Mention the words “Forex trading” to many people and their first reaction is “it’s a scam”. This is unfortunate because there are a lot of Forex brokers that provide a service that traders can use to make money. However, the industry attracts fraudsters at all levels, from unscrupulous, typically unregulated brokers, to dubious signal sellers and beyond. Read on to learn about the kind of forex scams you need to watch out for and avoid.
Beware of these common forex scams:
- Robot trading forex scams
- Forex signal sellers scams
- Multilevel Marketing Forex Scams
- Broker scams
Risk has always been an integral part of any form of investment that involves speculation. However, in most cases, a legitimate investment will also give the trader a very good chance of making some profit if they make the right decisions.
On the other hand, with a forex scam, you are guaranteed to lose your money because scammers and fraudsters are only there to take every penny from your pocket.
Much of the daily forex trading volume is driven by robot traders who seek out and identify good opportunities to make a profit among the huge pile of stock market data generated by trading platforms.
While robot traders have many proven advantages, they have also opened the door to unscrupulous online fraudsters. These individuals make their living selling unrealistic promises to inexperienced traders using clever wording, fake reviews/testimonials and other pressure tactics designed to convince you that their trading robots will make you rich.
The trader will end up paying for the fake bot and also end up losing all the funds they entrust to this software. If you must rely on software, create your trading parameters or trust legitimate, well-known platforms.
How will inexperienced traders or those who don’t have time for technical analysis handle the trades? They buy what is known as trading signals from companies that specialize in these types of transactions.
In most cases, a merchant can choose either a weekly, monthly or yearly subscription. But the problem is that some of these signal sellers do not do any technical analysis at all, so what the unsuspecting trader is buying is just randomly generated data that puts them at great risk of losing money.
It is unwise to rely on information you have purchased from unknown entities whose past performance you do not know. However, many traders still fall for the same scam and as a result end up thinking that all forex trading is fake.
As in any industry that has a high turnover rate, forex trading it has attracted many companies that specialize in multi-level marketing.
What these companies do is they invite traders to sign up on their platforms for a subscription fee and in return the companies provide them with educational materials, tips, signals or any other forex related service.
Once a merchant has signed up, they will receive small incentives to recruit other merchants who will recruit more and more. In this way, the company generates funds through subscription fees without providing any useful service to the merchant.
Eventually, the trader realizes that he has spent more time and money on recruiting events than actually trading. But by then it’s too late because their subscription won’t be refunded.
The MLM company simply moves on to the next unsuspecting marketer, usually after rebranding to avoid negative publicity.
You cannot trade forex without going through a broker. However, some of these brokers are not what they seem. If you are unlucky, you may end up with one of the many unreliable and dishonest brokers that populate the internet.
These scammers are specialists when it comes to finding ways to take your hard earned money. From providing false information to charging unnecessarily high fees, they know every trick in the book.
The worst kinds of fake brokers are the unregulated ones who use fake profiles and contact details to make sure that if you want to take legal action, there will be no way to find them.
Since you have no choice but to choose a broker before you can trade forex online, the best thing you can do for yourself is to do a thorough review of your chosen broker before handing over any money.
Forex brokers we recommend in your region
Forex trading is only legitimate if you trust the right broker or other third party service providers. The industry is full of scammers, but some traders still make an honest living from trading forex.
With a little care and due diligence, you too can avoid the scammers and experience the other side of forex trading where individuals profit from a few good decisions.
Every merchant must take steps to protect themselves from fraudsters. The following steps are the best ways to ensure you don’t get scammed when trading forex:
- Avoid any guarantees – The Forex market is constantly changing and nothing is ever guaranteed. A currency can be strong one minute only to nose dive the next. Even experienced traders cannot predict what will happen. Anyone who says you are guaranteed to make money is lying to you.
- Do a background check – The power of the internet is at your disposal, so run background checks on your broker and see what comes up. Brokers will try to show you pictures, charts and numbers that support their claims, but you shouldn’t pay attention to them. Base your decision on the information you dig up yourself, especially if it comes from other traders who have used the broker before.
- Reject unsolicited marketing – Any broker that is legitimate and has a track record of providing good service does not need to go around reaching out to customers and using high pressure sales tactics. This is a sure sign of a broker who is on a mission to get traders at all costs, something you need to watch out for. Withhold your money and personal information until you are sure you are dealing with a legitimate entity.
Despite your best efforts, you can fall victim to a forex scam. What do you do in that case?
It is best to contact Commodity futures trading Commission. If you act quickly, there may be some hope of getting your money back by reversing the bank transaction.
There is a lot of potential to make big profits through forex trading, but only if you do it the right way, use the right broker and don’t become another victim of forex scams.
If you use the information in this article as a weapon, you will be better equipped to identify scammers from miles away.
How Can You Protect Yourself From Forex Scams?
Educating yourself about forex scams and doing your due diligence on any broker you intend to sign up with are the best ways to protect yourself from the many forex scammers.
What are the best ways to check with a forex broker?
The Internet is the best place to get information about a potential broker. Rely on feedback from other traders rather than all the “proofs” the broker tries to show you.
What is the best way to avoid Forex scams?
Forex scams usually target people who fall for the trick with a 100% guarantee. If you want to avoid being scammed, never register with a broker that promises unrealistic profits in a short time.
Go for reputable brokers who offer advice and the necessary tools for online trading while being realistic about the risks involved.
What should I do after being scammed by fraudulent forex traders?
As soon as you suspect that you have been scammed, you should report it to the authorities immediately. Do not engage further with scammers as they will only try to take more money from you. Ask the Commodity Futures Trading Commission for help.
Can you get scammed on Forex?
Yes, if you are not careful, there is a real possibility of getting scammed when trading forex. However, with proper research and vigilance, you can avoid scammers and only trade with legitimate brokers.
How do you spot fake forex?
When you know the signs of a fake forex service provider, it is easy to spot it. Beware of unrealistic guarantees, pushy sales tactics, unclear background information, dubious testimonials and abnormally high fees.
Can Forex be trusted?
Yes, forex is a trusted type of investment that many people not only rely on, but also profit significantly from. However, this does not mean that all forex brokers can be trusted, as there are certainly a large number of fraudsters that you need to watch out for.