Detecting Forex Scams Promptly: Sharpen Your Skills and Outwit Cons
The great race taking place everyday on the global Forex market attracts all kinds of participants. From conglomerates, banks, international companies and institutions, professional investors to retail traders, all would like their piece of the cake.
Now, while not everyone simply has the ambition to earn based on their own skills, intuition and prediction abilities, there’s others who wish to exploit the lack of experience and knowledge of certain trader’s groups. Those are scam Forex brokers, and this article aims to equip you with enough knowledge and information to easily spot and avoid such schemes.
Forex Scams Categorized
Two distinct fraudulent deals do not always base their unscrupulous activities on the same mechanisms. They may have some elements in common that distinguish them as cons, but they may operate entirely differently. Here’s some of the most common of these shams explained.
Robot Trading Scams / EAs
With the development of AI trading tools, it has become quite common to encounter fake online trading schemes that offer trading bots.
These allegedly exceptionally accurate and skillful software and add-ons are advertised in a way that makes you certain they can do everything instead of you.
From constant market watching and analyzing to opening positions and closing them at a perfect moment so your profit is the highest expected, these tools allegedly do everything.
Naturally, while there’s tools used to facilitate some steps of the way, none can imitate the human trader perfectly yet eliminate all the risk factors related to human decision-making.
The majority of these bots simply use past market information to create future patterns. Sometimes they perform well, but the beauty of the Forex market is that it never has to act the same as in the past.
MetaTrader 5 scams are known to offer such benefits, just in order to attract more clientele to sign up.
Fake Signal Sellers
Many companies or individual traders could generate Forex signals based on the technical analysis, fundamental analysis or combined.
The problem is that it often happens that false brokerage platforms tend to claim to ensure you get signals with astonishing accuracy.
When advertised in such a way, it immediately means they’re just another financial trap. No signal seller could achieve that high accuracy for the same reason why EA’s can’t always perform the best: markets simply don’t always act the same as they did in the past.
Pyramid Scheme (MLM) Scams
The scary fact about this sort of fraud is that it could be often spotted even with some licensed companies around. Unless your broker is a Tier 1 licensed entity, they can still offer various bonuses, cash rewards and other alleged benefits.
Existing users are led to believe that they should promote the company and get new victims to sign up through their referral link.
Fraudsters have their clients convinced that the rewards will be higher the more people they get to sign up for the faux service.
High Passive Income Offers
Trading novices are especially attracted to deals that only require them to invest and have zero engagement in trading itself.
These investment scams offer a high percentage of profit, some on a daily basis even, and market it in a way that imitates guaranteed passive income.
All the investors are expected to do is hand their entire capital over to fraudsters and wait for their ROI to come to their bank account. Of course, that never ever happens, as the cyber criminals vanish as soon as they collect enough deposits.
The only outcome when trading on fake trading platforms is blocked, delayed or canceled withdrawal. Frauds that involve preventing clients to withdraw anything are the most common in the online trading niche.
Swindlers have the capacity to come up with just about any reason fathomable, just so they’d prevent their clients from requesting payouts. Trading volume requirements, insufficient documentation, fees in advance and other methods are just some of the particular tactics used to prevent withdrawals, and are what OctaFX is known for.
Common Scam Strategies
Now that we’ve clarified some of the most occurring unscrupulous Forex schemes, we should discuss their methods.
These concrete techniques could be found in an abundance of firms -some of them are even legit, but play dirty to attract more customers. Once you learn these signs, you will easily detect fraudulent attempts and avoid them:
- Software and Data Manipulation – The abundance of web traders is explained with their subjectiveness to manipulation and data shaping.
False profit and imaginary market events are just some of the values and information consistently falsified for the purpose of deception. Regulated brokerages use a legit Forex trading app, that couldn’t be played with so easily.
- Bonuses and Contests – The more you invest with fake portals, the bigger the bonus promised. Upon depositing, you will usually be offered attractive bonuses that always come with strings attached. EuropeFX used to be legit and now faces downfall because of employing these tactics.
- Lack of Legal Information – In their attempt to preserve anonymity, false brokers tend not to reveal any of their corporate information. It could also happen that they steal other firm’s data, clone legit companies and fabricate license details.
- Aggressive Marketing – Every illicit broker’s right hand are boiler room agents that contact potential victims and offer attractive deals. Unsuspecting targets are urged to deposit, almost forced and threatened along the way.
- Quick Riches Promised – Getting rich overnight is everyone’s dream and swindlers tend to exploit that.
High guaranteed returns, fortune made in a matter of days and other similar gibberish is how manipulators instill the fear of missing out on their victims and have them deposit.
- Data-Sharing Requirements – Without ever sharing any of their own identity information, fraudsters demand of their clients to reveal much of their sensitive details.
Names, addresses, numbers, back accounts and credit cards info are just some of the details subject to data theft.
- Exorbitant Leverage – Trading conditions found on faux trading servers never respect regulatory limitations.
Where you’d expect leverage to be limited to 1:30, you’ll often see it set at 1:1000 or even more. This tactic is used to push investors into loss quicker. A good example of one such broker is TriumphFX.
Before engaging in risky investments, it’s important to keep a level head and realistic expectations of the market behavior and your future success.
Those who did get rich overnight didn’t do so without falling a thousand times and losing fortunes in the process. Even then, such gainers are extremely rare.
Committing to learning, practicing and collecting as much information as you can also help you make informed market decisions and improve your general skills.
Lastly, staying cautious and vigilant in the process will make you more resistant to unrealistic deals and common investment traps, as well as more subtle ones.
And remember, in case you face any form of Forex scam along your online trading journey, don’t hesitate to contact experts for assistance in the scam recovery process.
Free consultation is available for everyone who needs someone competent advocating for you.