In the Forex market, an immense amount of money floats around every single moment. With all this money in an unregulated market that uses an instant trading policy, Forex scams provide operators the chance to make a fortune by taking advantage of unwary traders. Many prevalent scams have been stopped by the law and regulation enforcement actions taken by the CFTC. But some old scams have found their way to thrive in the market.
How to Detect Forex Scams
If you don’t realize the danger Forex scams can get you into, you may suffer greatly later. The point of this article is to teach you about different Forex scams. By paying attention to this post’s subject material, you can save yourself from unexpected and unwelcome losses in the future.
1. Scam 1 – The Point Spread Scam
This is an old type of Forex scam that is based on bid-ask spreads’ PC manipulation system. The point which spread between ask and the bid, naturally reflects the back and forth transactions’ commission. Such transactions are mainly processed through a broker. These spreads generally differ based on the price and relation between a currency pair.
When these point-spreads differ broadly among brokers, this scam takes place. Like many brokers may not always offer the usual three-point from the two-point spread in the USD/EUR. However, they may offer seven pips or higher spreads. Commissions can eat away at potential profit and factor in additional pips. It will depend on how the broker constructs their price for trading.
This scam has seemingly been non-existent for the last decade. But you need to be cautious as the market structure is highly vulnerable to it even today. Elite investors in Mena region always chose great broker like Saxo. Read more about the professional trading environment so that you can take better decision in the trades.
2. Scam 2 – The Signal-Seller
It is a popular modern scam. There are different signal sellers like asset managers, retail firms, several managed-account companies, and sometimes individual investors who offer their help in identifying favorable times to purchase or sell a pair. They sell their hard won experience and abilities. All you need to do is hand them over a specific amount of money to get their insight into the current market condition and the upcoming opportunity.
Most of these scammers have been alleged to collect money and disappear. There are others who may give you the correct indications, but they are not regular. Though this is a new scam, it is seemingly becoming prevalent all over the world.
3. Scam 3 – Robot Scamming
Now comes the latest scam, which is rising with the modernization of technology. Though this problem is not a new one, it is gaining a new dimension nowadays. Robot scammers sell their technical ability to create automatic orders. With this device, you can place orders even when you are sleeping. The terminology “robot” used for this scamming name is mainly for its automated feature.
Generally, no independent source or formal review submit such types of systems. To examine a Forex robot, you have to test different trading system parameters and their optimization codes. If both parameters and codes appear invalid, the system is likely to generate arbitrary buy/sell signals. In such cases, traders have nothing to do but gamble.
4. Other Factors
The high cost of certain trades is a kind of spam itself. No system should cost a trader more than a few hundred dollars. You also need to be cautious about the program and prices sellers offer to you. You must seek out authentic sellers who provide tested and recommended systems.
Another example of a scam is when brokers deny the withdrawal cost from investors’ accounts.
You should never be carefree about various old and new Forex scams. As a result of your greed and desire to make a quick fortune, you can fall into the trap of these scams. The consequences are never good.