Forex scams are very common. A 2011 study showed that there is a new scam reported on forex trading platforms every two minutes. There are many different types of scams, some are more sophisticated than others, but they all have the same goal- steal your money. If you want to learn about various forex scams and how to avoid them, read this post!
What are Forex Scams?
Forex scams are misleading strategies that you’ll find on social media, message boards, websites, and email. They’re designed to get you to invest your money in a fraudulent scheme.
Forex scams are a type of pyramid or Ponzi scheme. This type of scheme is often seen in the form of a get-rich-quick scheme where people are told that they can make lots of money very quickly with little or no effort.
This type of scheme relies on new investors to pay the earlier investors in the scheme. There are many different types of forex scams, but they all utilize these same tactics.
One type of forex scam is the “pump and dump” scheme. This is when an investor buys up a bunch of one specific stock, say 1000 shares, and then uses misleading statements to make it falsely appear like the stock is about to take off. They’ll do this with the goal of making people buy the stock quickly before it takes off. If they do this enough, then the stock will take off. The investor then sells their shares before it crashes back down to where it was before, and then makes a large profit.
Different Types of Forex Scams
One type of forex scam is the pump and dump. This scam tries to make a stock look like it is popular and has the potential to grow in price. The scammer will buy a stock and then post it in forums and social media accounts in order to get others to buy it as well.
This scam will only work if the scammer has a lot of money to start with, and they will just lose it all when the price plummets.
Another type of forex scam is the binary options scam. This scam involves a trader placing a bet on whether or not an option will be above or below a certain price when the time expires. This type of scam is very common because there are no risks involved for the trader.
The trader can earn a profit before the expiration date without understanding what they are trading.
How to Avoid Forex Fraud
There are many ways to avoid forex fraud. The first way is to do your research. Research the company you are trading with, research the platform that you are using, research the brokers that are advertising on the platform, and read reviews of the company.
The second way to avoid forex fraud is to beware of companies that offer unrealistic returns or promises of quick profits. The last way to avoid forex fraud is to be wary of any company that tries to get you to trade outside of your account limits.