Surprisingly many people think forex trading is a fraud. That is not the case, at least not usually.
Why do we say this? Because there are many frauds and dishonest people in the online forex trading market, despite the fact that it does offer legitimate opportunities to make money.
Unwary traders who put their faith in every forex ad they see are at risk of falling for various frauds.
With enough research and good judgment, you may avoid falling for the many forex platform scams and start profiting from the staggering daily turnover of 6.6 trillion dollars.
Keep reading to learn about the various Forex scams that exist and the steps you can take to protect yourself from becoming a victim.
What kind of Forex Scams Are Out There.
Stay away from these frequent Forex scams:
- Ponzi schemes using forex trading robots
- Scams by selling forex signals.
- Fraudulent multi-level marketing schemes
- Investment Fraud by Brokers
Every investment involving speculation has some degree of risk. When making the appropriate decisions, however, a legitimate investor also has a very excellent possibility of reaping financial rewards.
However, if you fall for a currency scam, you can rest assured that you will lose your money because con artists and fraudsters only care about getting their hands on your cash.
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Ponzi schemes using forex trading robots
Robot traders, who constantly scour the mountains of exchange data created by trading platforms for profitable opportunities, control a sizable portion of the daily forex trading activity.
Although there are clear advantages to using trading robots, these programs have also made the market more accessible to scammers.
These people make their business convincing naïve traders that their trading robots would make them rich through the use of pressure tactics and deceptive marketing.
The trader will lose the money they put in the false robot’s account, plus the cost of the program itself. If you must use a program, set your own trading parameters or only use trusted, established platforms.
Scams by selling forex signals.
How do people who lack trading skills or the time to do in-depth technical analysis generate profitable trades? Traders will pay for trading signals from companies that provide them.
Traders typically have the option of signing up for a service on a weekly, monthly, or annual basis. Unfortunately, some of these signal vendors don’t even bother with technical analysis, so all the naïve trader is getting is a bunch of random numbers that will almost certainly lead to losses.
It is risky to rely on data purchased from parties about which you know nothing about their track record. However, many traders still fall for the same scam, leading them to believe that the forex market is rife with fraud.
Fraudulent multi-level marketing (MLM) schemes
Forex trading, like any other industry with a high turnover rate, has attracted many multi-level marketing firms.
Traders are solicited by these businesses to join their platforms in exchange for a subscription fee, at which point the companies give the traders with forex-related resources such as educational content, tips, signals, and so on.
After a trader signs up, they are offered token incentives to bring in more traders, who in turn bring in more traders, and so on.
This allows the firm to continue reaping subscription fees from traders despite offering them nothing of value in return. Eventually, the trader will see that their efforts to bring in new clients have cost them more than their trading profits.
If they wait until after their payment has been processed, they will be disappointed to learn that they will not be able to get a refund on their subscription. If the MLM company receives poor press, it will likely rebrand and move on to the next unsuspecting trader.
Investment Fraud by Brokers
Foreign exchange (forex) trading requires the use of a broker. It should be noted, however, that not all brokers are honest. The internet is rife with untrustworthy and dishonest brokers; you might get unlucky and find one of them.
These con artists are experts at coming up with new and creative ways to steal your money. They will use every trick in the book, from providing you with misleading data to charging you exorbitant rates.
Unlicensed phony brokers are the worst since they utilize false identities and contact information to avoid being tracked down in the event of a legal dispute.
Since you’ll need a broker in order to trade forex online, it’s in your best interest to learn as much as possible about the one you choose before parting with any cash.
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Fake Forex Funds
Avoid foreign exchange (FX) funds that promise you quick profits, as they are almost always scams. No one, not even the world’s largest financial institution, can promise you future profits in Forex trading because the entire market is based on speculation.
To avoid losing money on fraudulent Forex funds, stick to the tried-and-true trading platforms where other traders are making moderate returns.
Can I Trust Forex, or Is It a Scam?
If you choose a trustworthy broker or other third-party service provider, foreign exchange trading can be a legitimate investment option.
Although there are many dishonest people operating in the forex market, some people are able to make a life at it. You can learn to benefit from forex trading like legitimate individuals by taking precautions and doing your research to avoid scams.
How to Protect Yourself From Fraud When Trading Foreign Exchange
In order to avoid being a victim of a scam, every trader should take the necessary precautions. The easiest approach to protect yourself from being scammed while trading forex is to follow these steps:
- Don’t rely on any promises – Don’t rely on any guarantees because the foreign exchange market is volatile and unpredictable. One moment a currency seems to be doing well, and the next it might plummet. Even seasoned market professionals have no idea what will happen next. If someone promises you sure profits, they may be lying to you.
- Conduct a Background Check – You can use the internet to your advantage by looking into your broker’s history. To back up their claims, brokers will likely provide you graphs, charts, and numbers; however, you should disregard this evidence. Your best bet is to rely on the information you find on your own, especially if it comes from other traders who have dealt with this broker before.
- Refuse Unsolicited Marketing – A legitimate broker who has a track record of providing excellent service should not have to actively seek out new clients. You should be careful of a broker who appears to be on a quest to acquire trading clients at any cost. Keep your money and personal details to yourself until you can verify that the business you’re dealing with is authentic.
I Think I’ve Been Scammed; Now What?
In spite of your diligence, you could fall prey to a currency scam. So, how do you proceed under these circumstances?
The best course of action is to get in touch with the CFT. It’s possible to reverse a bank transaction and get your money back, but only if you move promptly.
Avoiding Forex Scams: Steps to Take
The best thing you can do for yourself is to prevent becoming a victim of a forex scam in the first place. Learn as much as you can about the currency market and the various frauds that can befall you.
When you’ve settled on a broker, use the practice account before making any real money trades.
Conclusion
Foreign exchange (Forex) trading can be a lucrative endeavor, but only if you know what you’re doing, choose a trustworthy broker – like Libertex, and avoid falling prey to scammers.
When you arm yourself with the knowledge you’ll gain from this essay, you’ll be in a much better position to spot con artists in the wild.
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