Forex trading has grown extremely popular recently: there are literally millions of active traders on the market right now, and hundreds of brokerage companies compete for their attention and money. While most of these intermediaries are perfectly legit, there is still a chance to run into scams and lose your capital, so you should beware of them whenever you’re choosing a broker. The expert will explain the most common scam types according to Traders Union research.
Why Forex scams exist
All financial markets are inherently risky, but the Forex market is widely known to be especially volatile and unpredictable. While most of these risks can actually be managed, many novice traders lose their deposits and then call Forex trading as a whole a scam. However, that’s not true: most brokers on the market are licensed by several regulators at once and comply with their strict requirements. Moreover, there are many traders who make significant profits by trading currency pairs; of course, that requires some skills and experience.
Alright, the Forex market itself is legit, but can you get scammed in Forex trading? Unfortunately, yes: there are many different schemes to steal your money that often disguise themselves as a completely honest financial service. While new scams appear every day, there are several most popular schemes that can be recognized with ease and avoided.
Main types of Forex scams
High-yield investment programs (HYIPs) are very popular scams that promise you unusually attractive investments with extreme returns and no risks. All you need to do is just invest your money. Such scams sometimes take the form of paid Forex robots: they claim that all you need to do is buy a piece of trading software and count profits. Of course, no software developer or signal provider can actually guarantee you unconditional success on the market. You should also beware of brokers without a real license: they can block your account and confiscate all the funds at any time.
How to avoid scammers
All types of scams reviewed in this Traders Union article have one thing in common: they promise you very high profits with low risks, and that’s just impossible in such a volatile market. In short, avoid any offers that seem too good to be true and always check all available information online before investing your money.
