Forex Trading Scam
Have you recently been offered the investment opportunity of a lifetime? Well, then you might want to read the small print. Investment scams often disguise themselves as well-meaning brokerages working in your favour when in reality, they are sweet-talking you out of your savings.
Why forex trading can be a Scam?
The forex market is the largest in the world in terms of the total amount of cash traded. The average daily sums measure in the trillions of dollars since it includes every currency in the world. As you can imagine, this makes it a hotbed for scammers, so how can you tell if a business is providing a scam or a service
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What is Forex?
Forex or foreign exchange describes the trading of currencies in the global market. Simply put, a seller agrees to pay a buyer the difference between the current value of a currency and its value at the contract time. If the difference enters into the negatives, then the buyer pays the seller.
Forex is no singular market; currencies are traded worldwide in major financial centers. Since this is a global market and a prevalent trading method, scammers flock to forex as a way to trick the masses out of their saving
How forex scams work:
Forex scams can function in several different ways depending on what type of business they purport to be, their regulated status, and if they are an offshore broker.
One popular scam type are the signal sellers who have a ‘formula for success.’ This is when a system is offered which identifies the best time for buying and selling. Some of these systems rely on analysis; some rely on news sources, and others rely on a healthy mixture of both.
These also include the automated ‘robot’ scams, which make automatic trades at favorable times so you can make money even as you sleep. Which, let’s be honest, sounds a little too good to be true? It’s unlikely that you want to have your financial future determined via code.
They claim that they provide the tools needed to make favorable trades. Economists question if there really is a magic formula that can predict the best trades and if the company does have a magic formula, why they aren’t just using it for themselves.
It is also worth noting that the broker might be purposefully misleading you so they can profit from your losses.
One of the other common forex scams is the phony investment manager who claims to be an expert in trading forex and says that they will deal with it for you. This means you lose all financial control over the money you ‘invested,’ and the so-called expert is likely running off with your money.
How to spot a forex scam:
Now that we have covered the ways forex scams commonly function and operate, we can use this information to outline red flags that could indicate an unfair deal, shady broker, or outright theft.
A good looking website shouldn’t be all you need to seal the deal; always make sure you read the fine print and practice due diligence at all times.
Spotting a scam broker:
- Preventing withdrawals
- Promises of a secret to success
- Deals that force you to give up your financial control
- Unsolicited calls
- The general reputation of the business
- Regulated status (though please remember legal, regulated brokers can scam you)
- Offshore companies
- An ‘account manager’ who purports to be an expert
- Unlocatable and hard to trace
- An official-looking website but vague web content
- Pushy sales tactics
- Lack of customer service
- Company cutting off contact from clients
I should also mention that it is also worth doing a BASIC (background information status information center) check as this might highlight some of the red flags listed above.
How can we help?
Suppose you have been scammed before and want to prevent it from ever happening again or have just been provided an investment opportunity and want to be sure their services are legit. In that case, our expert team at Trader Defender is here to help. We provide full due diligence reports which aim to prevent you from being scammed in the first place.
If you want to understand all the fine print before you sell your soul away, then you can book a free consultation with us or contact us for a quote. Our information keeps the common consumer vigilant and informed to stop scammers dead in their tracks.