Forex Scam

Forex scammers tend to target beginners or uneducated traders. The best way to avoid being a victim, and avoid getting scammed, is by getting a good Forex trading education before you enter the markets. 
 
Forex scams often pitch “too-good-to-be-true investment opportunities” as a way of convincing you to part with your money. When you lack trading experience, swindlers will try to exploit your optimism, your fears and your lack of knowledge. Learning the markets means you are no longer an easy target.
 
How To Spot A Scam
The broad range of scams out there have many asking themselves, “Is Forex a pyramid scheme?”. No, Forex, itself, is not a pyramid scheme. However, there are scams of different sorts within the world of Forex trading. The most important giveaway of a Forex scammer is a guarantee of unusually large profits with little or no financial risk. 
First of all: there is no such thing as a 100% guarantee. If there was, there is no way traders would share it with other market players. Some of these offers may sound very attractive, especially to beginner traders. But as the saying goes, the only free cheese is in the mousetrap. The bottom line is this: if something sounds too good to be true, it probably is.

 

Here are a few simple rules to follow to avoid scammers:
• Remain safe and do not run after empty promises
• Be especially wary of software that claims to have found a ‘secret formula’
• Do not install any programs until you are certain they won’t damage your computer
Another giveaway is that scammers never register with any regulatory authority. Remember – true brokers always provide proof of their legitimacy. If you suspect that a Forex broker is lying about their regulatory status, you can contact a regulatory authority who may be able to provide a list of regulated companies, and a list of cases opened against regulated companies. This will help you understand which Forex brokers to avoid.

Three Major Types of Forex Scams to Avoid

Those involved in forex scams, money scams and general trading scams are always trying to find new and innovative ways to take advantage of new traders. However, there are three major types of forex scams that people commonly fall victim to. Below we will explain how these work, as understanding them is the first step in avoiding them.

1) Robot Scams
A Forex robot is a trading program that uses algorithms, or lines of computer code, as technical signals to open and close trades. Not all Forex robots are scams. For example, Forex robots can be built using Expert Advisors (EAs) within the popular MetaTrader suite of trading platforms.
Searching online for a Forex robot scam list may help you to avoid some of the known scammers.

There are a few other things to watch out for to avoid Forex robot scams you may come across:
1. Marketing messages that are unrealistic. If the author of a Forex robot has to ‘sell’ you on the dream of what it could do for you, then it’s unlikely they will have the results to back it up. After all, numbers don’t lie, or do they?
2. Very high percentage growth returns. Some Forex robots advertise systems that yield over 4,000% return in just a few years. This may seem fantastic, but it’s important to look at the statistics. The return could just be closed trades, the system may have open trades that if the stop losses were hit could wipe out any gains.
3. Undiversified scalping strategies. Many Forex robots employ a scalping system which means they trade for very small profits. This then shows a high win rate and can inflate the results in a supportive market condition. Yet, market conditions change, and if the system loses more per trade than it wins, it will only take a few losing trades to wipe out any accrued profit.
4. Using unregulated brokers. Some Forex robots show extremely good results using unregulated brokers no one has ever heard of. In this instance, the results might be good on their own interbank spreads but if you open an account with them your spreads and commissions will be wider, thereby eating into much of the profit.
At the end of the day, if you are considering using a Forex robot, then treat it like a business rather than an emotional decision. Start with an online search for a list of forex robot scams and then do your own due diligence.

2) Signal Seller Scams
Forex signal sellers are individuals who send out trade ideas which usually include a currency pair, direction, entry price, stop loss and target levels. There are multiple things to look out for so you don’t fall victim to these kinds of forex trading scams:
1. Subscription fees: Individuals may market amazing results without any verification. To get access to the trades, you often need to pay high subscription fees, or they start out low and use credit or banking details for other kinds of money scams. If their trade signals are so good, why sell them at all?
2. Broker-tied signals: Some signal sellers offer you trading signals, but only if you sign up with a specific broker. This means they may be getting a kickback from the broker, so are motivated to send you any trades for you to take regardless if they win or lose. Having said this, some will want to keep you profitable so they can continue to receive their kickbacks from the broker, which acts as their payment for the service.
3. Unverified results: It’s all well saying your forex signals have made a high percentage return but if they can’t show a verified track record it means they’re not trading the signals themselves – which is clearly a red flag in itself.
The key to avoiding any type of currency exchange scams, money scams or trading scams is to, again, think like a business and do your due diligence, rather than act on an emotional decision of inflated promises and dreams.

3) Phony Trading Investment Scams
There are many adverts nowadays promoting phony forex trading investment scams and fake forex investment funds. In the past, some traders have argues that the Forex Kings and Forex Paradise are scams. However, we don’t have any concrete evidence to support these claims. In essence, a slick marketing message or salesperson will sell you on the phantom, or unverified results, of their forex fund. All you need to do is send them your investment and you can sit back and enjoy the returns.
Of course, many people who send their money never see it again. The company says they have never heard of you and have not received any funds from you. What started as a forex trading investment scam now turns into one of those money scams.
Another outcome, is that they open an account for you, usually with an unregulated shady broker. However, after one or two trades, they wipe out your account. While they blame it on the market, it’s all gone to their brokerage company. Furthermore, because it is unregulated, it is very difficult to get your money back.

if you have already fallen for one of these frauds, don’t worry, we are here to help you.

What Are Binary Options Scams?
Binary options scams occur when a fraudster uses the cover of binary options contracts to make money illegitimately. The semi-regulated nature of binary trading has created a large grey area for bad actors to operate in. Dodgy brokers tend to promote themselves on social media, online or via bogus profiles on messaging apps. They will often entice customers to their ‘platform’ using promises of huge returns, images of luxury goods and fake expert or celebrity endorsements. The websites run by binary options trading scams can appear convincingly professional, making them difficult to spot.
Once an unwitting customer has opened an account with the phone broker, the scam will employ various tactics to steal their investment funds (and then some). Binary options trading scams may encourage investors to make a large upfront deposit, before charging them enormously high commissions, ‘taxes’ and fees. Sadly, it is often impossible to recover the lost money.

Common Binary Options Scams
Managed Trading
Some brokers offer to do everything for you, including the actual trading, and claim that profits are guaranteed. Most of the time this will turn into a game of repeatedly asking you to deposit more, to continue making a profit or to recover losses. Once the trader attempts to withdraw funds, there are suddenly lots of difficulties, if it’s possible at all.
A trustworthy broker would never claim that profits are guaranteed, as the financial markets are much too unpredictable. Also, if they knew how to always turn a profit, why would they run a brokerage at all? They could turn any amount of money into a fortune themselves and not bother with customers.

Fly-By-Night Brokers
Fly-by-night brokers attract customers to their trading platform by posing as real binary options brokerages. Their websites will likely have been created to look convincing, usually by someone with detailed knowledge of binary options trading. A few fraudulent brokers provide access to well-known trading systems, others may use their own platform.
Perhaps the simplest type of binary options scam, fly-by-night brokers first ask traders to make a large deposit, often offering attractive bonuses to new customers. Some scams will take the deposit and vanish, never to be contacted again. However, sophisticated scams encourage clients to put in more capital by showing large returns on their initial investment. When the trader attempts to take funds out of their account, the broker will cancel their withdrawal request and ignore all messages.
Some binary options scams will charge clients a series of large fees and commissions. For instance, if a trader asks to withdraw $1,000 from their account, the fraudulent broker could ask for a $200 commission payment, followed by tax contributions, transfer fees and so on.

Bucket Shops & Price Manipulation
‘Bucket shops’ are brokers that make a profit at the expense of clients using unfair practices. Dating back to the 1800s, bucket shops historically allowed customers to gamble on the stock market with products similar to binary options. Many bucket shops manipulate prices to scam clients. In such a situation, traders may believe they are trading on the market when, in fact, the prices are set artificially by the broker. Needless to say, the price is not being manipulated in the customer’s favor and they are likely to lose their funds. Additionally, some traders have reported that bucket shop brokers will prevent customers from winning by extending the expiration countdown until a profit becomes a loss.

Pyramid & Ponzi Schemes
The fairly ubiquitous pyramid scheme scam occasionally crops up in binary options trading. Members of pyramid schemes are encouraged to find recruits, earning themselves a commission. Everyone signed up to the scheme pays a subscription fee and, rather than making money through binary contracts trading, those at the top of the pyramid profit from the fees paid by those lower down. People at the bottom of the pyramid almost always lose money since they are unable to find enough recruits.
On the other hand, a Ponzi Scheme will advertise binary options trades that lead to large returns in a short space of time. Ponzi Schemes may only require a small down-payment and pay initial investors the promised returns to give the impression of success. These clients are encouraged to find more people for the scheme: once enough people have invested, the fraudster vanishes with the money.

How To Avoid Binary Options Scams

Use A Regulated Broker
To avoid binary options scams, always check where a broker is registered and which regulatory bodies it is licensed by. This information should be clearly available on their website. If you use an unregulated broker, your money will not be protected if something goes awry. Furthermore, the broker may be able to act unethically without breaking the law. Unregulated binary options brokers are not always scams, though it is certainly safer to use a regulated platform.
Every country has its own financial regulatory body that is responsible for upholding good business practices among brokers. The leading regulatory organizations for binary options trading include CySEC (Cyprus), the CTFC (US) and Malta GA. Some binary options brokers are based offshore in countries like the Seychelles, Mauritius or St. Vincent & The Grenadines. While many offshore brokers are legitimate, the laws imposed in these territories may be less stringent than elsewhere. It is worth doing some extra research before choosing an offshore broker to weed out potential binary trading scams.
It is currently illegal for UK and EU firms to offer binary options trading to retail clients. Occasionally, however, binary options scams claim to be registered in these countries – for example, by giving a prestigious City of London address. Other binary trading scams will name fake regulatory bodies, so be sure to double-check up any organization you haven’t heard of.

Beware Of Dubious Marketing
Typically, binary trading scams will advertise huge returns on investments, while ignoring or downplaying the risks involved. It is worth remembering that no broker can guarantee thousands of dollars of profit from just a few days of trading. Many dodgy brokers utilize targeted social media adverts to attract potential customers. These often use the allure of a luxurious lifestyle to deceive clients. They may also contain fake reviews from celebrities or economic experts. Common phrases used by binary options scammers include “get rich quick” and “make money online”. Note that not all binary options trading scams use this type of marketing – some may promise more realistic returns.
Many binary options scams offer excessively generous deposit bonuses to new clients. If a welcome bonus looks too good to be true, proceed with caution. Furthermore, reputable brokers will never cold-call potential customers. Any broker asking you to make immediate payments is suspicious and should be avoided. Some binary options contract scams will also send unsolicited emails claiming that you have already set up an account with them. In both of these cases, simply hang up the phone and delete the emails.

Check The Website

There are several red flags to look out for on a binary options trading scam website. Firstly, if a site is poorly designed or badly functioning, it is likely to be dodgy. However, some fraudsters can create professional-looking websites, so this is by no means an exact test.
Secondly, all legit binary options brokers will have complete information about fees, pricing and pay-outs clearly available online. Always check the small print of a website to check that there are no hidden fees. Often, binary options scams will overstate the investment returns, even though the payout structure has been designed to lead to a net loss for the customer. If some of the details do not match what is advertised, the broker may not be trustworthy. Sometimes, brokers will use sign-up bonuses against the trader. For instance, if a trader makes a loss after receiving a bonus, the broker may prevent them from taking money out of their account on the basis that “deposit bonuses cannot be withdrawn”.
If a binary options broker uses a phrase along the lines of “our prices may not reflect those of the actual market”, they are likely to be a scam. Sentences like this usually mean that the broker is manipulating prices to make money at the client’s expense. Finally, all trustworthy firms will adequately disclose risks. Trading in binary options is a high-risk, high-reward activity: if a broker promises low chances of failure, they may be a scam.

Do Your Research
Reading client reviews can be a good way of identifying binary options scams. However, be aware that a few negative reviews from disgruntled clients who have lost money does not necessarily make a binary trading broker a scam. Nonetheless, pay attention to reviews that allege that the broker prevented the client from withdrawing cash or moved trading goalposts arbitrarily. Occasionally, online binary trading scams will create fake reviews of themselves online, so make sure that you use information from reputable sources.
Additionally, it is well worth looking up binary options brokers on online blacklists. Some of these are run by regulatory bodies, for instance, the FCA has an online warning list of trading scams. In addition, FINRA’s Broker Check tool records brokers with outstanding legal actions against them.
Customer Support
Good binary options brokers will have easily-contactable customer support teams. A well-run customer service department indicates that an online broker cares about their clients’ trading experiences. Binary options scams are usually hard to reach or will only communicate via messaging apps.

Other Possible Signs Of A Binary Options Scam
• They offer to trade for you and claim profits are guaranteed
• The broker does not respond to messages
• Their website lacks an SSL certificate
• They advertises fake ratings and prizes
• They do not list an address to their physical headquarters or it’s really hard to figure out how and where they are based.
• Payments can only be made in bitcoin or another cryptocurrency

if you have already fallen for one of these frauds, don’t worry, we are here to help you.