Forex Trading Scams: What They Are and What to Do About Them?
Forex is a quick and popular way of trading. It involves high-risk, high-rewards and attracts those who want to make money fast. However, this type of trading can also lead to significant losses. The level of risk involved has caused many governments to regulate forex to protect consumers. Also, there are many forex trading scams, and it is important to know how to avoid them.
Trader Defender experts are here for clients who want to know more about Forex trading scams and those who have been affected by them. We consult with clients, discuss their experiences with Forex trading scams and launch a full investigation. With our intelligence reports, authorities and regulators can pursue the fraudsters and can help the client retrieve their funds.
What is Forex Trading?
Forex trading is short for foreign exchange. It involves trading the difference between currency pairs during a stated period. Because Forex trading involves value rather than owning the actual asset and deals with something that changes as quickly as currency values, it is one of the most volatile forms of trading. It is also the most active financial market with $3 trillion trading per day.
Anyone who is considering forex trading should be aware that, while individuals can make some money, institutional investors make the lion’s share of the gains. This is because larger investors have the tools, the people, and the resources to benefit from quick changes in currency values. Individual traders may lose out on these quick alternations. This is not to say that individuals can’t make money on legitimate forex trading, but even without forex trading scams, this type of trading is risky.
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Why Are There So Many Forex Trading Scams?
In addition to the volatile nature of forex trading, the prevalence of forex trading scams makes this type of trading particularly hazardous for those who are not prepared. There are many reasons why there are so many Forex trading scams. One reason is the principle that wherever there are people desperate to make quick money, scams tend to develop.
Forex trading tends to appeal to people who want to make a quick and large return on a trading style they already think they understand. Many people believe they grasp the concept of foreign currency pairs. Anyone who has taken a trip abroad and has made a deliberate and strategic decision on when to change money based on the value of their home currency compared to the currency of the place they are visiting has applied the concept of forex trading.
This false sense of security and familiarity with the concept of forex trading can give a trader a false confidence because forex trading is more complicated than changing money on a European vacation.
Because of the opportunity to make money quickly, the kind of people who engage in forex trading are often those who may be desperate to recoup gains after losing a job or to earn money quickly for a financial goal. They are not conservative investors who are prepared to wait and earn a modest return on non-essential funds for the long term. Given the haste, desperation, and overconfidence of many potential forex traders, unscrupulous cybercriminals develop Forex trading scams.
What Are Some Types of Forex Trading Scams?
Signal Seller Scam
Signal seller forex trading scams benefit from the perceived volatility of forex. Many traders realize they may need extra resources to stay ahead of trades and to perform as well as larger institutional investors. They may be hungry for some assistance to make forex trading easier.
Signal Seller Forex scams involve fake companies or coaches offering their services to tip off the trader about the best times to buy and to sell. They ask for a subscription or a monthly fee, offering discounts to those who will pay for months in advance or for the whole year in one payment. They may provide participants with a few successful calls to give them a false sense of security and to encourage them to subscribe. Then, when they have gotten the full fee from the client, they will disappear without a trace.
Forex Trading Scam Bots
Bots, like signal seller forex trading scams, are targeted at traders who have not had much success so far with forex and want a tool that will make it easier for them. Some bots promise traders to make money for them while they sleep, which sounds and is too good to be true.
This syncs with the trader’s observation that they can’t be awake at all hours or glued to a screen to detect changes in their forex pairs and would prefer to have a bot do the trades automatically for them. It should be noted that there are many legitimate forex trading bots. However, bots involved in forex trading scams are fake and are simply designed to steal the consumer’s money and perhaps also their data.
Forex Trading Scam Brokers
Forex Trading scam brokers, like other types of unscrupulous brokers, abuse the trust of their clients. They will encourage people to sign up and may show some gains on behalf of the client but then they will refuse to allow them to withdraw money or will only agree to release funds at an exorbitant fee. There are so many brokers, it can be difficult to tell legitimate ones from scam brokers, but the following are red flags that can identify unreliable brokers:
- Unusual or extremely high fees
- Vaguely worded agreements
- Evasive and uncommunicative manner
- Exaggerated claims
- Fake contact information
- Refusal to allow withdrawals
All of the above signals are red flags, and it is important to avoid the broker or get your money back immediately. If the broker refuses to release funds, you have fallen into a Forex trading scam and should contact Trader Defender experts right away.
What to Do If You Have Lost Money in a Forex Trading Scam
If you have tried to withdraw your money from a forex trading scam but they are holding onto the funds, it is essential to seek help. Trader Defender experts are experts who empower our clients with information and resources. We investigate, detect and report fraudulent brokers. Our professionals offer due diligence services and protect clients with our in-depth investigative reports. Schedule a consultation with us and we can guide you on the road to making successful trading decisions.