Analysis of Forex Scam: How to tell a scam from a serious Forex Broker
There are a number of people over the world that fall into the traps of scammers. Due to this reason, they lose a large amount of cash in the hands of meticulous tricksters. On the off chance that they had a superior method for distinguishing the tricksters prior ahead of time, they may have gotten away from the trap. The Forex trading market has been quite a soft place for a lot of scammers. They continually come up with new scamming tricks and techniques that are quite appealing to many individuals. In this way, they trap people easily and generate cash. There are many expert and novice traders who have experienced scammers once in a lifetime. These scammers are so expert that it is very hard to identify them. You must be wondering that what would be the techniques to identify Forex scammers as well as scams. Well, the first and foremost thing is to be very careful and not to trust anybody so quickly. This is the first technique. The other ways to recognize the Forex scams are explained below.
Check That Forex Site is Legitimate or Not Before Buying Any Product
The tricksters flourish by giving false commercials on a lot of sites. They sugarcoat their advertisements in such a way that amateurs in Forex market may be enticed to check them. It would be crazy in the event that you trusted that their product would work out. In spite of the fact that now and again they may even have a video to trick you into how another person profited, yet lamentably it isn’t the genuine unfurl of actions. Trustworthy sites and magazines, then again, have not many ‘pipe dream’ advertisements. They are fundamentally the favored and utilized over time sites. They have reliable interfaces. Also, they are sensible in content and nature. You would never anticipate such mind-blowing offers and deals that would not work for you. It is perfect on the off chance that you would stick to just legitimate Forex trading sites.
Are there just back-test outcomes?
Backtest outcomes are just another catch for defenseless brokers. The majority of traders and brokers will fall casualties of this trap in view of the conviction that numbers and insights don’t lie. Be that as it may, assume the numbers are controlled to delineate a specific outcome, will Einstein not accept? That is the catch with the backtest reports.
Try not to believe it on investor password with IP address
Financial specialist’s passwords that accompany internet protocol address (IP) are another trap that Forex scammers use to procure from clueless investors and traders. An IP address from a respectable broker might be fine, yet that shouldn’t be the premise used to examine the dealer. A decent trader ought to be controlled by a reliable and reputable financial framework. In the event that an IP address is acquired from an agent who isn’t directed, it ought to be treated with the outrageous alert. The majority of brokers keep up their believability that they will give distinctive server names starting from the drop of the server list. In this way, you will sign into the Forex server that compares to your record. There are few chances that the established broker will give you an IP address so that you can link up to the server.
Forex scam methods
There are several ways that investors are entrapped by Forex scammers, be it via telephone marketing (including SMS messaging and Whatsapp), emails, or advertising. All of these methods promote attractive investment proposals, promising high rewards with little effort in a short period of time. Regardless of the method they choose to employ, these fraudsters are almost always extremely persistent and aggressive.
Forex phone scams
Receiving unsolicited telephone marketing calls (also known as cold calling) selling everything from vacation packages to TV subscriptions are by now commonplace for anyone with a telephone. Although many of these calls are concluded with a polite “I’m sorry, I’m not interested right now”, an average of 1% to 4% of these calls are successful, this small percentage is enough to continue to drive the practice. Generally, a Forex phone scam will try and grab your attention immediately — within seconds, the caller will either 1. Present an opportunity to invest nearly nothing and receive inflated profits, or 2. Present themselves as a professional trading consultant representing a Forex broker. Although a small percentage of these calls may be legitimate, the majority turn out to be Forex scams.
Email, SMS and Whatsapp Forex Scams
Similar to the Forex phone scams, Email, SMS and Whatsapp messages from phony brokers are becoming more and more common. Once again, it is always important to be vigilant when it comes to any unsolicited messages, whatever format it takes.
Forex advertising link scams
This method of forex scamming is found in website advertisements or advertisements found on social networking platforms, such as Facebook or Instagram. They are often accompanied by photos of well-known personalities from the world of business or entertainment, who have nearly never authorized the use of their image. These images are used because they unconsciously arouse curiosity and thus influences the viewer to click and find out more. Another tactic used in these marketing schemes is the narrative “from rags to riches”, which utilizes visuals to share a tale of transformation of someone who once struggled to make ends meet, but now is living the highlife; all thanks to Forex investments.
Spot the signs: tricks to identify legitimate vs. phony Forex schemes
Trading in Forex and CFDs normally takes time to become profitable, so be wary of any forex broker who presents an opportunity to “get rich quick”, or to make high and fast returns on modest investments. One can certainly earn money on the Forex market, but it is almost never easy or quick. Phony Forex brokers generally present themselves to prospective clients in a very amicable way; inquiring about the client’s personal lives, choosing to assume a more friendly demeanour over a professional one. Oftentimes, the information they collect from clients in regard to their personal lives serve as fodder for their manipulative tactics, which are utilized throughout the course of the client’s investments. These “relationships” that the client and the Forex broker build is created largely through manipulation on behalf of the brokers. This is why, although cordiality is always appreciated, a reputable broker should always conduct themselves with clients in a professional manner. Reputable Forex brokers should also never discourage their clients from self-educating on trading, or about the Foreign Exchange market in general.
Key Warning signs of a Forex Scammer
You didn’t seek them out
If you are persistently contacted by a Forex broker company that you have not personally contacted, proceed attentively. It is always better to inquire through acquaintances or trusted reviews rather than responding to an unsolicited message or phone call.
They are very aggressive
Broker operators who operate forex scams utilize more coercive and aggressive methods than reputable brokers. They generally do not respond to requests to stop contact and will utilize different persuasive methods to do everything in their power to convince you to spend your money.
They promise exaggerated returns
A classic indicator of a Forex scam are exaggerated returns on small investments. Promises of high and/or guaranteed returns, when investing in Forex, are a big warning sign. These “guarantees” are nearly impossible to predict, as returns are dependent on an extremely volatile market.
They offer a high spread
The normal spread ranges (or relative value trade ranges) from two to three points in EUR/USD. Beware of those who offer spreads of seven pips (the smallest price movements. Most major currency pairs have a price of four decimal places, so the smallest variation is that of the last decimal point).
They present complicated “Terms of Use” and “Risk Disclosures”
Forex scammers take advantage of complicated jargon and lengthy ‘terms of use’ agreements and ‘risk disclosures’. The importance of these agreements are that they are binding and each clause can hide disadvantages for the investor who may have to find other ways to recover losses in trading.
Red Flags
If you are investing through a Forex broker, it is recommended to always be diligent, by keeping up-to-date with your trades and being constantly informed of any changes in regards to your investments or account.
When to worry
If you are unable to withdraw
If you try to withdraw funds from your account and are unable to do so, be alarmed. If, upon inquiring as to why you are unable to withdraw your money, the broker makes an unclear apology or does not respond to your inquiry, there is certainly cause for alarm.
The broker is blacklisted
By now many investors inquire about the broker’s credentials before accepting them to manage their account, and if they are well reviewed and their license is in order, it is more likely that one can invest their money with confidence. It is possible, however, that “pending licenses” may occur, or that the situation changes where a license is suspended, or a broker comes under investigation. For this reason, it is advised to periodically check websites of regulatory bodies (Consob for Italy, Cysec for Cyprus, FCA for Great Britain, NFA for the United States, etc.) to verify that the broker’s legal standing has not changed).
Infamous Forex Scams
The Ponzi/Forex Pyramid Scheme
Oftentimes, Ponzi schemes are difficult to recognize for what they are, especially in the beginning stages. Ponzi schemes are phony investing scams which guarantee high returns with limited risks. Ponzi schemes generate returns for prior investors by acquiring new investors. This is similar to a pyramid scheme, for both operate by using new investors’ funds to pay earlier investors. Most scammers who implement Ponzi schemes don’t actually invest in the Forex market; instead, the money is cycled internally, being given to earlier “investors” to stage returns that don’t exist. The continual and growing membership of “investors” allows some of these Ponzi schemes to go on for years.
HYIP Forex
A very popular scam uses ‘High Yield Investment Programs’, or HYIPs. HYIPs are the most elaborate forms of Forex Ponzi schemes, for they generally pay the interests of investors, or guarantee a high return on their capital, using the money of new investors. Arguably the most unfortunate result of this type of Forex Ponzi Scheme is that those who invest are well motivated to involve friends and relatives, who end up being defrauded in turn. As often happens in these situations, the money of the forex trader is never actually placed on the market, but simply diverted to either be deposited in the scammers’ accounts, or to pay new investors to temporarily gain their trust.
Computerized manipulation of the bid-ask Forex spreads
An old forex scam is based on the computerized manipulation of bid-ask spreads. Fraudsters offer large bid-ask spreads (at least 7 pips) on certain currency pairs, making it more difficult to earn profits on trades, indeed, any potential gains deriving from a good investment are cancelled by the commissions, which end up in the pockets of the brokers. Spreads have begun to be regulated better, with only minor spreads being allowed. Solely with retail Forex brokers, which are not regulated by the regulatory authorities, can still execute such scams.
The Signal-Seller scam
Fraudsters love to sell systems that offer programs at exorbitant prices, a price justified by the guarantee of incredible investment returns. A very popular Forex scam is that of the ‘signal seller’. Signal sellers are retail companies that offer a system at a daily, weekly or monthly rate, which prides itself on identifying favourable moments to buy or sell a currency pair that will succeed in pulling in high profits. Debt recovery in online trading is not simple, but neither is it impossible. If you have come across a scammer, or an alleged scammer, to whom you have entrusted your money, know that the best way to facilitate the recovery of what you have invested by relying on a trusted law firm which specializes in Forex Litigation.
