Reading Time: 3 minutes FOREX SCAMS

Forex Scams – How to Spot and Avoid Them?

Jul 9, 2020
forex scams

Forex, short for Foreign Exchange, is where investors trade different currencies, trying to gain a profit from the constant fluctuations of their relative values. Certain regulating bodies don’t vet and monitor forex brokers as well as they should. This has left room for numerous firms to operate forex scams. The quickest way to identify forex scams is that they sound too good to be true. Shady brokers promise high returns to first-time investors who don’t have the knowledge needed for forex trading. Always check that the broker you plan to work with has a license. Also, he has to have a registration with a reputable regulating body.

Forex Trading and How It Works

Forex is an incredibly liquid market with massive trade volumes every day. The most commonly traded currencies are the USD, EUR, JPY, GBP, and CHF. A trader specified an amount of currency to buy at a specific future date at a future price. If the value of the coin increases to a higher rate by that date, the holder of the futures contract makes a profit. Forex brokers offer leverage, allowing investors to take on larger positions than the funds they have available. This means that even small losses could wipe out the entirety of an investor’s funds.

Forex Trading and How It Works

Watch Out for the Many Types of Forex Scams

Different brokers employ different types of forex scams, mostly based around tricking inexperienced investors. Forex signals are a type of investment advice that tells an investor the specific time to buy and sell currencies. Those offering signals online often hide them behind paywalls and subscriptions. Forex scams also take the form of managed investment funds, which either overstate their potential profits or just take investors’ money and run.

Forex trading is regulated in many countries, but scammers often operate out of countries without the legal and financial infrastructure to crack down on them. They operate much like the penny stock boiler rooms of the ’80s, pumping out a massive volume of traditional and online cold calls. Scammers go further than trying to sell off bad investments – many illegitimate brokers are simply stealing investors’ money. They use phony credit card processors or bitcoin to take funds without any easily accessible recourse for the investor. The scammers are further hidden by fake shell companies, preventing investors from readily taking legal action against them.

Forex is a favorite asset for binary options scams. A binary option is essentially a bet on which way the value of an asset is going, up or down. Investing in binary options is practically gambling, and many brokers who offer them also refuse payouts to supposed to winners.

What to Do If You’re the Victim of a Forex Scam

Avoiding forex scams online can be difficult because the lack of regulation has led to a mix of both legitimate and illegitimate brokers. Always find out if the broker you’re considering is registered with a regulating body, find out what country they operate in, and the firm’s physical address. Taking a few simple steps to verify a broker before investing can save you a lot of trouble later on. If you’ve already invested with a forex scams broker, it might not be too late to recover some or all of your funds. Please tell us the details of your situation today, and we’ll determine how we can help you.