The forex market trades over $6 trillion daily. It is the most liquid market with millions of trades executed globally.
This means that there are numerous opportunities for investors to make margins off common and exotic currency pairs.
With the speed of transaction execution, there is a possibility of scam trades filtering into the decentralized system.
Decentralization means that the forex market is not regulated or controlled by any financial institution or central authority.
One trend about the forex market is that new traders can come in and start trading without doing too much, and sometimes they easily fall prey to scams or suspicious forex activities promising humongous profits.
Even experienced traders themselves are not completely immune to this, and because of this, various forex scams have popped up all in a bid to scam and deceive forex investors.
In this article, I will be showing you how you can spot these forex scams so that you do not become a victim.
• Forex trading is known to reward through arbitrage in fiat and other commodities.
• With the rise in forex trading, there has been a simultaneous rise in forex scams, with forex scammers constantly devising new means to scam gullible investors.
• Always do a background check on a forex mutual funds before you join or invest in it. This is so that you know how genuine it is.
• Forex robots can be really helpful when engaging in forex trading, but you have to be careful that you don’t fall victim to fake forex robots, which might be dangerous to your forex investments.
Let us take a look at them in detail.
1. Forex Robot Scams
You will hardly participate in the forex market without hearing about the existence of forex robots or how they can significantly improve your forex abilities.
These robots are trading programs that make use of algorithms to analyze the forex market to arrive at a result.
How to know that you have encountered a forex robot scam is by taking a look at what the robot has to offer. If the forex robot offers features such as
- Very high, unrealistic returns.
- Using unregulated brokers.
- Suspicious marketing messages.
- Undiversified scalping strategies.
You might want to take a look again before going ahead and making use of it.
Not to be misinterpreted, but there are many legit forex robots out there with realistic offerings, which is why it all boils down to you doing your research to be able to differentiate between the legit ones and those that are scams.
SEE ALSO: 5 Best Scalping Forex Robots for MT4
2. Trading Investment Scams
Nowadays, you will agree with me when I say that there are many trading investment ads littered all over the internet.
Some may even go as far as cajoling you sweetly to give them your investments with promises that you will see a lot of returns on them, or they may offer to open an account for you, which may be nothing but a front to siphon your investments and then later blame it on the fluctuations of the market.
Once you do that, your investments will be as good as gone and you will be left to blame no other person but yourself. In situations like this, it is always best to educate yourself on these scams and ensure that you avoid them.
Sometimes, forex investors tend to let their emotions get the best of them because of the sweet offers they get from these scammers, but by all means, ensure that you do not let your emotions get the best of you, even if you are having a bad day trading.
3. Forex Signal Scams
There are tons of forex traders on the internet who claim to offer the best professional forex signals for sure returns.
While this may seem like a good thing at first glance, you don’t want to go rushing in without first doing a background check to be sure that they are truly who they say they are or that they are capable of offering what they say they can offer.
In some situations, they may decide to charge very high subscription fees with the claim that their signals are top-tier, or they may get creative and use some other words to justify the existence of these outrageous subscription fees.
Before jumping in, you should ask yourself if their trading signals are as good as they claim, why don’t they make use of them to become forex millionaires rather than going through the stress of selling them? I believe this should leave you thinking about the right actions to take.
Finally, if you are forced to register with an unregulated or suspicious broker, or if you request to see a track record of previously successful forex signals but none are provided, these are all subtle signs that they are scams and should be avoided.
4. Holy Grail Forex Scams
Forex scammers know that there are some inexperienced investors in the market, and as such, they try as hard as possible to lure them by offering a “holy grail” trading system where constant profits are guaranteed with no possibility of making a loss.
Due to their lack of experience, having not spent a reasonable amount of time in the market, these investors themselves will be more than excited to partake in it, believing that that is how the market operates, not knowing that they are about to make a major mistake. When you see something similar to this on the internet, do your best to avoid it.
5. Forex Mutual Fund Scams
Taking part in a forex mutual fund is a good thing to do as a forex investor, but do not let your guard down and always do your research before joining one.
Here are some of the things you should look out for before joining a mutual fund.
- Qualified Fund Managers
Do some research and be sure that the mutual fund you are about to join truly has qualified managers. Don’t be quick to believe by word of mouth whatever you may be told.
- Exaggerated Returns
Forex scammers have their way of convincing investors, especially inexperienced ones that they can offer very high returns and may go as far as showing you falsified figures and numbers as to how this can be achieved.
Be sure to do your research and be sure that these numbers exist and that they are genuine before you proceed to invest.
- Outrageous Management Fees
This is not to say that you don’t have to pay management fees. Of course, you have to. But when the fees are on the high side, try as much as possible to find out why and what exactly they are for.
Also, check to see if you can easily exit the fund and if there are any sanctions for early exits.
This should give you some assurance that you can pay these fees without the need to worry.
- Guaranteed Return Scams
Sometimes, forex scammers may offer you fixed guaranteed returns on your investments, probably when you join a company of theirs or something similar to that.
If you are a smart investor, you will know that the forex market is very volatile and often changes at any given point in time, so to say that you will receive fixed, guaranteed returns on your investment is a major red flag and calls for some serious questioning.
Once you come across someone offering you this type of reward, you’d do well to run as far away from that person as possible. Profit and losses are part of forex trading as there is no foolproof strategy to use to constantly make profits.
Also, you can’t predict the forex market to always have constant returns, so anyone telling you that is nothing but a forex scammer.
Frequently Asked Questions (FAQs)
Can a forex broker steal your money?
Yes, if you trade with an unregulated forex broker, there is a good chance that you will lose your money, especially through scams and other fraudulent violations.
Is forex trading dependent on skill or luck?
Forex has nothing to do with luck. You will have to be highly skilled at forex if you want to be highly successful at it.
How long does it take to learn forex?
It will typically take, on average, around 1 year for someone to learn to trade forex. The technical side can be learned within a few weeks, but the risk management and psychology will take around a year to come to grips with.
Forex trading is a nice opportunity for investors to make some profit. This is good, but you have to be very careful so as not to fall prey to forex scams.
Always do your research before making any investments and do not be too eager to make unfounded profits.
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