forex trading scams: How to Avoid Forex Trading Scams

Before choosing a broker to start forex trading, make sure you go through the checklist in this article, and if there are warning signs, choose a different broker. There are plenty of legitimate forex brokers, and we have reviewed many of them for you. We have also put together a list for beginner traders of the best forex brokers. Many of the common forex scams in 2020 revolve around robot systems and signal sellers.

Though the facade of this kind of scam might change – maybe tomorrow the same scammer will approach victims through the Metaverse – the red flags and the intention remain the same. Initially, the scammer’s digital footprint appeared to only be an Instagram account, resplendent with eye-catching emojis, expensive cars, big swimming pools and, of course, mountains of hard cash. The account in question had also managed a moment of viral fame through a video of himself distributing cash hand-to-hand on a busy UK roadside. For an unsuspecting public, however, waving around numbers like $6.6 trillion and terms like “foreign exchange options” is enough to coax a new victim down the wrong path. When you’re planning on borrowing money – a credit card or personal loan, for instance – it can be challenging to work out whether you’re doing the right thing.

Ensure the broker or exchange has a license from a reputable regulating body, whether in the US, the UK, or overseas. Read broker reviews online and only invest a small amount of money. When joining a new trading platform, it’s essential to start small. Many trading platforms offer paper trading accounts that allow you to trade with fake money. It’s a great way to get experience without investing real money and risking financial loss.

Eventually, the trader will realize that they have spent more time and money on recruitment drives than they have on actual trading. By that time, though, it is already too late because their subscription will not be reimbursed. As with any industry that has a high turnover rate, forex trading has attracted a lot of companies that specialize in multi-level marketing. Trading signals provide trade ideas or suggestions to traders that will help them take advantage of opportunities in the market. If a broker is featured on thewarning list of a regulator, it is usually a scam broker. Investing in or trading financial instruments, commodities, or other assets carries a high degree of risk.

Trading forex and the foreign exchange market is a legitimate market and business, where you buy and sell the world’s currencies. It is not a scam in itself if you are dealing with a regulated broker. Trading involves risks, and you need to make sure you understand the market, and your attitude toward risk before you start trading. New traders can be impatient, seek more money, and hope for huge profits, but fall prey to forex scammers. To avoid being scammed, make sure you educate yourself about the market, learn the warning signs, and trade forex with a trusted broker, which is regulated by a top-tier regulator. A forex broker cannot steal your money legally, but sometimes scam brokers do steal.

Watch out for unrealistic guarantees, pushy sales tactics, unclear background information, suspicious testimonials, and abnormally high fees. Forex fraud usually affects people who fall for the 100% guarantee trick. If you want to avoid being duped, never register with a broker that promises unrealistic profits in a short space of time. It is unwise to rely on the information you have bought from unknown entities whose past performance record you do not know. Many traders still fall for the same scam, though, and as a result, end up thinking all forex trading is fake. Ultimately, the trader will pay for the fake robot and also end up losing any funds they entrust to this software.

Unsegregated Client Bank Accounts

To most easily avoid broker forex scams, choose a regulated broker with a good reputation and a long history. For all other scams simply trust in yourself rather than trusting someone else to make your profits. Here are some key red flags, which should make you suspicious if you are trying to spot common forex scams.

Forex is by far the largest financial market in the world, with over $6 trillion traded daily globally. That staggering figure, coupled with the magic of leverage, always means that there is immense opportunity to make profits in the Forex market, even though this comes with a lot of risks as well. Technology has literally democratised the Forex market, and there are almost no barriers to entry in the retail scene. Because Forex is a massive goldmine, unethical businesses attempt to attract unsuspecting customers with promises of making big money round the clock. They portray Forex trading and the ability to profit as something quick and easy. As long as the lucrative Forex market exists, Forex scams will always exist.

Forex scams tend to lure traders in with the promise of high returns on their investment with little to no risk. With a forex scam, on the other hand, you are guaranteed to lose your money because the scam artists and fraudsters are only there to take you for every cent in your pocket. Claims like “90%+ accuracy” are an immediate indication to be cautious.

You should only in trading or investing if you are fully aware of the potential risk of loosing all your deposited money. The CFTC is the governmental body in the US that regulates the trading of currencies. It has taken action against various firms that have violated laws and scammed investors. Any system that promises to give you an easy way to make money with forex trading without putting in the work is lying to you. They may require you to deposit funds and then promise returns from automated trading bots without you needing to do a thing.

Forex pyramid scheme

Unfortunately, unless the broker is regulated and located in a country that enforces those regulations, there may be no way to force them to give you back your money. Software like SEON helps keep fraudulent affiliate marketers, bonus abusers, multi-accounters and other fraudsters outside your infrastructure, immediately reducing the risks. Money laundering is a major concern although it does not directly target the FX platform.

See more on this in our article about whether forex trading is a pyramid scheme. Scammers typically use complicated jargon, and the client agreement includes vague language. Scam brokers could try to play on the inexperience of retail traders.

Scammers often claim massive historical returns and will show numbers that way exceed market norms to lure investors in. At BrokerChooser, we consider clarity and transparency as core values. BrokerChooser is free to use for everyone, but earns a commission from some of its partners with no additional cost to you . You’re asked to give bank account details so the “recovered” funds can be deposited directly into your account. No phone numbers are provided, or you’re asked to communicate through Telegram, WhatsApp, or other messaging platforms, and they use web-based email addresses such as @gmail or @yahoo.

It is therefore prudent for investors to be able to identify and avoid Forex scams in the various forms they come in. Forex trading is legit, but not all companies that offer forex trading tools or platforms are legitimate. Therefore, it’s critical to research a broker before you give them any money.

Avoiding Broker Scams

Signs of bot comments can include many short statements such as, “This platform is the best! ” They will usually provide no explanations as to why the platform is good. Some brokers may say they have a license when they don’t, and others will get licenses from shady regulators who sell them to anyone who wants. Requiring extensive documentation and identity verification the broker did not disclose when you signed up.

One victim reportedly invested upwards of £17,000 after being attracted to the scammer’s lavish online presence. After transferring the money, the victim watched his return ostensibly grow via a private WhatsApp group, before being told his balance had dropped to nearly nothing. The FSCS protects investments of up to £85,000 if a firm goes bust or you received poor advice that caused you to lose money. They usually only ask for a small investment upfront and pay initial investors the promised returns to give the impression that the scheme is successful. Fraudsters use Forex Ponzi schemes to advertise non-existent forex funds that guarantee a high level of return in a short space of time. Members of these schemes are charged a subscription fee and encouraged to recruit more people to join so that they can earn a commission.

If You Decide to Participate In Forex Trading

Even the best traders and technology cannot achieve this level of accuracy. With a little investigation, you can actually check their previous signals against historical market data. It’s possible to get rich with forex trading, but it will not happen fast.

Make at least two withdrawal requests, and ensure you get the funds you withdrew without any hassles. Scammers create these bots and target newbie traders who want to get rich fast. • If the broker is regulated , then they will provide coverage for your losses in certain circumstances. In reality, the so-called investment group was operating out of the Bahamas, well outside the jurisdiction of the FCA, and his money was gone the instant it was transferred.

Forex Scam Prevention and Red Flags

Traditionally, many trading systems have been quite costly, up to $5,000 or more. No trader should pay more than a few hundred dollars for a proper system today. Be especially careful of system sellers who offer programs at exorbitant prices justified by a guarantee of phenomenal results.

If the trading platform doesn’t operate to your liquidity expectations, warning signs should flash again. They tout their long experience and trading abilities, plus testimonials from people who vouch for how great a trader and friend the person is, and the vast wealth that this person has earned for them. All the unsuspecting trader has to do is hand over X amount of dollars for the privilege of trade recommendations.