Online trading, Here’s How to Avoid Scams?

21 Febbraio 2023 - 14:50

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In online trading (unfortunately) there are many promises of easy earnings. How to avoid scams?

Online trading, Here's How to Avoid Scams?

Unfortunately this very fascinating world characterized by a high level of professionalism and competence is also populated by many individuals and companies of dubious authority, therefore one can find oneself faced with real and artfully concocted scams. Let’s see together in this article how to recognize hypothetical scams through the help of some basic principles that are part of the world of trading online and which are in clear contradiction with what is proposed to us in a fraudulent and inaccurate way.

If you know what online trading is, we know very well what are the ways in which a "scam" disguised as an investment is proposed to us, therefore let’s see what is online trading together, what it is about and then recognize almost instinctively what is a scam and what is a good proposition. Unfortunately there is a tendency to lump everything together, therefore this world is literally polluted by absurd proposals of dubious realisation, to the detriment of qualified professionals who act in good faith and in defense of this highly qualified profession from the point of view of technical skills and more.

Know what online trading is

Online trading is an activity carried out by a trader and which is aimed at obtaining profit from the purchase and sale of financial instruments listed on the markets. Stopping here we can already say that the trader has specialized technical skills aimed at identifying profit opportunities on the movements of the financial markets, in short, we are certainly not talking about a skill that is easy to acquire, consequently a trader is not can improvise as such.

The trader can be in retail, i.e. a trader who operates on his own account and with his own capital without a banking infrastructure behind him but who uses a reliable broker to carry out his trading and a hardware structure suitable for the work performed, such as having a computer equipped with a processor suitable for trading, not to mention a fast and reliable connection essential for sending orders to the markets. The trader can also be an institutional trader, i.e. a trader who operates on behalf of a financial institution, be it a bank or an investment fund and makes his skills available for the management of the capital of the institution for which he works.

Some retail traders, if equipped with certain characteristics, can also operate on behalf of these institutions as investment funds and family offices, i.e. small financial boutiques that deal with the management of important capital for a few High Net Worth Individuals (persons with assets exceeding 30 million euros). As you can guess, it is not a job whose skills can be acquired in a few days or weeks, months if not years of experience are needed before being able to carry out this activity professionally. We also specify that on average, those who trade also hold an academic qualification, usually appropriate to the activity carried out, usually a degree or doctorate in economics, finance, statistics, mathematics and physics.

The latter is not an essential requirement but it is considered essential to adapt to the changes that this job requires over time. In short, the synthetic framework proposed makes us understand in broad terms that the professional trader is not improvised, which offers a certain "charm" to the figure of the trader as someone who "takes money directly from the market". It is important not to confuse the figure of the trader with that of the financial advisor, much less with that of the broker, a figure that disappeared with the advent of the internet and online negotiation which now sees the same banking institutions responsible for negotiating securities as brokers.

The promise of easy money

If it were easy everyone would do it, unfortunately no one does it. We’re talking about promises of easy earnings shouting "earn with...", surrounded by an imaginary world where those who invest do nothing and enjoy their free time on some beach in an exotic destination. Not to mention phone calls that are received in a harassing way where easy earnings in a short time and without enormous effort are expected. In exchange, we are asked for a deposit with a broker without checking anything with respect to who is offering us the deal of the century, even worse if we check the reliability of the broker without any expertise.

In essence, money is not made easily on the markets, on the contrary, as you have seen, it is necessary to build a set of skills which certainly do not require little time to be put to use. In essence, when the opportunity for a very easy profit arises, stay away from it as much as possible.

On cryptocurrencies the phenomenon is even more evident, with easy, safe and reliable earnings proposals, very important promised earnings in terms of invested capital, a real illusion. The example of Ponzi schemes, i.e. the technique that allows you to earn by bringing other people into the scheme, where the former earn at the expense of the latter and the more people they bring in, the more the former earn , a scheme used a lot especially after the strong wave of liquidity poured into the financial markets from 2009 onwards. Basically, before investing money, as when we have to buy a house, a car or a new appliance, we should investigate what the market offers and what are the characteristics of what we want to buy in relation to the price we pay.

In practice, if someone offers you an immediate gain in terms of money, you will most likely have to start asking yourself two questions and try to understand how you should actually earn. In this context it is therefore very important to check on special registers if the broker in question exists and above all to which regulation it is subjected, an essential element for establishing its effective operational reliability. In essence, simply check before investing money aware of your skills regarding the choice of a reliable financial intermediary. Knowledge, as in any area, is essential to acquire awareness, an element at the base of every choice that leads to avoiding problems both in the financial sphere and in life.

Original article published on Italy 2023-02-21 08:57:00. Original title: Trading online, come evitare le truffe?

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