Introduction to Forex Trading Scams:
Just like the market evolves according to the collective needs and wants of the customers, the scams and frauds do too. Scams are present in every corner of the world, waiting to pounce on the prey and steal all of their money. With scam brokers hiding in the nooks and corners, the forex market is no different. The scam brokers either forge the identity of a legitimate broker or create a new one discreetly from an offshore zone. The plan of action afterward, remains the same more or less. Starting with cold calls or bulk spam emails with irresistible offers, these scam brokers try every trick up their sleeves to scam the innocent and the unsuspecting traders. In this article, we will be discussing the List of Forex Trading Scams 2021 and how you can avoid them.
Who are these scam brokers?
Forex scam brokers may not always be a full-fledged company that is stealing the money. They are mostly individuals who pretend to be broker companies in the markets. These scammers are very skilled and use information from the websites of other legitimate brokers to make their page look reliable. These scammers do not apply for or acquire a license which makes them unfit to operate in the market. They may not even have the basic knowledge required for forex trading and yet claim to have years of experience on their website. Innocent traders and newcomers of the industry are most prone to such scams as they believe all these fabricated lies quickly.
These forex frauds may create attractive websites with catchy slogans and irresistible promises that drive customers in. They will use phrases such as “high leverages”, “guaranteed monthly profits” and “double returns” to attract customers to their company. As most of these brokers are market makers, they make a profit when their customer incurs a loss. Due to this reason, the scam brokers will always be inclined to make you lose the trade by promising high leverage which induces high risk, or by using AI and guaranteeing profits.
What are the types of Forex scam brokers? List of Forex Trading Scams 2021
Out of many, the three main types of forex scam brokers are listed below:
- The Bling Brokers
Just like how many of us are instantly attracted to the bling of jewelry, these types of scam brokers provide special attention to attracting customers. The website they create may not even have other functions like the websites of legitimate forex brokers. However, these websites are created to induce a sense of urgency and emotionally manipulate the customers into depositing as much money as they can to get better returns and bonuses. As a result, when the customers deposit their money with high hopes of getting huge returns, these scam brokers disable the website and vanish without a trace. In some cases, these fraudsters declare that they are bankrupt and leave with yet another fake promise of returning the money. As they are not regulated nor do they provide legitimate information on the website, it is hard to trace them.
- The world in itself brokers
Such scams require precise planning and more than an individual to execute. In this type, the scammers create a platform by blatantly stealing ideas from the legitimate forex brokers in the market. They then attract customers into their platform, who can only trade with other traders on the platform itself. In such a condition, these traders are not trading in the interbank market, thereby giving the scam brokers the right to set whatever rules they want. This creates an indirect monopoly in which the traders suffer loss constantly.
- Pyramid scam brokers
One of the most famous scams, pyramid schemes have been in the market for a long time. In such types of scams, the brokers pay the deposit that they have received from the new customers as returns to the old customers, thereby trapping them in a vicious cycle. In many cases, these scam brokers may even lie to the customers that they are trading on the interbank market and fill their minds with fake promises and guarantees.
How can you identify a forex scam?
In the early times, it was rather difficult to differentiate a scam broker from a legitimate broker due to a variety of factors. However, in this era of globalization where everything is available at our fingertips, we can access such information quickly. Some of the common practices that most scam brokers adopt are listed below, keep these in mind for the next time you research a brokerage firm:
> Fake promises of high profits
No broker can guarantee or promise high profits as it is not in their hands. If a broker is assuring huge profits or returns, you must know that it is a potential scam. Scam brokers often adopt this trick to lure in customers.
> Stating no risks
Trading is always risky. If the broker is claiming risk-free trades, chances are that they are a potential scam. It is very important for you to note all these factors rather than getting lured in by them.
> No regulation
Regulation is vital for any brokerage firm. The regulation or the license gives the regulatory body the right to supervise the brokerage firms that come under them. Therefore, the license guarantees the security of the money you deposited with the brokerage firm. If a brokerage firm does not have a license from any of the well-known regulations around the world, it might be a scam.
> Fake Ratings
In order to be more convincing, these scam brokers will make up fake polls and place themselves in the first position. If you come across such a poll on any broker’s page, always check if the poll is legitimate.
Conclusion:
Forex scams are dangerous. One moment of not being cautious and you can risk all your life savings to a scam broker. In order to make sure that this doesn’t happen, always check for a license from top tier regulations such as the FCA of UK, the ASIC of Australia, CySEC of Cyprus, etc. We have a separate section of the List of Forex Scam Brokers 2021.
If you have been scammed by any forex scam broker, do not be afraid. Report a complaint with us and get immediate replies with the best solutions for your fund recovery.
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