Foreign exchange (forex) trading is a perfectly legitimate way to invest. In fact, it’s even larger than the stock market, with a daily volume of more than $6 trillion. With so much money floating around, there are sure to be plenty of scammers trying to get their piece. Here are the common methods that forex scammers use and how you can spot and avoid them.
- Trading Bot Scams
Today, professional traders use many automated tools to trade more effectively. However, none of these solutions do anything close to taking over the trading process completely. Traders must still develop their own strategies and can only use these tools once they fully understand them.
Unfortunately, forex scammers use automated trading bots as bait for many of their scams. They promise that their trading bots will carry out 100% accurate trades for you, providing guaranteed returns. Like with any other kind of investment promising guaranteed returns, this offer simply isn’t legitimate.
Trading bots are a real option that allows traders to implement more complex strategies than simple tools like stop-losses. They aren’t automatic money generators. Your money is still at risk when using trading bots. However, many of these fake bots like Bitcoin 360 AI which was recently reviewed on a website named ScamCryptoRobots.com don’t even really use trading bots. They’re using the promise of automated trading as bait and simply take any money you send them.
- Cloned Firms
One of the most prominent threats to everyday investors today is cloned firms. These scams can victimize investors even when they think they’re doing the necessary research and caution to avoid scams.
Cloned firms will set up a website identical to that of a legitimate firm or broker. Victims find their way to the fake website through social media or other methods the scammers use to spread malicious links. Once they get to the website, everything looks like a real forex investment opportunity.
Worst of all, cloned firms can copy a real firm’s name and registration number. Now, when visitors look them up with the appropriate regulator, it will look like the fake website is a fully legitimate and registered firm. Always be sure that you’re on a firm’s official website, reaching it through your browser directly instead of relying on links from unknown sources.
- Fraudulent Brokers
There are many online forex brokers out there that are actually scam operations. They develop a professional-looking website and claim to offer great spreads, high leverage, and other perks that you might not get at a legitimate broker. However, these scams don’t allow investors to withdraw their funds at any point.
Research into these brokers will show that they’re unregistered or only registered with offshore tax havens that don’t enforce investment protections. You’ll likely find official warnings about specific scams as well. These scams are so dangerous because they simply shut down and reopen under another name once they’re discovered.
- Signal Scams
Signal scams are a different type of scam altogether and one that many more people fall for. Instead of flat-out stealing your money, signal sellers offer to sell “expert” advice. Unfortunately, their advice about specific times to buy and sell is almost always useless.
In the best-case scenario, you’re paying someone for an ineffective service. In the worst-case scenario, you’ve just given your payment details to an incredibly shady operation that could use them for other purposes.
Simple Steps to Avoid These and Other Forex Trading Scams
These are just a few examples of how forex scammers manage to swindle their victims. There are many more, and scammers are inventing new methods every day. However, you can take a few simple steps to avoid the majority of forex scams.
First, you should only invest with forex with an established and reputable broker or platform. Don’t be drawn in by promises of high leverage or bonuses. These are distractions to prevent you from focusing on the lack of registration and oversight.
Make sure that the broker or platform you’re working with has verifiable contact information, including phone lines and a physical address in their registered location. Most scammers operate anonymously, and a lack of solid communication is a hallmark of forex scams.
Finally, don’t let wishful thinking hurt you in the long run. There are plenty of opportunities to invest in forex, but if something seems too good to be true, then it probably is.
Alexia is the author at Research Snipers covering all technology news including Google, Apple, Android, Xiaomi, Huawei, Samsung News, and More.