Foreign Exchange (Forex) is a financial market. Thus, forex trading is a legitimate business where investors buy and sell various currency pairs. However, the market is decentralized and is not controlled by a single institution and a lot of fraudulent practices could happen. To avoid that, we’ve created a list of scams to look out for in the forex market in 2023.
1. Percentage allocation management module Scam
This occurs in a system whereby you attach your account to a different one to replicate the routine or imitate their buying and selling pattern. While this practice is legal, it is usually overused and sometimes results are artificially forged.
Also, the original broker can be an independent broker without any form of regulation. Thus, the broker can simply copy the showcased trading details and bait other amateur traders with these results as though it is theirs. This can continue until they have enough brainwashed victims, and it becomes easy to steal people’s money. So always be on the lookout.
2. Signal Scam
With signal scams, you’ll receive direct instructions on when to make trades that will create profits. Scammers will often claim outrageous success rates and high returns, enticing you. In return, you are required to pay a membership fee or deposit your money through affiliate links to some unregulated and offshore brokers.
Unknown to the investors, they’ll deposit the money in exchange for promising high returns. After a short period with high-interest returns (fake results), they’ll be asked to deposit more money and this cycle continues until the agent just mysteriously disappears, and the offshore broker stops responding.
3. Robot Scam
It’s also known as the Expert Advisor scam. It involves the use of a buying and selling algorithm developed to trade in the market automatically. While there are several authentic automatic systems available, the EA scam is becoming rampant due to its subtlety. You can check out this website for the best forex broker for beginners
It is easy for people to be scammed because it is difficult to authenticate the outcomes. On the other hand, sellers usually promise unrealistic returns even when the system is not working. Eventually, the predictions turn out to be false as a result of fluctuating trading conditions.
4. Broker Scam
You will always need a broker as long as you are not trading forex by yourself. Thus, it is imperative to watch out for red flags. Look out for this kind of manipulation while trading. They are;
- Operational manipulation: Anything that obstructs traders/ investors from carrying out independent and frequent trading operations is referred to as operational manipulation. This is usually orchestrated by the brokers to break traders’ emotions and stability, thereby affecting their decision-making. Not emotionally stable traders will fall victim to this, thereby outsourcing their trading decisions to brokers.
- Price manipulation: Brokers often manipulate prices to get an edge over their clients. In this case, the broker manipulates the price artificially so that a short-term spike, which doesn't last long, pushes your order to the stop loss.
5. E-courses Scam
There are several forex courses and training programs advertised all over the internet. While some of these materials are valuable, there are still overhyped courses that are not worth the money and offer no valuable lessons. While it is not illegal, buyers do not get value for their money.
Conclusion
No matter how juicy an offer is, always do your own research (DYOR) before investing, copying a trade, or depositing your money.
