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With the forex industry consistently growing every day, it is becoming increasingly difficult to avoid scams. People are trying to steal your hard earned money at every corner. You need to avoid these scams in order to become a successful trader. And here is all you need to know:

What is a Forex Scam

The phrase forex scam refers to a strategy that con artists employ to defraud traders in the foreign exchange market by pretending to provide them with a trading system that would enable them to make a significant profit in a very short amount of time.

According to the CFTC, forex scams have been an increasingly widespread sort of fraud since the beginning of 2008. It by no means implies that any online trading platform that promises large profits is operating a fraudulent operation. This is due to the fact that big earnings can be made, but it is not feasible to promise each customer a simple and quick way to make money.

Popular Forex Trading Scams

Con artists all over the world are always developing new methods and concepts for Forex frauds in order to mislead unsuspecting victims. You should be aware of the following types of Forex scams since they are the most common and widespread:

Pyramid Scheme

The Forex Pyramid Scheme is a business concept that is not only unsustainable but also dubious, and it is even illegal in most countries. Because its structure is similar to that of a pyramid, it has been given the name of a pyramid scheme.

The top-level investors in the Forex pyramid scheme are responsible for recruiting new paying members, who in turn are responsible for paying the upfront fees of the recruiter. The newly recruited members then recruit their own underlings, who are responsible for paying the first fees to their own recruiters, and so on and so on.

To put it another way, the owner and further recruiter make their money not by trading Forex but rather from the fees paid by the newly recruited members. The further up a particular trader is in the pyramid, the more income that trader will produce as a result of their position.

Spread Scam

One of the oldest types of Forex scams is called a spread scam, and it occurs when con artists on particular currency pairings promise exceptionally big spreads. As a direct consequence of this, it becomes extremely difficult to generate income through trading.

Additionally, because to the commissions, any possible gains that a trader may have earned from his investment are cancelled out and sent to the broker instead of the trader. Because of this, financial authorities all over the world have issued stringent spread laws, according to which only very modest spreads are permitted.

However, the foreign exchange market is filled with many different brokers, many of whom are not regulated by any government or private organization. Because of this, it is possible for any novice trader to become a victim of such a scam if they do not have the necessary information.

Signal Scam

It is possible to locate online platforms that make the claim that they offer solutions that tell traders about the optimal time to buy and sell currency pairs to make a profit. These platforms may be found online. Scams of this nature are known as “signal seller scams,” and the majority of the time, investment account businesses, pooled asset managers, and retail traders are the ones who start them.

Fees for trading advice can be charged on a monthly, weekly, or even a daily basis by organizations or people with enticing portfolios to beginner investors. This procedure can be either automatic or manual, or it can be a combination of the two, depending on the current trends in the market and the technical analysis. The majority of the time, signal dealers disappear after taking the trader’s money and leaving them high and dry.

Withdrawal Fraud

Bear in mind that those individuals who desire to make money extremely rapidly are the ones who are most likely to fall prey to fraudulent Forex trading schemes. Because of this, we strongly advise you to steer clear of any platform or service that comes with the mindset of getting wealthy quickly.

One of the most popular kinds of Forex scams is called withdrawal fraud, and it occurs when a trader is prevented from taking money out of his or her account. In these kinds of circumstances, when the trader makes an inquiry, the broker either does not answer at all or offers an apology that is muddled and vague. Because of this, it is very necessary to select a broker who is not only licensed but also respected and who is also regulated by a well-known financial institution.

Bot Scam

A computer algorithm known as a Forex Robot or Trading Bot is used to automatically execute foreign exchange trades in the market. MetaTrader is widely recognized as both a reputable and popular automated trading platform. However, it is important to keep in mind that there are also a great number of cons operating in this industry.

New traders are typically the ones that fall prey to this form of a con, in which the con artist sells a trading bot that is incapable of generating any revenue for the trader. It indicates that the so-called trading bot is unable to make judgments based on accurate information. Instead, it is based on a process called curve fitting, which makes use of historical data from the market and develops consistent patterns. But despite appearances, the market does not always act in the same manner as it did in the past.

Features of a Forex Scammer

Because con artists and con artists put a lot of work into convincing others, it can be a little bit difficult to recognize them when they are trying to pull a fast one on you. On the other hand, you may avoid falling victim to Forex con artists by reading the following:

Quick Money

Trading foreign currencies may unquestionably provide a comfortable life, but like any other means of income generation, it requires an investment of time, energy, and expertise. Consider it a warning sign if any online trading platform or service guarantees or claims that you’ll become wealthy in a short amount of time. You should get started looking for other options and try to find a broker who is regulated.

Success Guarantee

Regarding the foreign exchange market, there is nothing that any knowledgeable person, well-known broker, or any other business can promise. The foreign currency market is essentially a chaotic system that is determined by an excessive number of variables and circumstances that can’t all be accounted for. As a direct consequence of this, anything might take place at any time, which implies that no trader can completely eliminate the risk aspect. As a result, if you overhear someone brag or say that they can guarantee your success, you should consider it to be a fraud, report it, and then leave the area.

Background Information

If you have ever dealt with any online trading platform that is considered to be trustworthy, then you are already aware that they make their contact and address information readily available to the public. It is never a good idea to place all of your faith in the graphs and flowcharts. Their purpose is to explain the success of a certain platform.

Consider conducting research to uncover the history of the situation as well as the official profit and loss figures. Examine the company’s licensing, terms and conditions, as well as their contact details. We strongly suggest that you select only the online Forex trading platform that has a demo account. With this type of account, you may try the platform’s services without risking any of your own money. First and foremost, check to see if the brokerage firm you’re thinking about using is supervised. Especially by any well-known financial organizations in your region.

Too Much Marketing

In most cases, one of the most obvious warning indicators of dishonest operations is the presence of persistent and unwanted marketing. Someone could try to offer foreign exchange services to you with insufficient information. If they do, they are almost certainly attempting to defraud you.

It is important to keep in mind that you need to be ready to a trading account. Otherwise, no reputable online trading platform would require you to disclose any of your personal information. Only a con artist will ask you for your personal information. They can use this against you.

7 Tips to Avoid Forex Trading Scams in Brokers

  1. Check whether the Forex broker has a Proper License or Not. If you want to check the broker license, you can ask to the broker directly. You can do this through live chat or email. You can also search on the broker’s website and verify it through that country’s government site.
  2. Check whether the brokerage company is registered under which country financial department and Regulations.
  3. Don’t try to trade with a very low spread broker. Most of them are B-book.
  4. A Good Broker should have ECN(Electronic Communication Network) (or) STP(Straight Through Processing) account types.
  5. Check the Broker’s Spread and Commission details in Live Account, before Investing your real money.
  6. Check the Payment methods Which is suitable for your Transaction. (Credit Card/Debit Card, Bank Wire, Paypal, Neteller, Skrill, Webmoney, Perfect Money, UPay, CashU and other Ecurrency methods)
  7. Check the Withdrawal processing time from Forex Broker to your payment method. According to our experience, Withdrawals through Ecurrencies take a maximum of 72 hours. Bank Wire take from 2 to 10 Business working days.

Conclusion on Forex Trading Scams

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Thank you.

1 thoughts on "Avoid Forex Trading Scams – 7 Tips to Identify Fraudulent Brokers"

  • April 30, 2016 at 12:19 pm

    You’re a real deep thkneir. Thanks for sharing.

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