Forex trading is a legal way to supplement your income. But, there has been an increase in forex scams. Before you start trading, it’s critical to understand how to spot a forex scam.
The Forex market (FX) is the world’s largest trading platform with over $5 trillion daily trading. Also, the market runs for 24 hours daily – so, when trading ends in New York, for example, it starts again in Hong Kong and Tokyo.
However, the cycle goes round and round again. This volatile market can make one lose or gain money due to price fluctuations, so there is a need to be mindful of Forex scams. Forex trading is instantaneous at the FX market, and currencies are traded in pairs like the United Kingdom’s (£) with the United States ($) or the United States ($) with EURO.
Many people have fallen victim to Forex scams. Frequently, the scammers capitalize on traders’ inexperience–which has made several potential traders not consider trading at all.
Forex scams became very popular in 2008, but this does not mean all the online trading platforms advertised bogus profits are scams.
The following are the common types of Forex scams to be aware of:
This is one of the oldest Forex scams where scammers offer bogus bid/ask spreads. It becomes impossible to make money on trades because all potential profits on investments are cancelled and transferred to the brokers. However, this is why there are strict spread regulations that allow only small spreads. But many brokers are not regulated by any financial body, making it possible for any newbie to fall prey to their scam.
The structure looks like a pyramid where the highest investor (most times the owner of the scheme) gets new members that settle the upfront fees of the recruiter. So, the recruited members get their down-lines who pay the upfront fees of their recruiters. Also, the higher you go on the pyramid scheme – the more money you earn. Therefore, this business model is similar to MLM, where no tangible goods are sold. Therefore, Is Forex a pyramid scheme? No, it’s not, but the pyramid scheme is designed around Forex, the stock market, real estate, and other legitimate forms of investments.
These are primarily retail firms, managed account companies, pooled asset managers that use a system for daily, weekly, or monthly fees. They claim to know the best time to sell or buy currency pairs using their false professional experience with promises of wealth.
‘Trading bot’ is a computer algorithm that automatically carries out Forex trading – with MetaTrader as the most popular and legitimate trading bot. Also, there are countless scam trading bots in the market where new traders fall victim. These trading bots cannot make any money because they are unable to make an informed decision. They only use previous market data to design patterns which later fails to work.
It is usually advisable not to subscribe to platforms with a get-rich-quick formula. The withdrawal fraud scam is another scam where a trader cannot withdraw funds from the account. At this juncture, when you inquire – the broker doesn’t respond or is unable to give detailed explanations.
The answer is yes. A Forex broker can steal your money. In addition to price-fixing, they can also trade against you. For example, using the USD/EUR market – if you and your broker get into the same trade at a certain point and unfortunately, the market moves against you.
The price goes down, and the broker might offer a much lower price so you can leave. So, once you exit – the broker is left with the actual price and the price you were told, making all the profit accrued to him.
These are some of the most common types of Forex account management scams to watch out for;
The Forex broker charges a commission in return for initiating the buying or selling of orders. This commission is charged per transaction or per spread. This is how they make their money.
The difference between the asking and bid price for the trade is called a spread. The asking price is the amount paid for buying a currency, while the bid price is the amount you receive for selling a currency. So, the difference between these two is the broker’s spread.
Besides, in some cases, the broker might charge both spread and commission on trade while others might be offering a commission-free transaction (the broker is probably making some amount by widening the spread)
Go through the following steps to withdraw money from your brokerage account:
whenever you are contacted just out of the blue on Forex investment, it’s likely to be a fraud. Do not make any money transfer or give out personal details if they request it.
Forex scams are usually associated with unrealistic returns from the initial investment. Therefore, be wary of firms offering get-rich-quick opportunities – this is likely to be a scam. A good example is the Forex entourage scam.
recently, scammers have been using social media to advertise their fraudulent investment openings. They use luxurious images and videos to trick unsuspecting clients into making investments. Watch out for the Forex scam on Instagram.
any time you are under pressure from any firm to invest, it’s likely to be a fraud. Besides, some of the scammers will attach a mouth-watering bonus to your investment if done within the time frame given.
there is no investment without any form of risk attached to it, so any firm offering opportunities devoid of any risk is likely to be a scam. Be wary of the Forex academy scam.
If you’re a victim of a Forex scam, you must be thinking about how to get your funds back.
Several firms could help you get your funds back – they help gather evidence, analyze the case, visit the broker, and recover the fund—however, you’ll pay for their service.
The following are a few steps that you can take on your own in a bid to get your funds back from Forex Scam:
For instance, in the United States – there is the NFA (National Futures Association) with a dedicated platform for attending to trading fraud complaints. After receiving the complaint, they contact the firm, and if the firm is found guilty – they might lose their license and pay fines. Because they do not want this to happen – the fund gets refunded immediately to the victims.
I hope this has been helpful? These are essential facts that you need to know about Forex trading scams. Before embarking on any investment, it’s advisable to carry out a thorough background check on any online Forex broker by checking with bodies like NFA (National Futures Association. Also, be sure that the broker is duly regulated and is offering low-risk trading investment. Do not be carried away by unrealistic and bogus returns on investment – this could be a trap to make you lose your assets.
And if you find yourself as a victim of forex scams there’s a way you can get your money back. Golden Recovery can help you get your money back with less hassle. Book a free consultation to get started.
If you were ever fooled, or have fallen victim to a silver tongued “broker” binary options, if you lost money to “get rich quick” or “returns guaranteed”. If your unsure of your brokers intent, do not hesitate to reach out to us. Many people are the unwitting victims of online trading scammers, we at Golden-Recovery.com have formed a winning team of experts in order to help you sleep better at night. Reach out for your free consultation and our team of financial investigators will reach out to you as soon as humanly possible.