The Forex market is one of the largest financial markets in the world with it trading over $5 trillion per day. Forex allows central banks to trade with each other, allows holidaymakers to visit new destinations and also allows speculators to take advantage due to it trading 5 days a week, 24 hours a day.
Many once thought the overall trading of Forex was a scam years ago, but it isn’t. It has now become extremely easy to access for anyone with a couple of clicks from a button, you could be trading whatever currencies you want, from Japanese Yen to US dollars, there are hundreds of currencies out there to trade, it just takes some research and also depends on what interests you.
Many wonder whether Forex trading is lucrative or if can they get rich from trading Forex. While you can earn a lot of money, it isn’t easy and requires some research and a good education in investing and risk management techniques to go far. Due to Forex being lucrative, you will no doubt get unscrupulous characters trying to get your money by scamming you. Unfortunately, these scams will always be around for as long as Forex continues. As new schemes evolve, there is always a scammer watching and waiting to steal your money.
There are many forms of investment scams out there and some scams are even named after their creator such as the Ponzi scheme that is named after Charles Ponzi. Forex scammers will target beginner traders as well as uneducated traders. The best way to avoid scams is to research and gain a good education on Forex trading and various markets before you start. Forex scammers will often provide opportunities that are simply too good to be true which entices beginners to put money into it. In this article, we will go through how to identify Forex scams and how to avoid them.
How To Spot A Scam
There is a vast array of scams out there, but many ask whether Forex is a pyramid scheme. For those who are wondering, no, it isn’t. There are many types of scams out there and it is important to understand the clear giveaways such as a scammer will often promise high returns with no financial risk.
The truth is, there is never going to be a 100% guarantee, and if there was, you wouldn’t know about it. People don’t give this information away. When you are a beginner investor, these offers may seem very attractive. But if something sounds too good to be true, it usually is.
Here are some rules to live by when trading:
- Stay safe, don’t run after an empty promise
- Be extremely critical with any software that states they have a secret (they don’t)
- Do not install any software, until you know it’s legit.
The other giveaway to scammers is the fact that they never register with a regulated authority. Legitimate brokers will always show proof of their legitimacy. When you suspect there is a Forex trader that is lying about their legitimacy, you can contact these regulated authorities and they will be able to provide a list of the organisations that are regulated. This will help you to determine which traders to deal with and who not to deal with.
Common Forex Trading Scams
People involved in forex or general investment scams are always looking for new and innovative methods to part you with your money. However, there are some key scams that people fall for, especially beginners.
The Signal Seller Scam
This is a new method of scam and is becoming increasingly popular. Signal sellers are a combination of retail firms, asset managers, account companies or individual traders who offer some sort of system for a cost. This could be weekly, daily or even yearly subscriptions that show the best times to buy and sell a currency pair based on recommendations that will make you “rich”.
These scammers will try and get you to buy in by touting their experience and trading capabilities. They will also provide you with a range of testimonials saying how good they are as well as how much of a good friend they are. All these naive beginner traders need to do is hand over your money for the recommendations.
These signal sellers are going to wait until enough people have signed up and then disappear once they have their number up. They may provide a single good recommendation to keep you intrigued. Some sellers are legit and others are not, so take things with a pinch of salt and do your own research.
Robot scams are persistent shall we say. These types of scams are found in some forms of Forex-developed trading systems. The scammers behind this will broadcast how amazing their software is and how good it is at generating trades automatically. They will often say that you can earn money in your sleep.
This form of scam is now called Robots due to the process being completely automatic with computers. This all sounds fantastic, but the truth is, none of these forms of software has been submitted for review or testing by an independent authority. The examination of this form of software includes the testing of trading parameters and optimisation codes. If the optimisation codes and parameters are invalid, the system will randomly buy and sell signals. This will result in beginner investors gambling with their money. There are a select few software out there that are legit and have been tested, but it is essential to do your own research before investing.
Forex Broker Scams
There are many criminals out there that imitate legitimate forex brokers or investment platforms that already exist. This in turn tricks people into investing their money into Forex funds that are non-existent.
These scammers will often use the name and registration number of a regulated broker. To avoid this from happening to you, it is essential to look at the FCA register and contact them via the details on that site. Don’t trust the numbers they give you, and don’t believe that “the number is out of date” that is not true.
Many scammers will also not only use the registration number and name of the legitimate broker, but they will also make an identical copy of the website. Browse through the site, and see if it is legit. Google the actual business name, look for reviews and then click on the legit website through Google.
There are many forms of scams out there and it is crucial for you to look into the risks and the types of scams out there before you invest your hard-earned money. If you have ever been a victim of Forex trading scams, speaking to a wealth recovery solicitor can help to recover your losses. Remember, before doing any investing, it is essential to do your research, don’t run after promises of high returns with no evidence, be extremely critical with any software that you are looking at installing and don’t install anything that you are not 100% certain on as this can result in a range of malware attacks.