Last Updated: 13/10/2020

The forex market often referred to as the FX market is the largest trading market in the world, trading $5 trillion on a daily basis. The market is open on a 24 hours basis, allowing anyone around the globe to participate. FX market is characterized by constant price fluctuations that increase the potential for traders to make good returns. The huge returns on investment associated with forex acts as an incentive to many investors. With large volumes of money floating in a market that lacks accountability and not adequately regulated, scams will be all over promising traders fortunes in limited time. Although schemes and scams are evolving day by day, we have picked the most common forex scams and how to identify them.

Shady Brokers

Unscrupulous brokers most of whom are not regulated can perpetrate a number of scams against traders. First, some brokers will trade unfairly against traders; others will charge egregious fees, commissions as well as hidden charges. In some cases, these untrustworthy brokers will freeze the trading platform during economic events or busy market hours. This move limits the ability of a trader to cancel any order which means that the order will be filled at a price different from the one the trader intended. Thorough research on your broker will help you avoid broker related scams. Ensure you are working with a well-regulated broker operating in well-known jurisdictions. Checking broker reviews too can help a lot, although some brokers will leave behind fake reviews, independent reviews from independent sites can be used to gauge the authenticity of a broker.

Choosabroker’s recommended brokers are vetted exactly for the purpose to help you avoid shady brokers altogether. Check out our best forex broker article and how to choose the best online broker.

Phony signal sellers

One of the most popular modern-day scams come in the form of signal providers. Signal providers are firms, managed accounts or even individuals that will claim to offer favorable buy/sell signals at a fee. They will often tout their vast experience and special trading capabilities to unsuspecting traders. They claim that all a trader need to do is pay a specific amount of money in exchange for expert recommendations. Don’t get me wrong, there are some genuine signal providers, but the majority of them are fake. Try out the signals on a demo account with a trusted broker for 2-3 months before trusting them.

The life-changing Forex Robot

As you were doing your online search, I’m sure you came across a robot that promises 10,000 pips a month, and you felt this was about to change your financial life. The builders of this amazing robot even touted its ability to trade automatically and generate wealth as you sleep. What you don’t know is that these robots are not independently verified and even worse is that the owners do not trust them either. Ensure your research trading platforms within the market and utilise all the available educational resources.

Managed accounts

For those who do not want to learn forex but still plan to join the forex billionaire club, I have something for you. The managed accounts scam is the perfect fraud for you. The scam works by having the investor “invest” an amount of money with a professional trader who trades and retains a fraction of the profit. Funny enough, instead of the “professional trader” investing your money in the forex market, he spends the same on some luxurious cars and watches, and you end up losing your hard earned money.

To stay safe in the forex market, you need to take your time to review items you see on the internet. Always invest an amount you can afford to lose, don’t take a loan to try it out in forex. When looking for a trading platform, keep in mind that no software will make you an overnight success.

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