Forex scams will be around for as long as the Forex market exists. As schemes are evolving, scammers are nearby trying to extort your money away. Could there be a solution?
As Forex scammers will be around, be sure not to fall for their tricks. Forex scammers tend to target new, desperate, or uneducated traders. The best antidote is knowledge. Here, you can learn the basics of the Forex market and develop advanced techniques. Once you master the market, you no longer are an easy target.
Sometimes, scams are named after the creator – like Ponzi scheme, which comes from the infamous scammer Charles Ponzi. However, the one thing is common: Forex scams often use phrases like "a too-good-to-be-true investment opportunity" as a way to part you with your money.
When you lack trading experience, swindlers will try to exploit your optimism and fears. As such, nobody wants to lose. Here's where Forex scammers step in and make you an exciting offer.
Traders Fool Themselves
As Forex trading carries exceptionally high risk, losses are inevitable. Retail speculators are almost always trading undercapitalised, and are subject to the problem of gambling addiction and improper use of leverage. Any speculator who trades without skill is efficiently playing against the market as a whole, which has nearly infinite capital, and they will almost certainly go bankrupt.
Undercapitalised traders who do not have any informational advantages need to understand the different reasons why they think they can beat the market in such a challenging trading environment.
In all fairness, a large number of the reports of money being stolen by brokers is a result of weak trading and not scam brokers. I think that if bad traders spent as much time developing a proper trading methodology as they did complaining about brokers or searching for the right broker, they would become better traders much more quickly.
Most good retail traders should be able to use almost any platform with any broker, and see very little difference in their results – it's that simple.
Once you accept your losses, trade with a system and master your market, it will be much harder for you to fall for a scam.
The Signs of Trading Scams
Trading Systems and Education Without Any Proof
There are a lot of scammers selling trading systems and education. When you ask them to provide any proof of their trading history, they evade the answer. There are also many traders who would offer their systems without any trading room or service. I call all of them "snake oil merchants". "Snake oil" is the term traders use for false traders and trading systems that have no valid proof of their trading history.
Email Spam Asking for Personal Info
Scammers may also ask you for personal information, such as:
- Your full name;
- Your phone number;
- Your home address.
Please, don't give away your personal details to someone you don't fully trust. Lastly, be suspicious of brokers who don't provide you with a written risk disclosure statement. Even if they do, read the statements thoroughly because the devil is in the details. Remember, data may become currency soon.
Keep Away From Opportunities That Seem Too Fantastic
Easy money? No way! Don't believe anyone who tells you it's easy to make money with 20% gain per month. It's pure nonsense. Forex & CFD trading requires a lot of screening time, education, patience, and quick wits to become profitable. There is no easy money here. If you dedicate your time and learn to trade properly, you might have a great source of income.
Never work with someone who refuses to provide you with their background information. Be it a broker, a trader, an educator, or a money manager. Always do a quick check online to see if the person or company is legit. As Mr John Naisbitt once said: "We are drowning in information, but starved for knowledge".
Real Scams Exposed
I remember the story about this kid, who became famous overnight. According to New York Magazine, a kid from Queens has made tens of millions of dollars by trading stocks on his lunch breaks at Stuyvesant High School. What happened in reality is that it turned out he never made any money and all his profits were made in a paper trading account.
To ensure you're not a victim of a scam, always use a regulated broker that is established, has favourable online reviews, and is 100% transparent in their fees and compliance policies. I have dealt with Admiral Markets in the past five years and had no issues. No stop-hunting, no trades closed by the broker, no bad fills, no ghost trades, no problems withdrawing money, nothing!
The seductive allure of quick money and easy cash will always be omnipresent, which is why the most critical thing you can do is understand what it truly takes to become successful at currency trading.
Cheers and trade safe,