The forex market is the biggest financial market in the world. At the same time, it’s an unregulated market meaning there’s no central governing body that oversees it. That’s why forex trading scams exist.
Forex scams will exist as long as the forex market exists. The trick is to know a forex scam when you see one. The following are the most common scams in the forex market. Avoid them at all cost!
Forex Robot Scams
To understand how this forex trading scam works, we need to ask first, what is a forex robot?
A forex robot is a trading program that makes use of algorithms and codes to provide technical signals to enter and exit your trades.
Most of the time, forex robots come with Expert Advisors (EAs) within the popular trading platform.
This is not to say that all forex robots are scams. However, forex robot scams exist all the same. Check the following signs of a forex robot scam.
- Unrealistic marketing hype
- Very high percentage of growth returns
- Undiversified scalping strategies
- The broker is unregulated
To avoid this forex trading scam, you should do your homework and research for a list of known forex robot scams.
Remember what they say: if it’s too good to be true, it probably is.
Signal Seller Scam
Signal sellers are people who send out trade ideas or “signals” to traders. These signals tell the clients to buy or sell a specific asset when the system tells them.
The signals also usually contain elaborate details such as direction, entry price, stop loss levels, and target levels.
Watch out for these signs to avoid signal scammers:
- Subscription fees: to access their supposedly excellent signals, you usually have to pay high subscription fees. They may start out low, but they eventually get high. Ask yourself, if you have a system that tells you accurate trading signals, why would you sell it to others?
- Signals that come from a broker: other times, signal sellers are in collusion with a broker. They will offer you the signals but only if you agree to open an account with a broker.
- Suspicious results: this probably the most telltale sign that the signal seller is a scam. They may brag about the performance of the system and such and such, but if you check the track record, it lacks the backing up to make the claims credible.
To avoid this forex trading scam, simply do your due diligence. Check the track record of the signal seller and the broker.
Phony Forex Investment Funds
A forex fund is what its name suggests. It’s basically a fund where you hire another person to trade forex on your behalf.
And forex scammers use this kind of investment vehicle to scam traders. They typically use slick marketing campaigns to sell you unverified results of their forex fund.
What they promise in general is that you can simply let them do the job and sit back to wait for your returns. Except your money never returns.