Spotting A Forex Scam
Spotting A Forex Scam
The forex market is worth over $1 trillion a day, a lot of transactions take place every day.
With all these transactions that take place and brokers there are many scam companies or bogus or manipulative companies to watch out for.
The old common forex scam is based on computer manipulation of bid/ask spreads. The spread between the bid and ask reflects the commission of a transaction processed through a broker. These spreads typically differ between currency pairs. The scam occurs when those point spreads are wide amongst the brokers. Brokers often do not offer the normal two- to three-point spread in the EUR/USD, for example, but spreads of seven pips or more. This scam has got less, but be careful of those offshore retail brokers who are not regulated by the FCA. The common brokers that get more complaints are those registered in Cyprus.
Signalling the Scam
A popular modern-day scam is the signal seller. Signal sellers are brokers or account managers who promises to trade based on professional recommendations that will make anyone wealthy. They give you trade signals that deliberately make you losses but make sure that you press the button and so take no liability. Your first couple of trades may turn out well to draw you in.
Scamming in Today’s Market
A persistent scam, old and new, presents itself in some types of forex-developed trading systems. These people boast their full proof system’s ability to generate automatic trades that, even while you sleep, earn you wealth. Today, the new terminology is a robot because of the ability to work automatically.
Many of these systems have not been submitted and tested by an independent source for formal review and turn out to be false and will waste you money.
Other Factors to Consider spotting a forex scam
Probably better to stay away from systems, use a trading platform that is FCA registered and if you would like to get help with trade signals try using a trader that sells charts with no direct interest in your trading. Here is an example of an honest trader use Jason Sens system of technical analysis charts http://www.daytradeideas.co.uk/free-reports/ he offers some free reports but also has a paid subscription service, honest and highly respected.
Scams and warning signs exist when brokers won’t allow the withdrawal of monies from investor accounts, or when problems exist within the trading station. Can you enter or exit a trade during an economic announcement. If you can’t withdraw money, warning signs should flash. If the trade station doesn’t operate to your expectations, warning signs should again flash.
Again only use platforms that are regulated preferably with the FCA. If you are under any doubt google the company looking for reviews. For example if you google Xtrade reviews you would find many complaints, and many tell-tale signs that there are problems. Their Parent company was fined a lot of money for many failures to adhere to regulations of Cysec.
Even if a broker is caught in a scam most of the time the money has disappeared and cannot be retrieved.
It takes great skill spotting a forex scam
Always perform due-diligence on any broker even FCA registered ones. Always check reviews by google the company with reviews like “xtrade reviews”. Always use a credit card to make payments. Never follow a broker’s trade signal as they have a conflict of interest.
Good luck. Spotting a forex scam can be tricky.
If you fall foul of a forex scam then contact Phoenix Advisors Group