In trading and transactions, one can expect a fair amount of scams and unscrupulous individuals trying to take your hard-earned money. In Forex, it’s no different- after all, this is a market that can put out $5 trillion dollars on any day in currency trading.
Suffice to say, Forex scams exist, and it’s in your best interest to know them all. Here’s how you can differentiate a scammy operator from a legit Forex broker.
Clone Forex Trading Firms
Clone firms are those who use the FRN, or Firm Registration Number of existing brokerage companies who are actually accredited and authorized to trade. It only takes a few minutes to determine if the FRN is a clone or if it’s the real thing.
Signal Seller Scam
Signal sellers offer a Forex system that can pinpoint the highs and lows of trading for profit by monitoring currency pairs. These companies claim to have professional recommendations or someone who’s had it made by Forex trading.
Signal Sellers can either be manual (requiring input) or automated. Sifting through legit signal sellers may be a bit tricky, though. The best way to be sure is to open a practice account with a reputable broker or via a paper money account with limited funds.
Managed Forex Accounts
In this Forex scam, investors are offered investment fund management services by capital managers who claim to be highly-skilled brokers. Along the way, these companies lure you in with promises of making big money in a relatively short time, with terms such as guaranteed profits and high returns being used. All of this is set up on the firm’s trading platform or through a managed account where they make trades on behalf of the client.
The main hook of a phony Forex management brokerage is that they will make you lose control of your investment. Telltale signs include huge promises, unrealistic profits and false records of “success”. In the end, the investor makes nothing and loses all he has.
Remember that if it’s too good to be true, it probably is. Do some research and only go with well-established legit Forex brokers to prevent being scammed!