Forex has quickly green in popularity in recent years. Once it was reserved for financial experts but today pretty much anyone can join in on the fun and start their own forex trading. All of this newly gained popularity has brought to the industry a new threat, elaborate scams!
Getting scammed has never been easier since there are a lot of intricate and highly believable scams that inexperienced traders can fall for. So knowing the basics in how to spot a forex scam and how to avoid them is very important. The sooner you learn this the more likely you will have success in your forex trading adventures.
What Are The Most Common Scams?
There are a lot of different forex scams that you should avoid in any way possible, but here are the most common ones that you will face on your forex journey.
Automated Trading Programs
These programs are usually aimed at newcomers to the industry. They promise incredible returns on even the smallest of investments. The usual pitch is that there is some advanced AI trading the optimal currencies at any time, leaving you with huge profits without having to do any work at all. As you might guess, this is not how it works and you will lose your money.
These are similar to the previous examples. Signal sellers usually offer some way of identifying the perfect time when to buy or sell currency pairs for you to make the most money. While there are some who aren’t actively trying to scam you, anyone, who says they can predict the market is either lying or overestimating their abilities.
There are a lot of fake brokers fighting for your business. They will often try and use your capital to try and gain some personal wealth while wasting your money and never giving you any of it back. Before working with a broker check that they are actually who they claim to be.
Investment Management Funds
Some scams consist of tricking users to sign up for some investment management funds that will trade the customers’ money for them. Of course, promising some incredible profits in the process. Once you deposit your money to these “investing management funds” they are as good as gone.
How To Spot Forex Scams?
Sometimes spotting a scam can be hard, but there are a couple of red flags that you can check for. If you check at least one of these, it is likely that the offer you are getting is a scam. And checking a few of these flags make all of that even more suspicious.
- Incredible Profit Claims
- No Live Trading Data, only historical data
- Incredibly high win/loss ratio
- No named contacts or way to get ahold of those contacts
- Poor reviews
- Offshore HQ
- No prior information
- Asking large sums of money in advance
While these aren’t the best ways to gauge a forex offer, they are surefire ways to decrease the likelihood of you getting scammed by them.