTC) challenged Online Trading Academy, a widely used company that advertises a “patented strategy” that participants can use for “any asset class including stocks, options, futures and currencies” to make a lot of money.
Online Trading Academy, which charges up to $50,000 for participation, promises to help consumers “invest like the pros on Wall Street.” Its infomercials boast testimonials from “real” Online Trading Academy students who claim, “in three hours I made $12,000” or “I made $32,000 in less than seven trading days.” A retiree claims to have brought in “$40,000 in a single trade.” And speaker at a live event claimed participants “could potentially make $50,000 of annual income with an account size as low as $5,000” because Online Trading Academy has “a patent on the fact that you can time the markets,” which “gives us the ability to know when to get in and when to get out, long-term and short-term.”
Unfortunately, the facts contrasted the claims. An Online Training Academy customer satisfaction survey paints a very different picture.
When asked “As a result of your experience at Online Trading Academy, would you say you’re ‘making money’ through trading and investing?” customers responded as follows:
- 3% of people who responded claimed to be making “a lot of money”
- 31% reported making “a little bit of money”
- 66% said they were “making no money at all”
- Nearly 75% lost money
Tips for Avoiding Online Trading Course Scams
Online Trading Academy is only one example of a prevalent online education scam issue. The fraudulent claims made by similar organizations have grown so detrimental to consumers that the United States Securities and Exchange Commission (SEC) released an alert to warn investors and traders:
“The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn investors of potential fraud they may encounter at investment seminars that purport to teach investors trading strategies that will allow them quickly and easily to make money trading securities. In particular, SEC staff warns that some trading seminar promoters may use misleading or untrue statements to lull investors into purchasing expensive products such as trading software or classes. Investors should be prepared to recognize and avoid some of the potential fraudulent conduct they may encounter at investment seminars that purport to teach investors how to trade securities.”
Below, are tips for recognizing and avoiding fraudulent online trading courses:
Recognizing Fraudulent Online Trading Courses
Here are common signs of online trading course scams:
- Claims that trading is easy for anyone to do. Trading strategies are neither simple nor easy. Forex markets are very complex and typically require years of experience and education before they are “easy” to navigate. Traders and investors should be wary of courses that claim to make trading simple.
- Claims of guaranteed big returns. Trading in any market carries risk – there is never a guaranteed return. Large returns typically come after investing in a high-risk trade, which requires investing a large sum. Unfortunately, scammers often convince people who are willing and able to take large financial risks to dump large sums of money into their program and the FX market with the promise of a large return. Don’t believe it.
- Applying pressure. Scammers will use high-pressure sales tactics to get customers to purchase before considering what they are buying. For example, there might be claims of “just a few spots left!” to get someone to sign up within the next 15 minutes. A reputable online training course will communicate its value, build connections with potential customers, and give investors time to think and research.
- Exorbitant pricing. When it comes to trading courses, price does not equal quality. Many scammers will charge extremely high prices and say the cost is low compared to the reward their investors receive – yet they don’t provide real data that shows a positive return on investment (ROI).
- Only stories of winners. No trader has won every time and no program produces online winners. A fraudulent online trading program will make it seem like everyone who buys their course gets rich quickly. Beware of this. Purchase trading seminars that focus on education – not winning.
- “Money back guarantee”: This a big clue that the Provider could potentially employ scamsters and con artists. This so-called guarantee could also be linked to simulation software programs. Familiarize yourself with the applicable terms and conditions. In many cases is it almost impossible to follow the required terms and conditions and, in many cases, will they find reasons as to why the students does not qualify for the guarantee.
There are many companies who actually offer quality learning programs and materials, regrettably are their reputations damaged irreversibly by Representatives and Sales Agents who use unethical sales tactics in order to earn commission.
How to Locate Genuine Online Trading Courses
Educational material is the most important aspect of any forex trading course. Successful investors don’t become winners overnight. They take time to learn the market, develop strategies, work with more experienced mentors, and always look for ways to get better.
Trading and investing are skills that must be refined over the years. Online trading courses are an excellent place to start – if you find the right ones.
Here are some things to keep in mind when selecting a forex trading course:
- Research the course. Don’t spend a dollar before you research who created the course, what they are teaching participants, and if they have any complaints filed against them. You can check their reviews to get an idea of how they operate.
- Ask questions. Legitimate courses want participants to be confident with their purchase. Reach out to course instructors or creators to ask about up-front and additional costs, what kind of educational material is available, and if there is any available data on the program’s risks and rewards.
- Don’t believe every success story. Fraudulent program promotors may pay people to write glowing reviews and testimonials. They may even bring in “former students” to tell program participants an incredible story about how the course changed their lives. Be aware that these could be hired actors or extremely special circumstances. Keep in mind that one person’s success does not indicate an overall successful program.
- Look for disclaimers. A reputable trading program will have a disclaimer that explains the risks of forex trading and lists liabilities. Carefully read the disclaimer information before purchasing and be sure you understand what you’re agreeing to. If there is no disclaimer information on a program’s website, ask for it. Do not sign up for programs that have no disclaimers. It will be impossible to determine who is liable for what if things go wrong. In that case, you may be taken advantage of in a legal situation.
- Free resources. Great programs will offer free resources to communicate their value before asking for money. Such resources include value-driven blogs, social media content, videos, downloadable guides, and quizzes.
- Personalized coaching and mentoring. Trading strategies are not one-size-fits-all. People all around the world have different financial situations, education levels, mindsets, etc. An excellent online trading course will offer personalized education services that show you how you can navigate trading and investing.
- Terms and conditions of sale: It is imperative to familiarize yourself with the fine print and understand what is required and what you sign up for.
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