SELF DEFENSE LESSONS: FOREX FRAUD

How to protect yourself from Forex fraud? This question is relevant for both beginners and experienced traders. Fraud has flourished in exchange and currency markets since their inception. And most of the deception schemes are as old as the world and based on the excessive credulity of the participants in the trading operations.

Forex Fraud: Common Circuits

1) Spread brokers fraud

Any Forex transaction is carried out through brokers who assign the size of the spread – rewards. Accordingly, the difference in spreads between different brokers for different currency pairs can reach considerable sizes. By manipulating spreads, conducting direct and reverse transactions, you can get a good income, while for an investor the profitability of such a transaction will be very doubtful.

2) The disappearance of the broker

The most notorious case of fraud is direct theft by a broker or a false broker of funds from customer accounts. At the same time, attackers most often use registration in offshore companies and do not particularly seek to mask their intentions. But their bait annually comes across hundreds and thousands of gullible investors who want to get more favorable conditions in the framework of cooperation with a broker.

Read more about choosing a brokerage company in the article: “Forex. How to choose a dealing center.”

3) Sale of trading signals

No less often scammers play on the inexperience of novice traders. Fear of making the wrong move pushes such investors towards scammers who promise to share their trading recommendations, which almost never fail. Exchange of information, of course, is offered on a reimbursable basis. And the fraudster himself disappears along with the money before the trader may need his consultation.

4) Sale of trading systems

Automated trading robots are a popular commodity in the Forex market. They are bought or purchased for free, literally looking like a philosopher’s stone, trying to solve the problem of breaking even the most obvious and, alas, unwarranted method – by using someone else’s intellectual work. Meanwhile, there is plenty of evidence that Forex works best on their own trading systems. But most often no one, including its creator, can confirm the reliability and efficiency of the work acquired from the hands of a trading system. Of course, this does not apply to all trading advisors, but for the most part, trading with their help resembles guessing the loss of red and black fields on a roulette wheel.

Trading system frauds may not be so obvious. For example, fraudsters can appeal to the trader’s ignorance of the realities of the market. It is worth remembering that today not one, even the most excellent trading system today is worth more than a couple of hundred dollars. You are offered a secret development for a couple of thousand? Think about the appropriateness of such an acquisition, especially if the seller appeared literally from nowhere and is not known to almost anyone.

5) Guaranteed results

Does your broker promise a 100% return? PAMM-Account promises incredible profits without risk? Most likely you are faced with scammers who are ready to promise anything in exchange for money from gullible investors.

You can learn more about choosing the right PAMM account in the article:  How to choose a PAMM account manager?

6) Substitution

Brokerage companies allow traders to invest in Forex – they serve as intermediaries between the global market and small players. Today, all work and communication between brokers and their clients are carried out through the web interfaces of the sites. And here for scammers, an incredible scope opens up. Fake duplicate sites of well-known companies are created. Pseudo-agencies open, disappearing immediately after raising funds from traders who entrusted them with their money. In order to protect yourself from such risks, it is better to check in advance the reputation of the company with which it is planned to work. And, if there is even a shadow of a doubt, refuse to cooperate with a broker even before depositing funds into the trading account.

7) Scam traders

Beginning investors sometimes encounter such a phenomenon as the private initiatives of supposedly experienced traders, offering to entrust them with money “honestly and future profits.” Of course, the next move of such a manager will be to send the investor a message about the discharge of the deposit. And since there is no profit, then nothing will have to be shared.

8) Guru

The category of scammers that sells worthless information and affiliate programs is one of the most dangerous and widespread. It is such pseudo-guru who become real leeches, gradually depleting the already poor reserves of a novice investor. Moreover, the guru’s own real successes in trading are often nullified. And he makes money on gullible simpletons, ready to give their money for some knowledge that will definitely allow them to soar to the top of financial prosperity in a matter of seconds.

How to protect yourself from Forex fraud?

In fact, it’s not so difficult to protect yourself from getting hooked by crooks. It is only necessary to approach communication with any “specialists” promising the Golden Mountains from a practical point of view. Before entrusting someone with their capital, it is worth learning more about his professional activities, reputation, successes. Did you not find the information in the public domain? Most likely you will become one of the few “lucky” that the fraudster is going to deceive this time.

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