What are Forex trading scams?
Forex trading scams are when criminals deceive people into investing in fake foreign currency schemes. They usually promise “once in a lifetime” investment opportunities where traders can create high returns overnight. The scammers often go missing after receiving payment, leaving investors with nothing.

Is forex trading a scam?
Forex trading is not a scam in itself, but there are certainly tricksters who use the industry as a way to take advantage of naive investors. These scams come in various kinds, from unscrupulous brokers to fake trading systems.

How forex do scams work?
Forex scams often involve the assurance of unrealistic returns with little or no risk. Scammers will use high-pressure approaches to convince investors to deposit large sums of money into a trading account, promising to utilize the funds to make guaranteed profits. However, after that the investor is left with nothing since the scammer has disappeared with his money.

Signs of a Possible Fraudulent Sales Pitch
Lead you to think you can gain from current news already known to the public.
Made through referrals or emails from relatives and friends, representatives of community organizations, religious institutions, or social groups.
Contacts you and requests personal data like your name, mobile number, email address, and mailing address.
Trying to assure that there is no “down turning market” in forex.

Common forex trading scams
Fraudsters use lots of sophisticated schemes to rob your money through forex scams. We’ve rounded up some of the most common forex scams to watch out for.

Signal seller scams
Signal sellers are companies that provide suggestions about the best time to buy and sell currencies based on their said market analysis. Investors typically have to pay a fee for this information.

Signal-seller scams ensue when companies charge investors without giving any advice or trading details and then disappear. They usually guarantee that their data will provide successful trades and big profits.

Forex pyramid scheme
Forex pyramid schemes concentrate on recruiting new members into investment groups asserting to provide advice and data that help them make successful forex trades. Members of these schemes have to pay a subscription fee and are encouraged to hire more people so that they can earn a commission.

In this type of forex scam, money is made through membership fees rather than actual forex trading profits. The name “pyramid scheme” comes from the fact that as new members enter, you climb higher up the ladder and ‘earn’ more money.

When no more people can be involved or membership begins to decline, the scheme’s leaders usually close it down and take the entire money.

Managed forex account scams
Some investment firms provide managed forex accounts, in which a professional forex trader invests currency on your behest. In addition, investors are usually required to pay a cost or commission for this kind of account.

Managed forex account scams are when fraudsters pretend to provide expert forex trading services but instead they steal investors’ money. Before investing your money, you should thoroughly research any financial service or platform.

Forex Ponzi scheme
Fraudster’s use Forex Ponzi schemes to endorse non-existent forex funds that guarantee a high level of return in a brief amount of time. They usually only require a small initial investment and pay the promised returns to the initial investors to make it appear that the scheme is fruitful. Then these investors are motivated to recruit friends and family to join the scheme. Once a sufficient number of people have paid into the scheme, the scammers vanish with the money, leaving investors with nothing.

EA/Trading Robots Scam
EA (Expert Advisor) modules and Trading Robots are powerful automated trading tools that are frequently offered as value-added services by legitimate brokers. Investors can only use automated manual strategies. Automation has inherent benefits, but one of them is the ability to generate unlimited profits. Unfortunately, there are con artists who provide solutions that aren’t what they claim to be. Important factors to contemplate while evaluating automated trading solutions:

Promises of unlimited profits: Scammers will make assertions such as “unending earnings from the markets around the clock” or “high profits.” This is just untrue, and even the best and most reputable solutions cannot assure 100% precisely or even close to it.
World-class trading software with a few “recommended” brokers: This is a common scam in which investors are sold or recommended free software in exchange for depositing with a “recommended” broker. The scammer gains a commission by referring new clients to a broker, so their aim is to attract naïve investors with unclaimed promises, just to earn their commission.

Broker Scam
There are 3 main forms of manipulation that a broker can use to hide their exposure, disrupt your trading, or straightaway steal your money. Do remember that this includes the “market maker” type of broker, which is in direct conflict of interest with your trading. (They lose money when you win.)

Price manipulation: While not as prominent as it used to be, brokers still maneuver prices to push clients out of their positions. In that scenario, the broker artificially manipulates the price so that a short-term spike, which sometimes lasts seconds, puts your order to the stop loss.

Routing manipulation: While a broker might declare to be a straight-through processing (STP) or electronic communication network (ECN) broker, they might decide to direct them to a market maker and not the market liquidity provider, or keep them “in house” on the B-book. This manipulation doesn’t let you influence the market price, essentially cutting you off from the real market.

Operational disruption: This involves anything that keeps you from conducting regular trading operations—execution delay, slippage, requotes, or random disconnections. The broker will sometimes do this to play mind games with traders. Emotional traders are more inclined to make errors and lose money to brokers who keep their traders off the B-book.

Tips for identifying forex scams
Look out for these telltale signs that can assist you in recognizing a forex scam and avoid getting caught.

Unsolicited offers: If someone reaches you about a forex investment opportunity out of the blue, it’s probably a scam. Do not provide your personal information or wire them the money.
‘Risk-free’ investing: Investing always comes with a certain level of risk, so any company promising risk-free investment opportunities is potentially a scam.
Unrealistic returns: These scams often promise to generate high returns from your initial investment that are out of this world. Any company offering get-rich-quick investment chances is likely to be a scam.
Time pressure: If a company tries to coerce you into investing quickly, it’s possibly fraudulent. Some scammers even grant bonuses or discounts to convince you to invest right away.
Social media ads: A large number of scammers are using social media to publicize fraudulent investment opportunities. They frequently use images and videos of luxury items to scam people into making an investment.

How to Avoid Scams
Taking your time is the best method for avoiding investment scams. Don’t be hasty in making your decisions, and make sure to weigh all the pros and cons first.

Finding a trustworthy Forex broker is not simple, but you will have a long-term advantage if you put in the effort. When you come across such a Forex broker or agency, the first thing you should do is Google their company name.

Look for customer feedback on reliable websites. If there aren’t any or they sound phony, you should avoid that service provider. You can also read scam reviews to determine if a Forex broker is as trustworthy as claimed.

Also, make sure to search for any pending legal proceedings against the broker. You can, for example,

Check out the Forex forums to see if there are any concerns about fund withdrawals.
And, if so, consult the user who published the complaint and request more information.

Perhaps the user was incorrect or confused, but it never hurts to inquire. A thorough background check will reduce your risks.

Avoid Opportunities That Appear Too Good to Be True.
Simple money? No way! Don’t trust anyone who says it’s simple to make money with something like “20% gain per month.”

It’s utter nonsense because Forex and CFD (contract for difference) trading requires a significant amount of screening time, education, patience, and quick thinking to be profitable. There is no good money to be had here. However, if you devote your time and learn how to trade properly, you may be able to supplement your income.

Additional Security Measures You Can Take
Compare the regulatory authority’s regulations with the terms on the broker’s website to identify discrepancies and anomalies in their terms.

Consult a licensed financial advisor if you don’t trust your own judgment or simply don’t have the time. You can also request proof of business registration before registering with a broker.

When opening an account, be sure to read the entire fine print. When it comes to withdrawing funds, scammers will sometimes use account incentives against the trader.

For example:
If you receive bonus funds and want to withdraw them, a Forex hoaxer may reject that right due to its terms and conditions.
Remember that when you first begin live trading, you should always trade a small volume for a short period of time before attempting a withdrawal. If everything goes well, it is safe to deposit additional funds.

Another indicator of a good or bad broker is the availability of a demo account. If you are not offered this option or are discouraged to use demo trading, you are dealing with a Forex scammer.

To Prevent Trading in Investment Scams, Ask These Questions
Remember, you have the right to ask queries. A few simple questions can tell you whether you’re dealing with a reputable broker or a Forex con artist.

Confirm the company’s registration and company background, and make sure you understand your rights. Bear in mind that any information you got from a prospective new broker must be in text format. Never rely on promises made over the phone or in oral statements.

Consider the following questions to ask yourselves:

What should you do if you realize a broker’s offer isn’t right for you?
How legally binding is the contract?
How simple is it to contact customer service?
Is it possible to contact the broker by phone, Skype, or email?
Is there a physical address listed?
Do they use real people’s names?
Is it a registered company?
Can they provide a track record of performance?

Conclusion
To avoid becoming a victim of a scam, always choose a regulated broker who is well-established, has positive online reviews, and is completely transparent about its fees and compliance policies.

The attraction of quick money and easy cash is always present, which is why you should make certain that you truly understand what it actually takes to become successful at forex trading without relying on quick-fix schemes that put you in danger.

The post Beware of Forex scam appeared first on .