If you’re considering getting into forex trading and you’ve been doing some research about whether or not it’s a legit way to make money, you’ve probably come across lots of warnings about forex trading scams.
Forex is a regulated market and can become a lucrative additional source of income for you, but only if you know how to avoid forex trading scams to keep your funds safe.
In this article, we’ll go through some steps to follow in order to identify and avoid forex scams
Step 1: Know the common forex trading scams
The first tip we have for how to avoid forex trading scams is to learn what to watch out for. Here are a few examples of the most common forex scams:
Price manipulation scams
In a forex price manipulation scam, illegitimate brokers manipulate the spreads they offer and other trading data to make it look like you’re making less money than you are in order to pocket your funds for themselves.
Withdrawal fraud
This is another type of scam that fraudulent forex brokers use to walk away with your money. Instead of even bothering to manipulate data to trick you out of your money, they simply don’t let you withdraw it when you want to. If you try to contact the scam brokers about withdrawing your funds, they may offer a confusing explanation or not even reply to your inquiries at all.
Pyramid schemes
Forex pyramid schemes, or Ponzi and multi-level marketing schemes, are something else to watch out for in the forex trading community. With these types of schemes, someone will try and recruit you into joining some type of investment program that you have to pay upfront to be a part of. They usually do this by promising access to special training and tools that will help you make big returns on your investments.
However, once you’re part of the program, the focus is typically more on getting you to recruit others into the program the same way you were recruited. You’ll be offered small incentives for recruiting people, but most of the money coming in from new sign-ups gets funneled up the pyramid.
Scam bots
Some forex scammers employ forex trading bots that are supposed to make automatic trades for you to consistently make you money. Though legitimate trading bots do exist, the ones scammers use are often untested and unsophisticated, meaning they are much more likely to lose you money than provide you with a good ROI. Any money you pay for using such a trading bot service goes to the scammers.
Fraudulent investment managers
Forex scammers often pose as legitimate investment advisors or managers in order to swindle inexperienced traders out of their funds. They allege to be vastly successful and offer to give you advice in exchange for a fee. They may even work in groups or employ others to write fake reviews of their services to trick unsuspecting investors into the scam.
Of course, the investment advice they give is usually useless, and the money you paid for it is long gone. If you try to claim a refund for the bad investment advice, the scammers just disappear or offer an unsatisfactory explanation for why your trades didn’t work out.
Step 2: Recognizing scammers early
Besides knowing what the common forex scams are, there are some other red flags to watch out for to help you spot potential scammers early on. Here are a few examples:
“Get rich quick” promises.
A top tip for how to identify and avoid forex scams is to beware of any promises that sound too good to be true. The truth about investing is that it takes most people a lot of time and dedication to start making large amounts of money. So, anyone promising huge returns on your initial investments is very likely to be some type of scammer.
Unsolicited marketing
If you’re receiving unsolicited communications about forex trading via email, text, or social media, be very wary of the individual or company sending them. Unless you specifically signed up to receive information from a forex broker, any marketing material you receive could be trying to hook you into falling for any one of the scams mentioned in the section above.
These types of unsolicited communications, especially through social media, are often very pushy and bombard you with the types of “get rich quick” promises mentioned above. Remember that legit brokers or investment advisors shouldn’t reach out to you through your DMs and shouldn’t make any too-good-to-be-true promises.
Unregulated broker sites
Many forex scammers pass themselves off as legitimate brokers and have professional looking sites. However, if you do a little due diligence, you’ll find out that they are unregulated, meaning that they don’t have to answer to anyone for their actions if they make off with your money. If a forex broker is unregulated, that is a HUGE red flag, which brings us to the next step…
Step 3: Only use regulated brokers
The best way to ensure you avoid forex trading scams is to always use regulated broker platforms. What this means is that the brokers are regulated by some type of government agency in the countries where they are based.
For example, in the US, licensed brokers are regulated by the Commodities Futures Trade Commission (CFTC) and the National Futures Association (NFA). In the UK, legitimate brokers are regulated by the Financial Conduct Authority (FCA).
In order to determine if a forex broker is regulated, read all the fine print on their website. There should be information at the bottom of the page and elsewhere on the site that states the specific government bodies that regulate the broker. You can then do some additional research to make sure the information is legit and that the regulating bodies have a good reputation.
If you’ve been scammed by an unregulated forex broker, contact Reclaim Expert today for help recovering your lost funds. Our team is composed of forex trading veterans and cybercrime experts. We will do everything we can to get your money back.
Step 4: Only use reputable brokers
Besides checking to make sure any broker you use is regulated, it’s also important to make sure that they are reputable and that investors have had real success using them. You can do this by reading reviews and opinions on trusted forex trading informational sites and forums.
Here are some examples of reputable forex brokers you can check out:
- CMC Markets
- London Capital Group
- Saxo Capital Markets
- XTB Online Trading
- IG Group
- Pepperstone
- TD Ameritrade
Conclusion
So, now you should have a much better understanding of how to avoid forex trading scams. To reiterate the steps above:
- make sure you know the common forex trading scams
- know how to recognize scammers early
- only use regulated forex brokers
- and only use reputable forex brokers
If you follow these rules for investing in forex, you can make legitimate trades on the market to make money.
Remember that if you do get scammed, there are ways to get your money back. For help with recovering funds after any type of forex scam, contact Reclaim Expert today. Our team will get to work reviewing your case and the evidence right away to determine the best course of action.