Forex trading is the largest financial market globally. Over $6.6 trillion worth of trade is carried daily in this market. As with any other financial market, even forex trading is a target for many scammers. An enormous amount floating in the market provides an easy option to make fortunes for scammers.
While forex trading can help you become rich, scams can lead to heavy losses. Recovering money in the unregulated market can be challenging. Only a person who has been scammed can relate to it. But, there’s a piece of good news among all these. Several companies can help you with forex scam recovery.
Hence, if you have experienced a scam, you can connect with these companies to get your money back. But, you first need to know how to identify and report them. If you can’t spot a scam, you will keep falling into this pitfall.
The Telltale Signs of Forex Scams
Forex scams give you several signs. If you can spot these signs, you win the game. Here are some common signs that will shout out that you are investing your money in a scam.
1. Voice Phishing Attempts
Voice phishing refers to making fraudulent phone calls to lure victims into sharing personal information or giving money. It is likely a scam if you receive a random call about a great forex investment opportunity. They will ask you to either give money or share financial and other sensitive information to quickly invest in the opportunity and make a fortune. But you should never share any of these things over such calls.
2. Risk-Free Promises
You cannot make huge returns without taking risks. Every forex trade is associated with some level of risk. Usually, the level of risk increases with the number of potential returns. Like any other market, even forex trading has a bearish run. Hence, if someone promises risk-free trading, the person is attempting to get you caught in a scam.
3. Bonus or Discount Offers
Have you received calls to buy credit cards? Using bonus or discount offers for forex scams is almost similar to that. Some companies may reach out and offer bonuses or discounts if you start investing with them quickly. Thus, they will try to influence or pressure you to make quick decisions within a given time range so that you don’t have much time to think or do any background research.
4. Promises Quick and High Returns
Forex trading can indeed get you high returns. But it will take some time. It’s a one-time scenario where you might go from rags to riches within a few days. No one can promise you quick high returns. If you come across a company that promises returns that are too good to be true, it’s a scam.
5. Unregulated Companies
Authorized companies are usually regulated, investigated, and licensed by a government agency. For instance, authorized brokers in the USA are regulated by the Commodity Futures Trading Commission (CTFC) or National Futures Association (NFA). Similarly, every broker or company promoting or selling financial products in the UK is authorized by the Financial Conduct Authority (FCA).
Hence, you should always check if your broker is registered with the appropriate authority. Usually, legal and trusted brokers upload their licenses on their websites for viewers. If you can’t find a license on the website, go ahead and ask for it straight from the broker.
6. Fake Adverts
Scammers usually do fake promotions of their trading results. They will post screenshots with high returns to show that they are constantly performing great and always making profits for their customers. Try to check if an independent third party verifies the screenshots.
7. Lack of Information
A legal and authorized company will usually provide their background information publicly available. They will also show their license from the regulatory authority. On the other hand, scammers will try to hide their identities. If you can’t find background information of the company you are dealing with, there are high chances of a potential scam.
The Most Common Forex Scams to Avoid
Besides knowing the telltale signs, some information around the most commonly used scams will also help avoid them.
Due to technical advancements, robot scams are increasing exponentially. Everyone is aware of the capabilities of Artificial Intelligence-powered robots. They can operate without any human intervention. Scammers are using this as an opportunity.
The fraudsters promise robot systems that can automatically invest in trades to earn profits even while sleeping. They will also show you some fake results of previous trades. However, no robot can ensure 100% positive trades. All the robots work on data and algorithms. They are designed to carry out certain actions based on the data they receive. Hence, even the best AI robots cannot always predict correctly due to the high volatility of the forex market.
Signal sellers are brokers or individuals who claim to identify and alert favorable times for purchasing or selling any currency pair or commodity. Using fake testimonials and claiming long experience, they promise expert recommendations by taking a small amount of subscription-like fees. They will promise 80, 90, or even 100% positive signals. But, they usually give random signals without even doing any research or applying any strategies.
Managed Account Scams
Some companies offer managed account plans. They promise that an expert investor will invest in trades on behalf of the customers in exchange for a small commission. The expert investor will vanish once they lure multiple people into the scam.
These are where the fraudsters return profits to some initial investors, making them believe that the company or scheme is legal. This encourages investors to promote the scheme and even put in larger amounts. Once enough is gathered, the scammers simply vanish, leaving nothing for the investors.
It’s all about questioning to gather information. A simple Google search to check if the company is registered with the regulatory authority or any other background information available can prevent you from scams. But in case you are not able to identify fraud and go straight into it, always remember to report them and seek help from forex scam recovery companies. Reporting these incidents are important as it will alert others and prevent them from becoming the next victim.