Forex, or Foreign Exchange (FX) Trading, is a massive, booming market raking in billions year-on-year. It involves exchanging one currency for another for many reasons, including tourism, trading, or commerce purposes.
It is a global marketplace that provides a platform for people to exchange national currencies. Its worldwide reach makes Forex markets the largest and most liquid asset markets globally. In 2019, the trading volume reached up to $6.6 trillion, according to the Bank for International Settlements.
This large volume of money involved in FX trading makes it a breeding ground for all types of Forex scammers. They aim to entice unsuspecting and financially illiterate people to participate in fake Forex trades, giving them hopes of quickly earning huge returns.
This article will educate you on how to spot and avoid Forex scams and help you recover your resources if you ever fall victim to them.
How to Spot Forex Scams
Forex scams are now less persuasive because of the government and regulating bodies’ tight regulations. However, there are still some significant scams that have been tough to eliminate to date. Here are a few of them to look out for:
- Signal Seller Forex Scam
A signal seller can come from any of the following fake Forex fraudsters: retail firms, pooled asset managers, individual traders, account companies, etc., that claim that they know the best time to trade a currency pair because they are “experts” in the field.
They are very persuasive and claim that their many years of experience and trading knowledge help them make informed trading decisions that can make you rich. They make you give them some amount of money to share their expert trading recommendations with you.
Usually, once they collect this money, they disappear. This is not to say that there are no honest signal sellers out there, but the vastness and popularity of this scam require you to be careful who you trade with.
- Broker Scams
Scammers are well-known for posing as Forex brokers to lure unsuspecting investors into putting their money into non-existent Forex markets. They often come off as very convincing and legit, sometimes even posing with the identity of a legit Forex broker, but it’s all a ploy.
- Robot Scamming
Forex Robots are usually run by legitimate programs and software to help traders buy or sell currency on your behalf using an algorithm. To determine their legitimacy, an impartial agency conducts an exam and verifies them to find out if they perform the functions they ought to.
However, fraudsters have caught on to this and designed fake or illegitimate robots that can perform the same functions but make you lose your money to them.
- Pyramid Schemes
These are also very popular in the Forex scamming world. Fake Forex traders recruit people to join their investment clubs to gain more knowledge on Forex investments and build wealth quickly.
Some of them require you to find more people to join the group so that you can climb up the pyramid quickly and get a share of the invested money.
How to Avoid Forex Scams
If you’re interested in Forex trading but worried about falling victims to Forex scammers, check out these easy ways to avoid being scammed.
- Steer Clear of Get-Rich-Quick Brokers or Clubs
Getting good returns from Forex trading takes time and skill, just like many businesses. So, if you meet a broker trying to convince you to come on board to earn money fast, you should avoid them.
- Be Wary of Brokers or Companies that Assure You Guaranteed Success
Forex markets are susceptible to risks, which can happen at any time. So, any trader or company guaranteeing you a 100% fool-proof trade is likely to be a scam. Nobody can guarantee that there will be no risks involved, no matter how expert they are.
- Crosscheck the Legitimacy of a Broker with Regulatory Bodies First
Before making any deals or trades with a Forex broker, check with the NFA regulation for the broker’s contact information and if any details are incorrect. If the broker tries to convince you about why there are inconsistencies in their details on the regulatory body’s platform, it’s a definite red flag.
Forex Scam Recovery
If you think you’ve been a victim of a Forex scam, try not to panic or get too angry. There are some Forex scam recovery tips you can try first.
- Work with Forex Trading Scam Recovery Platforms
These experts understand the process of recovering your funds from Forex scammers. They review your case, gather enough evidence, help you confront the scammers, and get your money back.
- File for a Chargeback
If you made a transaction to the scammer using a debit or credit card, you could make a chargeback request directly to the issuing bank. If your accusations are found to be valid, the banks involved will reach out to the broker, deduct the funds from their account and reimburse you.
- Speak with the Regulatory Body Near You
If you live in the US, the NFA is the authority you would wish to contact. They have a website for fraud complaints where you can register your grievance about the trading scam. They will review it, contact the fraudulent broker and help you retrieve your money.
Final Thoughts
Before you invest your money into any Forex trade, conduct proper research to ensure you’re not about to be scammed. The tips we’ve shared will help you stay on high alert and run from any suspicious activities.
If you have unfortunately fallen victim to scammers, try any of the Forex scam recovery tips for help.
