“You can start today with a free $3o account and no deposit is required; There is lots of demo videos and training on the platform and no risks.” That is exactly how many ads advertising forex apps and websites begin and many people fall for them. Forex is a dynamic market where constant profits are not assured and the only way to make it is by staying focused, training and understanding the market and then being patient when trading. Being a largely unregulated market, most of the players don’t play fair and brokers are not exempted. You should only invest with brokers that are approved by the regulatory authorities in your country. Most importantly, you should avoid these scams by losers that don’t care about protecting your investment.
Signal Seller Scams
Signals can make you lots of money in forex as long as they are from a reliable analyst or company. Some people sell signals while others only act as brokers where they buy signals from a company and then sell them off to traders. Some are outright scammers that promise you signals only to give you unreliable information after they get your money. Others will sell signals for some time just to increase their customer base and then run off with a lot of money once they are no longer able to acquire real signals. In other words, most people that promise 90% plus accurate signals are often scammers.
Guaranteed Profit Scams
These are also called risk-free trading scams and they are more common than you can expect. A broker will advertise themselves as the ‘ultimate managed account’ where all you need to do is put in your money and sit back. The truth is that the forex market is too dynamic to trade without making any losses. No one makes guaranteed profits in forex. Chances are, that broker will disappear before you get to withdraw any of those profits. Others will charge you abnormal commissions for the so-called earning trades that will eat all the profit plus your money.
Forex Pyramid Schemes
Ponzi schemes still survive in Forex and most of them never get caught by authorities because they are so good at disappearing once memberships start dwindling. They don’t focus much on trading, just recruiting new members. They will tell you that you will earn a commission for every new trader you direct to their company. You will never realize it but your money may disappear long before you make a single trade.
Price Manipulation Scams
The stop-loss order is a trader’s manipulation and you really hope that when you hit it, you will immediately exit the trade. Malicious brokers do stop hunting where they ensure that your stop loss comes in when it is too late. Some brokers also manipulate entries and exits to be always against the trader when you always end up buying in when the price is at its highest and selling when it is at its lowest. That ensures almost guaranteed losses for the traders. That is why you need to review your broker carefully to see if they have been accused of price manipulation in the past.
Unsegregated Client Bank Accounts
You can allow your broker to make trades for you but you can never allow yourself to share your bank account with the broker. Your money should be yours no matter who your broker is. When you invest with brokers that have unsegregated accounts, they can easily spend your money and disappear and you won’t do anything about it. Some brokers may also have debts or fines levied on their accounts which you may end up paying.
Fake Bonus Scams
Most forex apps promise you huge amounts to use on your demo account and some menial bonus to get you started because they know that most novice traders lose 90% of their first trades so there is virtually no risk on them. They will just entice you into investing on their platform before manipulating prices and seeing you lose your money in no time. Some also state high bonuses but then set terms and conditions hidden somewhere in the agreement that make it almost impossible to actualize and withdraw the deposits. Imagine being told to invest $10,000 so that you can get a $3000 bonus only to be told that you will only get your bonus after making 1,000 successful trades. That may take years.
Super Software/Robot Scams
Softwares have made forex trading easier than ever before because they analyze trades and help predict possible winning trades. There is no Forex trading bot that is always accurate and which can make 100% accurate trades every time. If anyone had such software they will use it to make loads of money and not sell it to you. If someone promises you a super bot or software, check their past trades and you will find that there is something wrong somewhere. Most of them are after quick money.
These ones are everywhere which is why you are supposed to check with the financial regulatory authority in your country before investing with any broker. All authorized brokers will be listed by the government and any that have been found in violation of rules will be identified as well.
Managed Accounts Scams
There are lots of ways managed account brokers can harm you. The most common one is that fund managers could run away with your money. In other cases, you may be charged exorbitant fees and commissions that ensure that you make losses even when the fund makes profits. Some funds may also end up holding your money for longer than you are willing to allow and that may hurt you.
Personal Data Scams
The other reason why they tell you to invest with an authorized broker is so that your personal data won’t end up on the black market for bad guys to come after you. Investing with brokers means that you give them lots of your personal information including credit cards and social security numbers. Some brokers that don’t manage to run away with your money will sell this to a third party putting you in jeopardy.
Have you had a negative/positive experience when it comes to Forex trading? Do let us know in the comments below!