Retail Forex is a booming industry, especially now during the Coronavirus pandemic where most traders take advantage of falling asset prices to make profits. But as booming as it is, fraudulent activities associated with Forex trading are also on the rise.
Scams which promise overnight returns by selling you trading robots or trading on your behalf.
Unregulated brokers also do exist to prey on unknowing traders who have insufficient knowledge about the Forex markets and how things really run.
It is not only newbies who find themselves in such traps because experienced traders may also be caught up with Scams deceiving them with allegedly 100% forex signals with promises of huge sums of profits.
All these are real and are happening right now in the Forex industry.
Will you be caught up in a scenario where you will fall prey to Scams and fraudsters?
Not after you have read through today’s article – Most common Forex Scams and How to Keep yourself Safe.
Most Common Forex Scams.
As we might have hinted in the introduction, most common Forex Scams come wrapped in already established forms.
At least if nothing else will, this should make it easy for you to quickly and easily spot them and keep off.
These most common Forex scams have identified themselves specific niches in the Forex Industry and come in the following forms;
- Forex Robot Selling Scams.
- Forex Signal Selling Scams.
- Brokerage Firm Scams.
- Account management Scams.
1. Forex Robot Selling Scams.
Forex Robots are automated softwares that are plugged into trading accounts to carry out trading activities on behalf of human traders.
The catch is, you will be relaxing, waiting for the profits because a machine will do the trading for you.
I know that sounds heavenly, doesn’t it?
Of course, it does and you would agree to the offer immediately just to save yourself the emotional and physical torment that comes with trading.
Trading may at times be one hell of emotional torture and fatigue which you would do anything to get away from if only anything else could do the trading.
Now imagine you are in that state where trading has really wearied both your body and your soul and someone approaches you to purchase a trading robot.
An angelic encounter, right?
Come on you are just about to kiss the emotional torment and fatigue of trading goodbye because the software has come to replace you but not at the expense of your profits.
As if that is not enough, this software, as put across by the Robot seller, is bound to generate huge profits that you will be tired of winning.
Profits you might never have achieved all of your trading years summed! interestingly, you can also earn these profits while you sleep. Provided your robot is on and trading.
Oh, the naivety of an uninformed trader.
Can I tell you the truth?
Most of these Forex Robots do not actually end up performing as those 100% efficient machines your seller presented to you.
The truth actually is, you may even end up suffering remarkable losses that you may never even have suffered before.
Most of those softwares do not get to be tested not only sufficiently by the developers but also by independent parties to determine their efficiency.
Are you still going to fall prey to fake trading robots?
I guess not after this awakening.
Realize that there is no short cut in forex trading.
You need that experience, so invest the time and endure the psychological implications to gain that gem of an experience.
If you really have to, like really have to purchase a trading robot, then proper prior search and research will help. Know who is genuine and who is not.
2. Forex Signal Selling Scams.
Forex Signals are a kind of advice on the direction of price movement and when to Buy or Sell while trading.
If the signal implies a Buy then you would be better suited to enter a Buy position, just as you would enter a Sell position if the signal implied a Sell.
You already can see where the scammer will catch you.
You do not need to carry out any market research nor any technical analysis because all that has been done for you.
The only thing you need to do is to relax and wait for the signal to be relayed to you on whether to Buy or Sell and maybe where to place your stop loss and Take profit.
Market research and that technical and fundamental analysis can be so tiring and a lot of work to do. You would do anything to avoid doing any analysis on those charts if anyone else could do it all for you.
Well then, Forex Signal sellers got you covered and are now here to strike a deal with you. You would never deny such a deal of course, would you?
You are being assured that this signal developer relies on proper market research, fundamental and technical analysis to generate signals.
The signal developer will relay an automatic or even a manual message to you every other time in order for you to execute a trade.
These signals, according to the seller, will perform excellently and earn you profits you may never have earned before.
Okay, if you want, go ahead and purchase that offer.
Later on. you may realize that those signals will most times be wrong leading to huge losses you may not even have incurred before.
Carry out your research and you may find out that no market research or analysis is actually done in developing the signals – their interest is in making money from you!!
What then should you do?
Avoid overly ambitious signal sellers promising excessively excellently performing signals.
Develop your own strategy and use it to generate your signals as you have always done. Remember, you need that experience and there is no shortcut in Forex.
However, if you really have to rely on those signals, carry out proper research, and deal with only signal sellers who are approved by Financial advisors.
3. Brokerage Firm Scams.
Brokerage firms will also come as Scams.
This is so because what would you call an unregulated broker who is also dishonest? A Scam, definitely.
When going through various social media platforms and search engines, Forex broker Ads will almost choke you to death.
So many of the Ads, each advertising a different forex broker. Some of these Ads advertise genuine regulated and honest brokers while others advertise fake unregulated and dishonest scammers disguised as Forex brokers.
You cannot tell at a glance of the Ad who is genuine and who is not. And not being sure is likely to lead you to choose a scammer for a broker, unknowingly because you couldn’t tell.
Genuine brokers will always be regulated within recognized jurisdictions.
If at all a regulated broker is involved in any fraud, then it will be grilled and held accountable by their regulators.
Fake brokers will also boast of regulation but this time, you will realize that they use unrecognized regulators who may be so difficult to trace.
Note: – Properly regulated brokers will be held accountable by their regulator if they commit any fraud.
How about an unregulated broker who claims a non-existent regulator?
Who holds them accountable for committing crimes?
Of course, no one. Be careful not to get scammed.
Regulation by a recognized and reknown regulator is the number one check for Genuine versus a Fake broker.
You need to carry out that research to ensure that the broker you want to join is properly licensed and regulated lest you join the dreaded forex scams.
If you make the mistake of joining a fake broker, then your money might remain stuck with them in the form of unprocessed withdrawals, limited withdrawal limits, and poor execution of trades leading to losses.
Another way you can lose money with forex scams is unfulfilled stop-loss orders.
The broker will blame slippage caused by technical problems for failing to execute such orders.
Beware that your broker will not provide you fake conditions on the Demo account then expose you to totally different conditions once you go live – such is also a very clear way to lose money to the broker.
These Scams may not have viable and reachable support teams and added to the fact that they are not regulated, you will have no choice but to count your losses if you realize something fishy.
What then do you do to be safe?
Properly carry out research, read those reviews, and ensure that the broker is properly regulated. Licensed and regulated brokers are most likely to carry out activities in the interest of the trader.
We recommend brokers licensed and regulated by;
- Cyprus Stocks and Exchange Commission (CySEC) in Cyprus.
- Malta Financial Services Authority (MFSA) in Malta.
- Finanstilsynet (FSA) in Denmark.
- Financial Market Authority (FMA) in Austria.
- Financial Conduct Authority (FCA) in UK.
- Australian Securities and Investments Commission (ASIC) in Australia.
- Financial Sector Conduct Authority (FSCA) in South Africa.
- Capital Markets Authority (CMA) in Kenya.
4. Account Management Scams.
Have you met Ads of companies promising to double your funds really quickly by investing in Forex trading? Well, you may not earn those funds after all.
Forex Account management companies may be companies or individuals who want you to give them your money to manage your trading account.
They will then promise a certain percentage of returns within a specified period say 24 hours (For example, 50% returns in 24 hours).
Imagine just having to give money and wait for profits? That must sound so attractive and worth it.
The entities will provide detailed investment schemes with various amounts to be invested and timelines with different percentages of profits to be earned.
If it is individuals they will offer to trade on your behalf and generate huge profits to be shared between you and them.
Fresh unsuspecting newbies are most likely to fall prey to such traps and invest huge sums of money because of course the more you invest the more return you get.
Your money, as they put it, will work for you as you sleep, only to wake up to profit alerts and monies flowing into your account.
These are often Scams who only want your money and nothing for your good.
Do not trust those huge numbers you are being promised because I can tell you that Forex is not a lottery to be won.
Begin small, learn, and gain that experience – those baby steps matter.
Forex is not the place to get rich overnight.
If someone comes claiming to help you earn millions in a day in Forex, keep away from them.
You will need to train, lose, and gain, lose more than you gain, and eventually learn how things work.
It is until then that you will be a consistently profitable trader.
If accounts can be managed to earn profits, then let the account manager be you, being in control of everything. Do not trust someone promising to make you rich so quickly.
Wrapping Up Forex Scams and How to Be Safe.
In conclusion, ensure you don’t fall prey to these common scams by;
- Seeking Forex education to be able to trade for yourself without relying on robots, external signals, and account managers.
- Carrying out research and reading reviews on every broker you are about to join to ensure they are properly regulated by a recognized regulator.
- Starting trading with Demo accounts to learn the broker platform interface to gauge its suitability. Fake brokers will have problematic platforms and interfaces.
- Not falling prey to opportunities that seem so good to be true. Remember you don’t get rich overnight, even in Forex.