Forex Trading Scams You Should Avoid At All Costs Nowadays

Have you ever thought about what are the most common Forex trading scams you should avoid? Are you into foreign exchange for a while, bumping into “too good to be true” trading systems and software that are available online? Do you know how many types of Forex scams there are exactly?

First of all, the forex market is a legitimate place to make money and profits. However, not everything in there is good. Forex trading scams exist, and you should learn to spot them to avoid them. In this article, we’re going to dissect different broker scams. 

If you are into foreign currency and looking for a fantastic investment opportunity, it is crucial to understand that there are a lot of Forex trading scams out there that you should keep in mind first. Among them are also signal sellers, dishonest brokers, and others. 

So, how to spot one particular Forex scam? What is essential to know regarding all this? Let’s kick this off now.

Signal Sellers – tells when it’s the best time to buy or sell

Forex trading platforms nowadays follow algorithms. Thanks to the new technological advancements, these algorithms can provide signals to traders. Signal seller scams are among the most common Forex trading scams found online.

The signals, then, give them ideas about the next price movement of the asset. These systems let the traders position themselves ahead of the curve. It’s like an early warning device that tells you when to buy or sell.

Taking advantage of the system

Now, some brokers who commit forex trading scams take advantage of this system.

Signal sellers simply offer a system that, they say, identifies good times for buying or selling. This system can be found on their forex trading platforms.

You can do it manually, where you put the trading info, and they provide you with a signal. Other times, it’s automatic. Automatic systems will put on a trade when a signal shows itself.

Some sellers depend on technical analysis to justify their signals, while others base it on the news. Many use a combination of both.

The common ground is that they claim these signals offer you good clues about what to do next. Of course, their signals come at a price. You may either pay per signal, or it’s a part of their brokerage services.

Criticisms of Signal Sellers

Most often, it’s easy to criticize such systems. You can simply ask, why would they sell signals on widely available info? You would think they should use this unbelievable system for their own advantage.

Of course, there are others that really do provide signals to their clients. But the difference is that these scammers usually disproportionately tout their systems as the best.

Another important thing is this: is it really possible to predict the next move in the market?

One way to work your way out of this scam is to try their signals using demo accounts. Take some time and see whether it’s really as efficient as they claim it to be.

Dishonest Brokers – not acting in the client’s best interest

One of the forex market’s unique characteristics is its lack of a central regulatory body. The spot forex market, for one, is totally on its own. There’s no regulator for it. That’s why it’s easy to see how some brokers try to take advantage of this by not dealing fairly with their clients. It’s not really uncommon for a broker to defraud a trader.

If you want to trade currency pairs, finding yourself a good Forex broker is essential. Finding a regulated broker nowadays is the number one priority for many motivated and ambitious traders since numerous dishonest brokers may steal the personal data of their clients. These brokers also represent Forex trading scams that you should avoid at all costs!

Luckily, there’s a way to avoid such brokers. You can pick a forex broker that also deals with stock market trades. Unlike the forex market, the stock market follows regulatory bodies like the Securities and Exchange Commission. 

FINRA Regulatory Body

Another regulatory body is the Financial Industry Regulatory Authority (FINRA). But don’t misunderstand that. You can still trade with a forex broker as long as it also handles stocks.

The Forex trade doesn’t go under any regulation, but the stock trades do. A broker that deals with stocks follows regulations from the SEC and the FINRA.

They wouldn’t risk losing their license for other securities. So, they probably wouldn’t defraud you as their forex trader.

Phony Forex Investment Management Funds

First off, what’s a Forex management fund? This type of fund or trading account is where you let an account manager trade on your behalf. You deposit funds, and then the manager does the job.

The goal of this account is to alleviate your difficulty in terms of making decisions for your trade. You’re basically free to use your time for other things. 

Maybe you want to spend time with your family, or you want to go jet skiing in Tibet.

This is ideal for those who have another career to pursue. You don’t have to deal with the trading process personally. Sounds tight, right? Unfortunately, this can be another of those forex trading scams.

How does it work exactly?

It’s easy to see where the problem lies here. The fund purports that the manager is “highly skilled” and will handle your account. Then, they ask you to give up control of your money.

That sounds problematic right off the crack. Most of the time, you know very little about the fund manager. Forex trading scammers usually describe these managers with a record of success, which may be false. It’s also super hyped up on their websites.

There’s a huge chance you’ll end up with nothing. The fund manager may get away with it and live on your money.

How to best spot Forex trading scams nowadays?

As you’ve seen, there are different types of Forex scams; one of the main questions is – How to spot them? In which way can you ensure you’ve encountered Forex trading scams if you wish to trade legitimately?

Robot scamming in Forex isn’t so rare. Besides these types of scams listed above, you can also encounter the following fraudulent activities: 

• EA and/or Trading Robot Scams: Beware of scammers offering unrealistic automated trading solutions. Red flags to look out for include promises of guaranteed profits and claims of 100% accuracy. Another scam is offering free software in exchange for depositing with a specific broker, which is simply a ploy to earn commissions.
• “Holy Grail” scam: Forex scammers exploit the difficulty in finding the best trading opportunities by offering a mythical “holy grail” trading system that promises unlimited profits 24/7/365. These scams lure naive investors into believing that they can earn massive profits without any risk. Any promotion of a “holy grail” trading system that claims to guarantee profits and prevent losses is a scam and should be avoided.
• The “Guaranteed Returns” scam involves luring investors to join a Forex trading service or company that promises fixed profits. However, this is a blatant scam as Forex trading is highly unpredictable and involves both profits and losses. It is impossible to forecast or generate guaranteed profits from the market. Anyone claiming otherwise and offering foolproof strategies is simply trying to deceive investors and take their money.

How to avoid Forex trading scams?

To avoid broker scams, it’s crucial to identify and avoid them entirely, as they can be more subtle and disastrous than other scams. One way to do this is to ensure that the broker is regulated by respected agencies such as ASIC, FSA, FSCA, and FFAJ. 

Regulated brokers must have segregated bank accounts for client funds, undergo platform checks, and avoid unfounded claims and dubious marketing tactics. Additionally, investors can check online reviews from trustworthy sites to read about other traders’ experiences and investigate complaints, safety, and security issues.