Forex trading, or exchanging one currency for another, is one of the largest markets globally. Currencies from all countries, about $5 trillion, are being traded daily on a mostly unregulated market. This is because there is no international regulatory body – each country has its own.

International travelers, those conducting businesses on an international level, and foreign trade all require forex trading. Moreover, trading in currencies is also used by individuals who want to profit from the volatility in the value of a specific currency against another one.

Forex trading is run on the basic principle of profiting, but exchange rates are both risky and volatile because several factors influence the value of Money.

Types of forex scams and frauds

Criminals trying to trick people into fraudulent schemes involving foreign exchange are responsible for scams. They promise wonderful investment opportunities, only to disappear overnight.

Signal seller frauds

Signal sellers offer suggestions for the best time to buy and sell currencies. They say these are based on market analysis, and they charge you a fee for this information, guaranteeing successful trades at a huge profit. You are being charged by the signal sellers, but they may not give you advice or may give you some trade advice before disappearing.

Forex robot scams

Forex robots are software programs that automatically buy and sell currency for you. They do this by using an algorithm.

With legitimate forex robots, the software has been tested and reviewed by an independent body. Untested or fake software is often used to make random trades, causing you to lose money. The best way to avoid being scammed is to research which forex software is approved before investing.

Broker fraud

Sometimes fraudsters trick people by pretending to be legitimate forex brokers or investment platforms. If you fall for this trick, you invest in a forex fund that doesn’t exist. Before investing, check with the regulatory body of your country for their contact details. Criminals will try to convince you these details (contact numbers, names, etc.) are wrong because they are out of date.

Scammers often set up matching websites as legitimate ones to trick you into investing with them. As soon as you deposit your money, it vanishes.

Pyramid scheme involving forex

In a forex pyramid scheme, new members are recruited with claims of advice and data offered that will help you make successful forex trades. Of course, they will request a subscription fee for your membership, and you are offered a commission to encourage others to join.

Unfortunately, this scheme relies on the money generated from membership fees, not on the returns from forex trading. The higher you move up the pyramid, the more money you ‘earn’, hence, a pyramid scheme.

All the money is lost to the leader when no more new members can be recruited, or when membership recruitments drop.

Managed forex fund frauds

With managed forex fund fraud, you are approached to invest money in a company where an expert does forex trading. You are asked to also pay a fee or commission for the account or trades. Before long, you realize that the fraudsters are not offering any forex trading, but have made off with your money.

Always research any financial service or platform, and check their registration details before deciding on investing any money.

Forex Ponzi scams

Ponzi schemes are used by fraudsters to advertise non-existent forex funds. They guarantee a high level of returns very quickly and only ask for a small investment upfront. Initial investors are paid the promised returns, allowing them to get the impression that the scheme is a huge success. Investors are then encouraged to invite others to join until the scammers have collected enough money, only to vanish with it all.

Spotting Forex Scams and Frauds

One of the surest ways to spot Forex Scams or fraud is the promise of making a lot of money quickly. Even though forex trading is a good way to earn some profits, you won’t get rich overnight. Therefore, know how to spot a scam by looking out for the following red flags:

• Claims and guarantees to make you a millionaire
• No live trading data is offered, only historical data
• No performance information from the past
• No named contact is offered
• A large sum of money is required
• A very high win/loss ratio is promised
• Bad consumer revies
• Claims of a secret formula
• Company headquarters are offshore and not covered by a regulatory body from your country.

Final word

If you have fallen victim to one of these forex scams or frauds, report them. Perhaps you may recover your money, but even if you don’t you can help others from falling victim to the same scammers.

The post How to Easily Spot Forex Scams and Frauds? appeared first on StreetWise Journal.