Is forex trading legal? – Save the student

If you are on social media, you may have come across some videos promoting Forex trading as a way to make money. And while investing can potentially be a way to grow your money, it’s never without risk – especially if you’re not aware of what you’re investing in.

Social media “influencers” can make it seem like Forex trading is an easy get-rich-quick way. However, this is not the case. it is risky form of investmentand unfortunately, there are scammers who try to make money from people who do not have all the necessary information.

Below we will explain what forex trading is, which common scams you should pay attention to, and some alternative ways of making money that are much safer.

What is forex trading?

Forex is short for foreign exchange. It is a global market for buying and selling different currencies.

When people talk about forex trading, they mean buying currencies and selling them for profit when the value changes.

If you’ve ever bought foreign currency for a holiday, you’ll know that the value of currencies is constantly changing. Just look at the exchange office at the airport – prices change daily (sometimes multiple times).

When looking at the value of a currency in forex trading, focus on currency pairs. This means that you will be looking at two currencies and their value in relation to each other. For example, you can see how much the British pound is worth against the US dollar (GBP/USD).

The goal is to predict whether a currency will rise in value against another currency. For example, if GBP/USD is trading at 1.24, this means you can buy $1.24 for £1.00. If the value goes up to 1.25 and you sell your original $1.24, you get to keep the extra $0.10 as profit.

Obviously, $0.10 isn’t much in this example. But if you trade with larger volumes, the potential profits (and losses) also increase.

The value of a particular currency depends on many different factors, such as political events, interest rates, tourism, environmental impact, and more. But remember that the price can drop just as quickly. This makes Forex trading one of the riskier forms of investment, as prices fluctuate quickly and unpredictably.

Is forex trading legal in the UK?

Yes, forex trading is completely legal in Great Britain. It is overseen by the Financial Conduct Authority (FCA). The Forex market is one of the largest financial markets in the world – governments and banks participate in it, not just individual investors.

The problem is that even though the market is regulated, there are still people who try to take advantage of others who don’t have enough experience or knowledge. Below we will review some of the most common forex trading scams.

And while Forex trading is a legitimate way to invest money, it also carries a a lot of risk. Even if you invest through a regulated broker, it’s easy to lose money. The Forex market is very volatile, which means that the value of currencies changes very quickly – both up and down.

You can quickly make a big loss when trading forex. Day trading is a risky way to invest, although some people on social media do it as an easy way to make a lot of money (spoiler alert, it’s not!).

Is forex a scam?

As we mentioned above, Forex trading is a legitimate way to invest money. Currency trading has been around for decades, but that doesn’t necessarily mean it’s the right way to invest your money.

One of the advantages of forex trading is that the market is open 24 hours a day (except weekends) and the investments are very liquid. This can be attractive to potential investors.

However, the downside is that the market is incredibly volatile, which makes it risky to invest money this way.

In Forex trading, someone wins and someone loses. As Andrew Hallam explains in his book ‘The Millionaire Teacher’, for every dollar earned in forex trading, a dollar is lost somewhere else. This is the key way it differs from investing in stocks, where there is inherent value.

But even if forex trading itself is legitimate, but still risky, there are scammers who use forex to cheat people out of money. See the next section, where we explain some of the most common scams and how to avoid them.

Social Media Forex Trading Scams

One of the common ways young people and students become targets of forex scams is through social media.

Some people on TikTok and Instagram make it seem like turning £100 into £10,000 with forex is easy and guaranteed, and this is where things get dangerous. If it sounds too good to be true, it almost always is.

Beware of people on social media who claim they can help you become a millionaire through Forex trading. It’s often how these people make money promoting trading services, courses and memberships. There is a good chance that they will make more money promoting these services than they do from Forex trading itself.

Scammers can target people who lack industry knowledge and those who are in a vulnerable position. If you’re on a student budget and struggling to pay rent, the promise of a quick and easy way to make money can be tempting, but be careful to avoid potential scams.

Do a lot of research before investing money and consider lower risk alternatives.

Other common forex trading scams and how to spot them

Here are some other common forex trading scams to watch out for:

• Unregulated brokers – If you decide you want to try Forex trading, make sure you only do so with an FCA regulated broker. Read reviews before signing up and make sure the broker you’re dealing with is legitimate.
• Guarantees – No one can guarantee you a profit when it comes to investing. If someone tells you where and how to invest in forex promising you guaranteed returns, it is almost always a scam.
• Requests for money – If someone asks you to send them money (or cryptocurrencies) to start investing in forex, stay away. Especially if you are pressed by time constraints, there is a risk that you will not see your money again.
• Download Apps – Before downloading any forex trading app, be sure to read reviews to confirm that the app is legit. Never click a link someone sends you on social media to download something, as they can be used to hack into your device and access your data.

Forex trading alternatives

Here are lower risk alternatives to Forex trading:

• Savings account – Instead of putting your money into investments, you can put it in one of the best savings accounts. This is generally a low-risk way of earning interest.
• Cash ISA or LISA – Using a Cash ISA or Lifetime ISA is another way to save money and earn interest, but these accounts allow you to do so tax-free. As we explain in our dedicated guides, there are some restrictions so do your research before opening an account.
• Stocks and Shares ISA – If you’re thinking about investing in the stock market, find out how stocks and shares ISAs work. These investment accounts work similarly to regular brokerage accounts, but all of your profits are tax-free.

Need money now? Check out our guide for easy ways to earn.