Online trading—an investment strategy for buying and selling financial assets—is legit. It’s a growing industry offering investors a new way to grow their capital and secure future wealth.
However, its legitimacy concerns arise from misconceptions that lead traders to lose money.
In this article, we’ll closely look at the myths surrounding online trading and debunk them with their respective realities. Explore what makes beginner traders lose money and prevent the same thing from happening to you.
What Is Online Trading?
The incorporation of new technology into traditional financial markets incepted financial technology companies, popularly known as fintech companies.
By making financial services accessible, fintech companies have reshaped how people access, manage, control, and invest their money.
One significant aspect of the fintech sector that caused disruption is its ability to enable ordinary individuals (retail traders) to access and influence the movement of financial markets.
Beyond the large market scale, your access to the financial markets presented a new way to grow your capital and secure future wealth.
Through online trading, you speculate on the price movement of several lucrative financial assets, including currency pairs (forex), cryptocurrencies, stocks, indices, and commodities.
However, to actually access the financial markets, you must find a trading broker to execute your trades.
This is where the question of “Is online trading legit?” comes.
Online Trading Is Legit But Some Brokers Aren’t
Online trading has opened doors for many individuals to grow their wealth, access global markets, and take control of their financial future.
While the industry itself is legitimate, not all brokers operate with integrity. Traders lose primarily because of their broker’s unethical practices, not because of market volatility.
This leads to distrust within the financial markets as retail traders are left alone in the high-stakes environment of online trading.
Is Global TradeATF Legit?
No, Global TradeATF (popularly known as TradeATF) is a forex scam.
Once bearing a license from the CySEC (Cyprus Securities and Exchange Commission), TradeATF was scrutinized by the regulators and the public for doing business, which led to thousands of losses from its traders. Notably, the traders of TradeATF claimed the following cases against the forex broker:
Spreading misinformation to attract clients to trade more
Not disclosing the risk involved in trading
Executing high-pressure sales tactics
In June 2020, the CySEC suspended its license because the regulator found its brokerage operation to go against the integrity of the financial markets.
Providing access to 45 currency pairs and other assets, such as stocks and Bitcoin, TradeATF requires investors to open an account and deposit a minimum of USD 250.
How to Avoid Forex Trading Scams?
While forex scams are pervasive in today’s financial market, there are still ways to prevent becoming a victim.
You must be proactive when selecting a broker to trade with and dealing with them.
Here are the common warning signs and typical red flags of a forex trading scam:
Unregulated Brokers
The foreign exchange market (forex market) is a high-stakes environment involving monetary transactions among institutions, investors, and speculators.
This means that all forex broker practices should be under the strict oversight of a reputable regulator. This ensures that all transactions remain fair and protects against other unethical practices.
When a broker is unregulated, it simply means that it’s straying away from financial laws that sanction deceptive brokerage activities.
But don’t quickly believe the regulatory licenses flashed on a broker’s website. Remember that the operator can put in a random license number or use the license of a regulated broker to create an impression of credibility.
You can verify the license number on the regulator’s database yourself. Go to the regulator’s official website, access its ‘License Search Engine,’ copy and paste the license number, and countercheck if the information matches.
All financial regulatory bodies have an accessible database of financial service providers for the public’s reference, so make sure to use it when looking for one.
Unrealistic Returns
We trade financial assets to grow our capital and secure your future wealth. Thus, it’s only natural for us to aim for high returns.
However, this motivation makes trading scams thrive.
Scammers use the promise of unrealistic returns to target online traders’ enthusiasm or desperation. Despite being the most obvious truth-teller of a scam, it’s the most effective in catching the interest of unsuspecting traders.
This includes the promise of guaranteed profits coupled with an extremely huge return on investments (ROI).
Imagine a Ponzi scheme promising its investors a guaranteed 400% ROI within a week. Sounds too good to be true, right? Well, it’s because it’s simply untrue.
In the complex financial markets, there are no guarantees of profits, let alone a staggering return.
Note: A Ponzi scheme is an investment scam that uses new investors’ money to pay the earlier investors. This impression of profitability encourages earlier investors to recruit more members into the scheme.
Financial Advisor and Signal Sellers
Financial advisors—responsible for trading on your behalf—and signal sellers—providing an algorithmic execution recommendation—are not illegitimate financial services at their core.
However, the issue here is the way they market the service.
Financial advisors or account managers often use high-pressure sales tactics to encourage you to trade on a particular currency pair market. They frequently disregard the significant risks involved when trading.
Conversely, signal sellers market their products as the “winning trading recommendation.”
However, all trading signals are set based on historical market price actions, making them naturally non-performing during fundamental events.
The Myths Of Online Trading
Aside from trading scams, forex traders often lose money because of their misconception of online trading.
Here are the five myths of online trading and the reality behind them:
Myth 1: You Need a Lot Of Money to Start
Many starting traders go big immediately after entering the online trading scene. This is because they think profiting big is only possible by starting big.
However, many brokers offer accounts with low minimum deposits—often under USD 100. These accounts allow new traders to familiarize themselves with live trading without committing big capital.
Additionally, accessing high-valued trades doesn’t mean you must make the exact deposit. Brokers allow you to trade with leverage and in fractions, so you can start small.
Myth 2: The More Trades You Place, The More Money You Make
This goes along with the first myth – going BIG in the market for bigger profits.
Overtrading often leads to losses due to transaction costs and emotional trading.
Quality over quantity—strategic, well-planned trades based on solid analysis yield better results.
Myth 3: You Must Predict the Market to Be Successful
The core principle of online trading is to identify the future direction of the price movement. Naturally, this idea breeds the misconception of accurately predicting the market for a trading success.
However, the financial markets are dynamic and highly complex. No one can predict it with certainty.
Instead of getting strained on spotting the perfect price movement, you should focus on probabilities, risk management, and disciplined trading.
Myth 4: Trading is just gambling
The third myth suggests that no one can predict the market with certainty. While this is true, this makes trading looks like gambling to some people.
This is because online trading is viewed as putting your money on something uncertain, just like gambling.
However, you need to remember that gambling is a game of chance. You wager your money entirely based on your guts.
Trading is far more different from that.
Unlike gambling, successful trading is based on analysis, strategy, and risk management. While luck can affect short-term outcomes, long-term success depends on skill, discipline, and continuous learning.
Myth 5: You Can Get Rich Quickly
We participate in online trading to grow our wealth. However, viewing this as a shortcut to wealth could mean your unprofitability.
Just like any market, the forex market is extremely risky. You’re constantly in battle with institutional and large traders, and a trading position that goes against theirs could wipe out your trading capital.
Aside from the volatility these large participants bring, you’re also exposed to the immense risks of dealing with scams or unethical brokers.
Trading requires skill, discipline, and time to become consistently profitable. While some traders make significant gains, many lose money due to a lack of experience, poor risk management, or emotional decision-making.
Remember: Be cautious if the broker promises guaranteed, enticing profits over a short time. This is their way of attracting you to trade on their platform.
