How to Spot a Forex Scams – From Ask

How to avoid forex scams

In the UK investors lose GBP 2 million to forex scams every day. Here we run through some of the most common forex scams and give tips on how not to be fooled into handing over your money. Common tactics fraudsters use include contacting potential investors via social media ads or setting up fake websites that mimic accredited companies they’re trying to impersonate, these are simple ways for amateur investors to recognize fakes.

Visit our website to look at some of the most common scams.

What are forex trading scams?

Forex trading is known for its wide array of investment opportunities. These investments come in all sorts of shapes and sizes, but all are attractive in some way or another. Scammers have been going after these forex investors left and right trying to take as much money away from them as possible, while simultaneously destroying their lives. The best way to avoid becoming a victim of one of these criminals is never to invest more than you can afford to lose because guess what happens when you do? You end up losing it, that’s what.

Is Your Forex Broker a Scam?

Want to trade forex, but don’t know how? Then you’re at the right place! Here you’ll learn how to go about identifying reliable brokers, and here’s a hint – all strong brokers have transparent operations so it’s easy to separate the wheat from the chaff. First, it’s important to distinguish between good and bad by going through a series of steps that inspect broker accounts and websites, i.e. ensure transparency of dealing commissions as well as legal compliance. 

Six common forex trading scams

When it comes to forex scams, fraudsters don’t scrimp on creativity. The techniques that they use are as diverse and imaginative as the people who live in different parts of the world. Today we’re going to be discussing six common forex scams.

Read more: Recognize Scams

Signal seller scams

Signal sellers are middle-men companies that offer investors their advice about the best times to buy and sell currencies based on their analysis of the market. They usually issue this information for a fee which is what makes signal seller scams so dastardly. These crooks will promise investors guaranteed success in trading with their advice, however, after they have taken their money, it’s no kw what happens afterward because they simply disappear. The signal seller scammer will sometimes give some trade details and then claim that the data guarantees a successful trade and high profits but those aren’t fool-proof and won’t necessarily mean that you will make money.

Forex robot scams

A forex robot is a superhero designed to recognize market opportunities and take action on your behalf. It can execute trades at pre-set parameters with a speed that cannot be matched by other investors. Some criminals sell inferior, fake, or random software which fails to recognize market trends and may cause you to lose money. Always do as much research as possible, to give yourself the best chance of avoiding a robot scam.

Forex broker scams

Some traders like to think that forex trading is the same as gambling. It isn’t like gambling. With gambling you have the possibility of losing but with trading, you can make a profit. You should always check up on how many pages are linked to scammers because if there are a lot, then it is likely that the broker isn’t a scam. Although there might be details about them being wrong not all scammers tell people blatant lies about it and I hope you remember that because it will help you save so much time in the future.

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Forex pyramid scheme

Forex trading scams may appear on social media or as an email or message asking you to participate in a trading group. You will be promised advice and data that will help you make successful trades. The catch is that you’ll need to pay a subscription fee and sign up other people to trade alongside you so that you can earn a commission. We’d advise any traders who are new to the market – but particularly those looking for legitimate recommendations for mentorship or information – to watch out for these types of forex scams.

Managed forex account scams

Some investment firms nowadays offer managed forex accounts, where an expert forex trader invests currency on your behalf in trading for you. That’s the theory and it sounds good. But we’re not convinced. For a start, there are many foreign exchange fraudsters out there who pretend to offer expert forex trading services, but instead, steal investors’ money and/or destroy their financial information. In addition to this, they also take any wanted information such as credit card details, bank account numbers, and even passwords that aren’t required to use the account in question. And it goes without saying that if anyone should have access to all of your hard-earned money then you should know about it.

Read more: ATM Credit Card Skimmer

Forex Ponzi scheme

Fraudsters are awful human beings. They take advantage of people and try to ruin them financially. But the one thing that irks me the most about these scoundrels is that they make it sound like you can be rich by following their advice when they’re just out to rob you blind. Perhaps one of my favorites is something known as Forex Ponzi schemes.  These fraudsters advertise non-existent Forex funds that guarantee a high level of return in a short space of time while only asking for a small initial investment from their victims with much more coming from subsequent investors who are promised returns from their investments as well.

At this point, enough people have already paid into the scheme for the fraudsters to make off with all the money, leaving investors with nothing – not even their last penny.

Tips for identifying forex scams

Unsolicited offers

If you’re contacted out of the blue by someone claiming to have received a referral and is looking to invest in your property, it’s likely to be a scam. Never give away personal information or send money, as it will never be returned.

Risk-free investing

Investing can be daunting and risky as with anything worth doing. Any company or opportunity promising risk-free investments is likely to be a scam.

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Social media adverts

scammers are using social media to reach out to potential buyers. Many scammers use images of luxury items and make a promise of big profits to lure people into investing, oftentimes resulting in someone losing their hard-earned money (FCA register).

How to spot forex broker scams

According to the government, a guarantee of up to £85,000 is provided by the FSCS for retail investors who have placed their investment with a firm that turns out to be fraudulent. They are not liable for this amount in case something happens to your company – in other words if you either lost your money or were given poor advice and then managed to lose the invested funds. If an unauthorized company handles your investment there’s no protection offered through the FSCS so it can make it more difficult for investors to recover their losses.

This is not an exhaustive list. The UK government constantly updates the FCA list with new potential scam firms (you can access this link on their website). Also, remember that clones of existing authorized companies are popular among scammers as they try to trick people into thinking they have invested their cash with a legitimate business when they have been deceived into giving away their money once again.

The Bottom Line

Conduct due diligence on the forex broker you’re considering by going to Background Affiliation Status Information Center (BASIC), created by the National Futures Association. Many changes have driven out the scammers, and there are now legitimate firms for the average investor. One way new investors can tell a real provider from a scam is to ask themselves if their website looks trustworthy and is free of grammatical errors and spelling mistakes.

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