If you search for forex scams, the results you will get are frightening. While the forex market is growing and becoming regulated across the world, there are many forex trading scams, which should be banned from the markets. But you will not know them unless you get scammed. Hence, you should point out scam brokers beforehand, which is not an easy task either.
You can omit the scammers by choosing the best forex broker. Alternatively, you can also do some research on the forex scammers list that is already available. Thanks to our research team and the users who already listed out the broker scam. Here you will find the list of scam brokers available in the world. Besides, we also cover the ways to avoid scam brokers.
Definition of Forex Exchange Fraud or Forex Scams
Traditionally, a forex scam is considered a trading scheme that looks for ways to defraud the forex traders. Usually, scammers hunt for inexperienced or new traders and offer them highly profitable schemes or packages about forex. Nevertheless, a lot of the traders fall for that. Even some experienced individuals also become victims.
In early 2008, forex traders experienced a rise of scam brokers and eventually lost a significant amount of money worldwide. Normally, scammers trap the trader in various ways. Those scammers aim to lure the trader’s money. Most of the brokers come across that kind of scammer at least once in a lifetime. Some may avoid it while most of the traders lose small to big amounts of money. If you never experienced them, you are lucky!
Thus, knowing the list of fake forex brokers is important and the process to avoid them.
Forex Scams Type
Forex scammers follow numerous tactics to scam. If a process fails, they look for another one. Hence, the invention of scamming never ends. However, the basics remain the same. So, we would suggest you understand the basic scamming types then go for understanding the advanced scammers. Your precious investment can be saved in this way.
We have found four basic types of scamming ways invented by the broker scam. So, let’s see them first.
As per the working procedure of this type of scam, they offer many lucrative schemes. However, the scheme owner never initiates a trade. Instead, the owner receives money from registration fees. Hence, if a new registrant or investor invests any money in the scheme, the owner generates money. It is like a chain process. The new registrant will then need to recruit more people for the schemes to earn money out of it. So, everyone is connected to each other in the scheme, and the process will go forward like that.
Therefore, the more registrants you can convince to invest, the more commission you will get from the chain. Usually, the earning is calculated as a percentage based on the number of investors you can convince. These kinds of schemes cannot add any value to your portfolio but lose your time and money.
So, the process summarizes that you are taking money from others and pass it to the people who are at the higher level in the pyramid and support the forex trading scams. Sometimes it is also named multi-level marketing, which is illegal in most countries in the world. So, if you ever come across to this type of investment offer, you should not fall for it. We have the fake forex broker list in this article; you can check that to find out the pyramid scams near you.
Scam via Forex Robot
It is mainly the algorithm and programmed with a computer that works on self-trading for the investors. Furthermore, some robots help the traders to make trading strategies. Normally, robots make the trader’s life easier, but there are some robots that don’t help the traders. Instead, they just take the fees for you without providing the actual benefits. But the creator or the programmer of the robot will offer you many worthwhile benefits and deals. In return, you will get nothing. Thus, you will become a victim of forex scams robots. You will not know about it until you use it.
Scam robots can make you a victim in two ways
- Scammers will sell you the robot at a huge price by offering numerous benefits, which are actually false claims.
- The robot can direct you to the wrong way. Here the system is a bit complicated, and you will know nothing until you lose a significant amount of money. Normally, the robots search for a trading strategy from the past and suggest you gain a huge profit. But, in reality, you are getting the wrong strategy from the past and which doesn’t have any value in the real market. Ultimately, you are trading based on past information without getting the live data.
Eventually, you are losing money from both ways; you can stay away from this kind of robot by checking the fake forex brokers list and see if the brokers or the robot is available.
Forex Ponzi Schemes
It is like an attractive investment firm, which has nothing inside. In Ponzi schemes, you don’t need to pay any fees; you will put your money in a scheme offered by an investment fund. Basically, the owner of the firm will offer you some forex guru or experts and convince you to invest via them. Here, the experts have a different name, called forex money manager.
But you might know that the regulated forex brokers also offer money managers, and it is possible that you might think the forex Ponzi scheme is legit due to the manager. But, in reality, those scheme managers act as regulated managers.
This kind of scheme will gain your trust by providing you some return initially. That’s how you will invest more with the hope of getting more returns. So, the later investments are likely a loss for the investors. So, how to identify them and stay away? Well, you can check our list of scam brokers as well have included the Ponzi schemes too.
Forex signals are usually a notification alert that you can subscribe to get updates about the market anytime. However, it is almost identical to forex robot scams. But the two have a difference, which is, you will have to pay a regular subscription for the signals. And that is the way you will be losing money without getting the right signals. The signal scammers are likely to send you a default signal without having any relation to the market.
Usually, the traders use the signals as a guide to initiate a trade. So, you will be trading as per the direction of the wrong signal and end up losing money. You can avoid them if you follow some tactics. But the best thing you can do is check the list of fake forex brokers before subscribing to any signal. It is because most of the signal scammers are associated with some specific brokers. So, you can simply check the signal list from the brokers.
Apart from the basic forex scams, we also found different types of forex scammer list who work as indirect scams, and you will not be aware of it.
Point Spread Manipulation
It mainly manipulates the bid-ask spread via computer software, and it overly benefits the broker instead of the trader. Normally the point spread manipulation happens when the system raises the spread to 7 to 8 pips. Nevertheless, the usual spread is 2 to 3. Due to this significant difference in spreads, brokers eventually get the benefits and earn money. The US traders may face this kind of scammers as point spread manipulation is mostly available in the USA. However, some offshore brokers may also scam through this way.
It has been seen that; sometimes brokers do not have enough money to initiate the trade. As a result, they pull out the money from the trader’s account. This is not a sort of direct scam. Less liquidity leads to bankruptcy most of the time. Therefore, the trader’s money stays at risk.
It is one of the most common ways to scam innocent traders. A list of fake forex brokers is available across the world who really don’t offer anything to the traders. Hence, you will be investing in them but don’t get any return.
Alternatively, it is possible that you will not earn a penny with a real and regulated broker. And that doesn’t lead to the idea that the broker falls under the fraud forex broker list. It may also be possible that your strategy is not working with that particular broker.
So, changing the broker will get you the idea of your trading situation, and you can understand if your past broker was a fraud or not. But this method will cost you a significant loss, So, it would be great to check the forex trading scams brokers before you invest.
The actual and expected price difference for a currency is known as price slippage. Whenever the trader starts a trade, it also initiates another identical trade to eliminate the trading risk. After that, the broker goes to trade the second position. So, if the trader’s position is earning the profit, the broker’s position will also be the same. In contrast, if the first position faces a loss, the broker will also face the loss too. Brokers usually do this to reduce the expected loss, and the broker offers some bonus or benefits to the trader if the broker earns money from that. However, scam brokers don’t offer benefits or bonuses to the traders.
Block Traders from Withdrawal
Normally, the regulated forex broker is bound to provide access to the trader’s fund anytime. Furthermore, traders can withdraw the funds too. But there are some brokers that don’t allow withdrawal of the fund or put restrictions. As a result, your money gets locked in the account. If you see any broker that imposes this kind of restriction, you should avoid that at any cost.
The usual trading activity gets the broker some commission. Hence, brokers influence the traders to initiate any kind of trading activity without any valid reason. So, if the trader starts trading, the broker’s goal will be fulfilled and eventually earn a commission. This kind of influencing activity will not seem as scamming directly. But indirectly, it is a sort of scamming and called Churning.
Commingling of Accounts
In the case of trading with a managed fund, brokers don’t have any control over the invested money. Hence, it becomes difficult for the traders to track their money. As a result, brokers get the opportunity to use your investment for their own benefits. Nevertheless, as per the rules, regulated brokers are not allowed to do such activities. So, if you face such a situation where you don’t have control over your account, you should not continue with that particular broker.
So far, we have covered all the basic forex scams types as well as the indirect scams. Now, we will take through the process to identify the scammers easily from the scam broker list.
How to Find the Forex Trading Scams?
It is evident that no scammer will continue the same strategy if they get exposed. Hence, they tend to introduce new techniques. So, traders may fall for those new scamming tactics without knowing them. But, every time they bring a new strategy, there will be some clue to find them out. Let’s have a look at them.
Ensure a Profits or Success
The rule of thumb while trading forex is that no one can guarantee you success or profit. The forex market is highly volatile and can change in a blink. So, no broker can guarantee you a guaranteed profit. That being said, if you come across a broker that offers you a guarantee to make money from forex, you should list that as forex scams.
Brand New Company or No Prior Experience
Normally the best forex brokers keep their identity public, and everyone knows about them. So, there should not be any doubt about trading with them. But there are some brokers that don’t reveal any identity or maybe don’t have one. This kind of broker may offer you some screenshots of their earnings to establish them as legitimate brokers. But this might not be true, and you may also notice that they don’t have any losses in their statements. Therefore, if you ask for an explanation, they might slip off your questions.
Moreover, it is also possible that the brokers produce charts from the demo account. And the new traders tend to fall for that and end up investing. So, if you face any doubt about a broker, even if the broker is reputed, you should ask the required proof. If the broker takes time to supply your requirements, that is a red flag, and probably you just come across forex scams.
Unwanted Advertising or Marketing
This is a sort of fraudulent activity. Any aggressive and unsolicited marketing activities are not expected from any broker. And no broker can push you to invest with them. Therefore, if any forex trading platform or broker forces you to invest with them in no time, this should be fishy. And you should avoid them.
If you face any kind of broker with such activity, stay away from them. Furthermore, you should stop yourself from sharing personal information with those brokers. There are possibilities that they may steal your credit information.
How do the Scam Brokers Contact the Clients?
Forex trading scams normally copy the client hunt approach taken by the reputed investment organizations or the broker. Hence, everything will seem so real and perfect. That is why the newbies, even the experienced traders, get confused about the brokers from the fake forex brokers list. It becomes more confusing as the forex scam list uses the same contact method as the real brokers. So, phone calls, mail, email or referrals are common for both face brokers as well as regulated brokers. As a result, you may ignore the background checking method for each broker you get contacted. Let’s dig more about the contacting methods of the scam brokers.
This is the usual and the easiest method. Normally the sellers contact the customers via phone call, and it is also an effective method used by the forex brokers. So, getting a call from a different forex broker is normal. And you will not know from the phone call if it falls under the fake forex brokers list. So, you should not trust the person sitting on the other side of the phone. Instead, what you can do is ask for more information.
Another conventional method is to reach potential traders or clients. In this method, the fake forex brokers list individuals who send mail to the potential traders with some eye-catching lucrative offerings. Normally, these kinds of emails are written by the professional, so that you don’t point out any doubt towards them. And guess what?
You might get convinced easily. No matter what they are offering, make sure you verify their name, address, etc., with the proper authority.
Due to the wide availability of the internet, 59.5 percent of the world population use the internet, and most of the users have email addresses. So, it becomes easier for the scammers to send an email with their offerings. Sometimes, you may also get bonus offerings too. However, authentic brokers may also send some sort of offerings. And that is why you might get confused easily. So, there is no alternative to checking the scam brokers list. We would suggest you check before taking any action.
It is one of the most effective methods. Firstly, a broker from the forex scammer list will get closer to you via family and friends. So, how does that work?
The scam broker will offer and provide huge profit to someone you know, and they will think it is legit. Now the broker will offer them a referral bonus if they bring more traders. Here comes the deal, your nearest and dearest one will now try to convince anyone they know and offer them the referral. And you will surely trust your nearest ones and get along with forex scams.
Some forex trading scams work more smartly, perhaps introduce them as real. They put an advertisement in newspapers or magazines about the lucrative offerings. As a result, the scammers are not going to anyone or calling anyone. Instead, people get attracted to the offerings and get curious. Eventually, they contact the advertiser and take a step towards getting scammed. Instead of going for the advertiser, do some research about the company first. Again, checking out the forex scam list will be helpful for you.
Through this method, the scam brokers form a real business from previous forex scams profits. They take expensive offices in a good location and decorate the office in an attractive way. Further, they introduce themselves as a famous organization. And, you might not doubt after looking at the office. So, you will not know if the broker is enlisted in the list of forex scams.
But you can definitely look at the business formation date, duration of the operation, and financial statements. Moreover, you should not hesitate to ask for details from the company itself and verify with the regulatory bodies too.