Forex scams are rampant and can sometimes be very difficult to spot. It’s difficult because these types of operations rely on very simple and commonalities amongst the investors themselves that most people wouldn’t notice. If you are new to forex or investing, it’s essential that you learn all you can so that you can spot a scam from a mile away. Whether you’re already trading or considering trading, this post is going to reveal to you how to recognize a Forex scam with ease. You will be doing so by utilizing accurate, up-to-date, and hard-hitting information and case studies on how to spot a Forex scam from a mile away.
Here’s a simple example of how you can spot a forex scam from a mile away. When you first start investing, you will likely be introduced to a brokerage or forex investment opportunity. The broker or company will make it their business to help you make money with forex. Most investors fall for this easily. They have no idea that this type of business structure doesn’t work. After signing on with the broker or company, they often find themselves losing money or having their account shut down.
Forex scams are also known as “pump and dump” scams due to the fact that the forex scammer makes a very large, quick, and significant investment, but then disappears just as quickly. These types of scams are very common, and you will probably run into them quite a bit as you invest. For example, some forex scam artists may try and get you to sign up with a large, new brokerage firm. They will convince you that they are in the best position to help you make money, when really they are not. Or, they might tell you that you need to invest a large amount of money in order to achieve success. Once they get your money, they run off with your investment and disappear.
A more common type of forex scam is a “pump and dump” scheme. This is where a trader makes an incredible investment, runs out and tells his broker that he’s going to use all of his funds to invest in a specific currency. Although the broker was already told that the trader was planning to dump all of his funds, the trader then tells the broker that he’s going to make the trade using this currency – even though that currency doesn’t have any value at the time. Essentially, the broker helps this potential client gain some value to his trading account by pushing him on an investment that has no real future. If the broker is not regulated, this act could result in charges being filed against the potential client.
Forex signal providers are another area where forex traders are looking for trouble. These signal providers supposedly tell forex traders which trades to enter or exit based on complex mathematical algorithms. However, there’s no real method to these predictions. And if you’re not paying attention to what these signals are saying, then you could end up losing money all because you didn’t realize that the trade signal was ineffective. More often than not, these signal providers push their customers to invest in products that have no real potential for profit.
One of the most talked about forms of forex trading scams are the ones where the traders are encouraged to put money into “winnings” that don’t really exist. In the classic con, the forex trader is told that a certain currency will soon make a substantial return. Usually this occurs when the investor takes a quick look at past performance numbers. Once this sort of information is found, the forex broker makes an investment in the currency in hopes that it will soon begin to grow. Unfortunately, the profits of this particular transaction never materialize.
Forex brokers that engage in this sort of practice are clearly in the business of making money. But just in case they don’t seem to be upfront about this, it’s always a good idea to find out more about a broker. This is especially true if there’s any sign of poor performance. It’s always possible that there aren’t any signs that indicate that the broker is actually doing anything, but you still want to be careful. If a broker seems to be more focused on the potential client than providing quality service, then avoid trading with them altogether.
The final type of forex scam is the one that falls under the “breach of funds” category. In this scenario, the forex broker collects your money without actually providing you any service in return. These are typically the brokers that push hard for large deposits from potential clients, and once they have your money, they run away with it.