How to Spot a Forex Scam

Today we will be discussing how to spot forex scams, we will give you insights so that you get aware and avoid scams.

An old point-spread forex scam was based on computer manipulation of bid-ask spreads. The point spread between the bid and ask basically reflects the commission of a back-and-forth transaction processed through a broker. These spreads typically differ between currency pairs. The scam occurs when those point spreads differ widely among brokers.

KEY TAKEAWAYS

• Many scams in the forex market are no longer as pervasive due to tighter regulations, but some problems still exist.

• One shady practice is when forex brokers offer wide bid-ask spreads on certain currency pairs, making it more difficult to earn profits on trades.

• Be careful of any offshore, unregulated broker.

• Individuals and companies that market systems—like signal sellers or robot trading—sometimes sell products that are not tested and do not yield profitable results.

• If the forex broker is commingling funds or limiting customer withdrawals, it could be an indicator that something fishy is going on.

• The Signal-Seller Scam

A popular modern-day scam is the signal seller. Signal sellers are retail firms, pooled asset managers, managed account companies, or individual traders that offer a system—for a daily, weekly, or monthly fee—that claims to identify favorable times to buy or sell a currency pair based on professional recommendations that will make anyone wealthy. They tout their long experience and trading abilities, plus testimonials from people who vouch for how great a trader and friend the person is, and the俄语 vast wealth that this person has earned for them. All the unsuspecting trader has to do is hand over X amount of dollars for the privilege of trade recommendations.

Many of signal-seller scammers simply collect money from a certain number of traders and disappear. Some will recommend a good trade now and then, to allow the signal money to perpetuate. This new scam is slowly becoming a wider problem. Although there are signal sellers who are honest and perform trade functions as intended, it pays to be skeptical.

• “Robot” Scamming in Todays Market

A persistent scam, old and new, presents itself in some types of forex-developed trading systems. These scammers tout their systems ability to generate automatic trades that, even while you sleep, earn vast wealth. Today, the new terminology is “robot” because the process is fully automated with computers. Either way, many of these systems have never been submitted for formal review or tested by an independent source.

Examination of a forex robot must include the testing of a trading systems parameters and optimization codes. If the parameters and optimization codes are invalid, the system will generate random buy and sell signals. This will cause unsuspecting traders to do nothing more than gamble. Although tested systems exist on the market, potential forex traders should do some research before putting money into one of these approaches.

• Other Factors to Consider

Traditionally, many trading systems have been quite costly, up to $5,000 or more. This can be viewed as a scam in itself. No trader should pay more than a few hundred dollars for a proper system today. Be especially careful of system sellers who offer programs at exorbitant prices justified by a guarantee of phenomenal results. Instead, look for legitimate sellers whose systems have been properly tested to potentially earn income.

An important factor to always consider when choosing a broker or a trading system is to be skeptical of promises or promotional material that guarantees a high level of performance.

Other scams and warning signs exist when brokers won‘t allow the withdrawal of monies from investor accounts, or when problems exist within the trading platform. For example, can you enter or exit a trade during volatile market action after an economic announcement？ If you can’t withdraw money, warning signs should flash. If the trading platform doesnt operate to your liquidity expectations, warning signs should flash again.

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