Forex scams refer to financial products that are offered with the goal of deceiving investors. These scams are popular because of how easy it is to start them. 

For example, anyone can create a high-quality website to offer managed accounts. It is also easy to create a fake forex brokerage company and siphon funds from customers. In this article, we will look at some of the most popular forex scams and some strategies to use to avoid them.

Fake forex trading brokers

A leading scam in the foreign exchange industry is where a person or group of people will create a fake broker and market it online. To do this, they either hire a professional website developer or build the website themselves. 

After building their website, they will use advertising platforms like Google, Twitter, and Microsoft to market their products. Then, after creating their accounts and depositing funds, these customers won’t hear from the broker again. 

You can avoid falling prey to these scams in a variety of ways. First, we recommend that you trade with long-established and well-known brokers. Some of these are companies like IG, OctaFX, ATFX, and eToro.

Second, always check the legal status of the broker. Most of them publish their registration numbers on their website. But even scammers do. Therefore, take the number and verify it on the regulator’s website. The most popular regulators are CySEC, FCA, and ASIC.

Third, pay close attention to the website you are creating an account in. This is important since many scammers use names that are similar to well-known brands. Finally, read online reviews about the company.

Managed accounts

Another popular forex scam is managed accounts. These are scammers who offer trading accounts and promise sweet returns to their customers. Some will promise you more than 30% of returns every month, while others will offer more. 

As with the fake brokers, the scammers will create a professional website, offer exciting testimonials, and promise you excellent returns. Some of these scammers will provide you with an excellent returns sheet, and some will even send you these funds. 

Their goal is to create a relationship with you, which will push you to deposit more money. They will then disappear. 

Other managed accounts scams are blunter in that they will disappear as soon as you make your first deposit. 

You can avoid these scams by doing several things. First, always read reviews of the company you want to use. If they have pictures of their testimonials on the website, do a reverse search to see whether they are using stock photos.

Second, avoid deals that sound too good to be true. Furthermore, since trading is a risky business, no one can guarantee to you the returns they will offer. 

Third, check the registration state of the fund if they claim to be regulated. Just confirm with the specific regulator about this. 

Forex signals

Another popular forex scam is about forex signals. This is a situation where a scammer will build a website that offers daily signals. They will then charge their customers a monthly or weekly fee for the service. 

While there are some genuine signal providers, the reality is that many of those in existence are not. The goal of these scammers is to capture as many customers as possible and lock them in their platforms.

Some of these scammers are known to make it difficult for subscribers to cancel their subscriptions. Others are known for stealing their customers’ credit and debit card numbers and withdrawing their funds.

Fortunately, there are several methods of avoiding these scams. 

First, you should check out the reputation and experience of the provider. For example, you can use Whois to check when the website was registered. Avoid those that were started recently. 

Second, you can read reviews from websites like BBB and TrustPilot for more reviews. Finally, only use a service that gives you a free trial.

Forex robots

Robots are programmed products that help traders to automate their trading processes. A robot can automatically open a trade or send signals when a certain combination is reached. These robots are built by people who know how to trade and develop software. 

Since few people know about trading and programming, many companies sell robots. Some sell the robot for a one-off price, while others offer them as a subscription product. The most popular marketplace for buying and selling robots is MQL, which is owned by the developers of MetaTrader 4 and 5. 

While some trading robot providers are good and credible companies, many are not. In fact, some people have spent thousands of dollars buying a robot that didn’t work. You can avoid these scams by requesting a free trial, reading reviews, and using the robot in a demo account.

Forex education scams

Finally, another scam in the forex industry is education-related. These are scammers who market online trading courses that target new traders. 

In this scam, they will create a website and charge thousands of dollars to their students. While some of them have created genuine courses, many of them usually compile materials from other popular trading education platforms.

Therefore, the education material they provide is usually accurate, but the amount they charge is not. You can access these same courses for free using platforms like BabyPips. 

You can avoid the trading education scam by first using the free education websites. You can also avoid the deception by using platforms like YouTube that have some excellent education coaches. Finally, before you buy a course, give it a test run first.

Summary

Forex scams are popular globally because of the interest many people have in the industry. Furthermore, many people believe that they can double their money easily in the industry. 

In this article, we have looked at five of the most common scams, but there are many. If you are a new trader, you can avoid these scams by taking time before you do anything. For example, before you open an account, look at the broker’s registration status or before you buy a robot, give it a test run first.