You are probably aware that the Forex market is the largest financial market in the world. It is easy to access the Forex Market these days. With just one click you can place a trade with a major, a minor or even an exotic currency. Many people wonder whether it is possible to get rich trading Forex. The returns are pretty high, and so are the risks.
Unfortunately, there are very many individuals who try scamming people inviting them to trade with Forex scams. These scams exist as long as the Forex market is around. However, there must be a solution for this problem.
Forex scams come in different forms, and some of them are even named after their inventors, like Ponzi scams, for example. The main target of scammers are beginners and uneducated traders. The most effective method of avoiding being scammed is to get decent Forex education before starting to trade. Forex scams usually speak about unlikely lucrative opportunities. They take advantage of beginners’ optimism and lack of knowledge.
You can spot a scammer if they promise you incredible returns with little or no financial risks. You should know that there is no such thing as 100% guarantee. If an opportunity like that existed, no way market players would share it with others. Some of these false-success opportunities may sound very appealing, especially for beginner traders. Here is the rule: if something appears too good to be true, then most likely it is.
At EuropeFX Academy we have created a list of rules to follow if you would like to avoid being scammed:
- Don’t chase after empty promises
- Be careful when you hear about software that implements a “winning algorithm”
- Don’t download or install any software, unless you are sure it will cause no harm to your computer.
Another distinctive feature of a scam is that it is never registered with a regulatory authority. Note, reliable brokers always support their legitimacy with a proof. It is also very easy to check if a broker is actually regulated, as you can call a regulatory authority and ask them if this broker is listed.
There are three major types of Forex scams, here we will explain how they operate and teach you how to avoid them.
A Forex robot is a trading software that implements algorithms and sends signals to open or close trades. It is important to note that not all robots are scams. Here is the list of criteria that is inherent to robot scams:
- The promises used to describe those robots are unrealistic. The author of such software might try to sell you a dream which is most likely a lie.
- High percentage growth returns. Some marketers will advertise that with a particular robot you can get up 500% of return in a couple of years. It wouldn’t be wise to have high expectations from these fantastic numbers, so stay alert.
- Trading with an unregulated broker. There are Forex robots that show extraordinarily good results using unregulated brokers. Trading with unregulated brokers is not recommended in general, so EuropeFX Academy warns you to stay away from robots like this.
Signal provider scams
Usually signal providers are individuals who are professional traders who share the information about potentially profitable traders. These signals include a currency pair, direction of the trade, entry price, target levels and stop loss. There are several things to look out for when you choose your signal provider:
- High subscription fees. Some signal sellers may market their signals 100% profitable without substantial proof.
- Broker-related signals. Some signal providers offer you signals only if you sign up with a specific broker. It means that they don’t really care if signals are profitable or not, all they care about is the commission they will receive from this broker.
- Unverified results. It is easy to say that your trading signals yield good results, but if there is no record of success that might be a red flag that a provider doesn’t trade these signals themselves.
The best way to avoid these scams is to take your time. It is our intention to warn you that access all pros and cons before making a decision. It is not an easy task to find a reliable broker, but it will be advantageous in the long run if you take your time choosing the right service. The first thing you should do is google broker’s name and see if there have been any complaints about their credibility.
To avoid getting trapped by a scam, always trade with a regulated broker that is fully transparent in their fees and compliance policy. The appeal of easy gain will always be there, but keep in mind it might not be a good idea to trade with companies that put your capital at risk.