Red Flags of Unrealistic Promises in Trading

Red Flags of Unrealistic Promises in Trading

• The dangers of Fake Promises in Trading!
• Common characteristics of fake promises
• Psychological strategies used by the fraudster
• Characteristics of fraudulent advertisements
• How do you protect yourself from fake promises?

The Dangers of Fake Promises in Trading!

Achieving high returns and quick profits may be the most prominent and attractive reason for an individual to enter the world of money, whether in stocks, Forex, or others, which makes it a suitable environment for unrealistic promises, which traders can fall victim to, whether they are beginners or professionals.

Therefore, traders need to be aware of the most prominent indicators that help them distinguish between realistic promises and those that are not realistic, regardless of the trader's level and experience, due to the acceleration and great development taking place in the world of money, and the extent to which this world is linked to changing technology and advanced fraudulent methods.

This article will review the most prominent warning signs "red flags" through which a person can distinguish between real promises and others, as some promises may go beyond being harmless exaggerations, to become deceptive tactics used by fraudsters of all kinds.

Also, recognizing these warning signs will enable the trader to make the appropriate decision, with the least level of confusion that can affect him directly or indirectly. Warning

Red Flags of Unrealistic Promises in Trading

In this guide, we will explore the most common warning signs of unrealistic promises in trading and how to protect yourself from them.

Distinguishing between real promises and unrealistic ones is important for a trader, given the ambiguity surrounding these promises, the difficulty of verifying their truthfulness or otherwise, and the fact that they are promises that appeal to emotions rather than reason, making them largely deceptive.

Here are some of the most important characteristics that can help you identify these promises and distinguish between the true and the fake:

First. Common characteristics of fake promises:

1. Guaranteed profits:

Promising guaranteed profits, or constant, continuous profits, is an impossible thing in the world of financial markets. One example of these promises is: Invest a thousand dollars and get a 20% return or get a return of $200 per month.

2. Risk-free investing:

Risk-free trading or investing is impossible, as every investment involves a certain degree of risk. Examples of these promises include Investing your money with zero risk, or your investment is completely safe.

3. Get rich quick:

This falls under specific word forms such as: Make a huge fortune in a matter of days or make a fortune without any effort at all. It can also be in the form of a video of a person or group of people who appear to be wealthy and talk about their ability to achieve wealth without effort or a long time.

Second. Psychological strategies used by the fraudster:

The fraudster uses very smart strategies and tactics on the psychological level in addition to verbal strategies, intending to trap the victim and exploit their feelings and behaviors that tend to believe everything that enables them to make money, so understanding these tactics contributes to protecting money in advance by quickly identifying fake promises, and these are some of the most prominent of these strategies:

1. Emotional manipulation:

Here the fraudster uses some indirect phrases, to motivate the person who shows greed, or pressure him by frightening him from missing an imaginary opportunity, this emotional manipulation can be through many examples, such as:  the fraudster showing a chart of an asset or currency that has risen significantly over some time, and emphasizing that it was a favourable opportunity to achieve huge profits, or that the opportunity still exists to achieve future profits for sure.

2. Too Good to Be True Promises:

These are deals that are so attractive that they raise suspicions, either that they are not real deals or that they involve hidden risks, such as a promise to buy a stock at a price much lower than its market price or fair price.

3. Social Proof:

The scammer may make promises, along with some fake reviews and testimonials from people who are supposed to have used their services and benefited from them.

4. Reciprocity:

Some scammers use psychological influence, by making promises with a gift or free service to create a sense of obligation in the victim, which is called psychological influence, when the victim feels that she is forced to return the favour when she is given something for free, which makes the victims more likely to comply with the scammer's request later.

5. Over-information:

Although a lack of information may indicate fake promises, over-information may be a means of scammers, who are keen to show the extent of their possession of all technical or legal knowledge.

6. Flattery and praise:

 The scammer may send a message claiming that he has been monitoring the victim for some time and that he is impressed by his skills or achievements while promising that he can develop these skills to reach record financial levels.

Third. Characteristics of fraudulent advertisements:

Many promises may reach the trader through advertisements published on various social media, so knowing the characteristics of fraudulent advertisements is very important in avoiding the trader from the promises they contain:

1. Suspicious language:

There are many phrases that can be included in suspicious or fake advertisements, such as: double your money in days, your success is guaranteed without fatigue, or your investment is risk-free, or buy your dream car while you sleep!

2. Exaggerated testimonials in the advertisement:

Some advertisements contain indirect promises, by reviewing some people who provide fabricated or invented success stories to attract traders or reassure them of the owner of the investment.

3. Incomplete advertisement for an investment company:

Many are advertisements that refer to a specific company, trading platform or brokerage, without this advertisement being accompanied by a reference to its license in the victim's country or simply referring to a license without specifying its details or location.

How do you protect yourself from fake promises?

Here are some of the most important recommendations and tips that can be used to protect a person's money from falling victim to fake promises:

1. Education:

By researching and learning the basics of the world of financial markets, or the market you want to enter.

2. Realism:

By understanding and realizing that quick and easy profit is illogical and that believing in it will lead a person to make bad decisions.

3. Verifying credibility:

Verifying the licenses in force with the official financial authorities in your country or the country you intend to invest in is essential to ensure the credibility of the party making the promises.

4. Thorough examination:

A field visit to the location of the party making the investment promises directly or indirectly, in addition to visiting its website, are important matter for conducting a thorough examination.

5. Stay informed:

Knowing the basics is only the first step in knowledge, so the actual or potential trader must always research and learn about the characteristics of the market.

6. Ask questions:

If you have doubts, do not hesitate to contact the company or individual offering the deal to get clarification.

7. Consult trusted sources:

Discuss the opportunity with a financial advisor, friend, or family member to get an outside perspective.

8. Proofread:

When you receive a written promise, carefully review the wording and style of the promise, as it may contain grammatical or spelling errors, or be completely unprofessional.

9. Be alert for fraud:

Read and stay informed about fraud, or common fraud tactics, so you’re better prepared to spot it.

Conclusion:

While the potential for high returns in trading may be tempting, it also makes the financial world a breeding ground for fake promises.

So traders, regardless of their level of experience, must be vigilant and recognize the warning signs of fake promises, such as profit guarantees, risk-free opportunities, and overly attractive deals.

The investor must also constantly educate himself about the market and its facts, and consult reliable sources, such as financial experts, which also requires the investor to distinguish between the real expert and the fake expert, which is an important topic that you can read about within the trading transparency + project.