Forex scams are the most common phenomenon in forex trading that corrupt the market. There are many swindler schemes that scammers are using in the market to get their hands on the money.
Fuad Ahmed, a currency trading expert is identifying some regular traps in the forex trading and giving traders the suggestions to avoid scammers’ tricks. The basic technique, according to him is to acclimatize yourself with the market and understand how it operates. Once you know the dynamics of it, you can very well judge the ebbs and flow of the forex market yourself.
How forex scam works
Fuad Ahmed has previously discussed in another article how it’s important to have complete knowledge of forex trading and have the proper education of how everything from fair trading to scamming works. He is of the opinion that since all the scammers work on a similar agenda, they possess a particular state of mind too, therefore, there are some common red flags that are present in all the trades when scams have been studied.
The most common point among all has been observed to be the fact that the scammers always make an offer so lucrative that you cannot avoid. They give investment opportunities that are very difficult to resist for traders. So, a smart trader would know when he is made an offer that is too tempting to be real. If ever found in a situation like this, the trader would know he is being dragged into a trap to invest money in a Ponzi scheme.
Most common victims of these scheme traps are traders that are new in the business and are not very well aware of the market. The scammers target such novice traders and try to take advantage of their vulnerability by creating a web around them.
Since it’s the new traders that fall prey to the trap of schemers the most, Fuad Ahmed suggests them to believe that losses, in the beginning, are indispensable and cannot be avoided. This is the reason he recommends them to accept losing money as part of the game and try not using shortcuts for making money.
How to spot a Forex scammer
As mentioned above that a trader has to remain vigilant and alert of all the agents involved in malicious activities like tempting traders with an investment plan guaranteeing huge profit returns.
There is need to understand that no trader can be given a guarantee of 100% or more profit returns in the first few trades he places. There is always fluctuation in the results, that is why a trader that falls prey to such scams are very easy to identify for scammers. They believe the most unreal offer possible.
And if there was then there’s no way traders would share it with other market players.
These offers are really attractive for the new market players that are eager to generate more money in short span of time.
The rule of thumb in the identification of a scammer and avoiding them is to run away as soon as you meet someone with an offer too charming to be true. For the new traders, it’s always good to remain a little skeptical than investing a huge amount of money and losing it all.
Fuad Ahmed also suggests traders to not try the fake trading software and only choose the best trading platform to avoid all kinds of miseries that can come with a bad one. Many scammers hide behind trading software and damage computers along with taking all the account information that the trader put on the programs.
Its recommended that the brokers a new trader should go to be always registered and have a standing in the market. The brokers present in the market for some time always have a license from some regulatory body, therefore, traders should always check with the authenticity of the broker before contacting him to begin trading.
Where can you find the forex scammers
There are many kinds of forex trading scams, however, the most common and popular ones are listed below.
The most challenging job for a trader, in the beginning, is to find an honest and upright broker in the forex market. Among the operators, it’s the signal sellers that are very commonly found in the forex market.
Signal sellers are the ones that use signals to direct traders about the most suitable time to buy and sell currency pairs. These sellers might show the indicators and signals manually or they can be received by entering info in the system to get results in an automated way. These signals can be based on financial analysis, daily news or any breaking bulletin that might stimulate a price change in the forex market. The reason all this information is revealed to the trader is to save him from losing his money and avail himself of the best opportunities to make a profit.
All the signal providers charge different amounts of money as service charges from the trader, therefore it’s said that these signal sellers are the real scammers in the market. Its said that if it was so easy to overcome the changing market by just following the seller’s directions, wouldn’t everyone be making a crazy amount of profit without losing a single penny.
Some analysts also believe that to avoid scammers the best solution is to use the best forex trading software, that uses a well planned and free of the scam of signaling service. The major point of criticism against signal sellers is that is it actually possible to predict the changes in a moving market or not. There is still a debate that whether it’s easy to efficiently derive the advantages in a forex market.
The most suitable way as told by many analysts in the market is to start a demo account to know how a signal seller can benefit you. It is recommended that one should not fall prey to the trap of every seller that’s present in the market. One should stay in the market, gauge all the aspects of it and understand for oneself with patience that what move can positively benefit him.
Investment Management Funds
Forex Management funds have been circulating in the market for the past few years, which often are a scam than real.
The major issue with companies offering the management funds is that they ask the investor to hand over all their forex trading to skilled traders to be managed by them. These skilled traders give lucrative measures to novice traders, promise them to get incredibly high-profit returns on their investment. These management firms operate in a manner that demand investors to give all the money and its information to someone the investor barely knows. This can be extremely dangerous and as the website and brochures of these firms show a very fancy and successful picture of them, whereas these are just to trick the naïve clients.
The solution to this problem lies in remaining vigilant of the market and choosing the right firm for yourself.
Avoiding the dishonest broker
There is no central regulatory authority in the forex market, there are many unregulated accounts that deal and place an innumerable amount of trade every day. The most common issue found in an environment where operations are not regulated is actors not behaving or dealing in a fair manner.
A trader should always search for the broker on the internet and check for his authenticity to avoid dishonest brokers. The other option can be to look for a trader that is licensed or authorized by a regulatory body like SEC and FINRA in the US. He should also have a standing in the market.
Where forex trading is a business taking place in the largest financial market in the world, there are many scammers and fraudsters playing in the market too.