The Forex market is the largest financial market globally with over $6 trillion traded daily, and an abundance of opportunities to benefit from its potential. In addition, the advancement of technology has made it more accessible than ever before – especially online. However, it has also introduced some dangerous ‘soft spots’ for scammers and frauds. And you can bet that the forex trading frauds they’ve come up with are very clever.
In recent years we have seen a steep increase in forex trading frauds. That’s why we at Scam Recovery want to take this opportunity in this blog post to highlight the most common schemes today. If you want to know more about how you can avoid them, and what there is to do if you have fallen victim to one of them, stay tuned for more content to come on this blog. Let’s begin.
Types of Forex trading frauds
The biggest issue with identifying forex trading frauds is that they usually base themselves on seemingly legitimate services, and this makes it tricky to identify the fraudster from the real deal. In other words, there are thousands of brands offering forex trading services online – mainly through contracts for differences (CFDS) – and most of them are not scammers.
How can you know if the service provider you are interested in signing up with is a scam? Here are a few rules of thumb.
- Signal service scams
Signal services involve providing a trader with a trading idea or recommendation that can potentially help them in the decision making process. It is ideal for newbie traders or those who have limited time available to study the markets. However, they can also be used by scammers to trick traders into making wrong decisions – and losing their money to the broker (which is ‘by chance’ also the provider of these dubious signals).
How do you know if you can trust the signal services you are offered? Here are some warning signs:
- Free signal services – The service provider naturally wants to make a profit from the service they offer you. Hence, if the signals are provided free of charge, the profit needs to come from somewhere else. We at Scam Recovery do not recommend, as a general rule of thumb, to trust these free tips and advice.
- Signal services from an unstated source – In the online forex trading market, there are several well-known signal service providers, such as TradingView, MetaQuotes and others. If your broker is working with one of these legitimate sources, they will usually state it on their website and platform in a clear manner.
- Promises of “high accuracy” signals – Signal accuracy of over 90% is very unlikely, even for the best tools in the business. A quick way to test their accuracy is to review historical trade signals versus the actual market data.
- Forex trading opportunity scams
It is not always easy to know whether the broker you are working with is reliable or not. As we’ve stated, there are thousands of them operating in the industry these days, with new ones popping up daily.
However, there are a few rules of thumb that can help you identify the wrong from the right. Here are the most prominent ones:
- Unregulated brokerage – Whenever you sign up with a new broker, always confirm that they are licensed and regulated. You can request this evidence if it is not available on the website (but keep in mind that a regulated broker will always state its framework clearly).
- Guaranteed returns and no risk – In forex trading, there is no %100 on anything. Therefore, any broker that promises absolute/high chances of returns with low/non-existent risk should be treated as a scam, and avoided.
- Insufficient information – Take a look at the potential broker’s website. If you think it is missing something, you should definitely trust your gut feeling. For example, if there’s not enough info about the trading platform, trading assets and security measures, you should opt for another broker. Also, it is imperative to check out the means of communication with the broker. For example, if a phone number is not provided, you should not sign up with them (and if it is, you should first check that it is real and that there is really someone answering the phone on the other side).
These were just a few raised flags in a nutshell. Of course, there are more signs to be aware of, on which we will elaborate in the future. In the meantime, we invite you to contact our experts at Scam Recovery if you want to know more about forex trading frauds, or if you believe that you have fallen victim to one. Let’s see how we can help you.