Making a big buck has undoubtedly become a prerequisite, and forex trading is one of the ways for that. As of now, it is the biggest financial market across the globe and makes a daily volume of $6.6 trillion. This has attracted several individuals to the forex market by now. However, this cannot change the fact that the crowd is not only the traders, and scammers are also a part of it, giving rise to the forex scams. The purpose of this blog is to be the source of information for forex scams and combat them:
What is Forex trading?
Forex or Foreign trading is the currency commerce to gain profits or accomplish practical purposes. A forex exchange can include a simple transaction such as exchanging currencies at a local business. It can also consist of dealing with currency at foreign markets. It is available in currencies of all kinds, and its platforms are reachable for everyone with even an internet connection. The financial market stays active round the clock throughout the world, allowing corporations and international banks to transact with each other.
Here is a practical illustration of how the forex trading works-
Let us say trader A purchases 1000 Euros, and the EUR/USD exchange rate is 1.18, which can make you pay 1,180 US dollars approximately. After some time, the exchange rate reaches 1.20, and it is when you can trade those euros into dollars. This transaction can get you a profit of $20 on your initially invested sum of $ 1180.
What is a Forex Scam?
By now, you have become well-versed with forex trading. Let us now focus on the situation of forex scams. Before we proceed, you must know that you can reach investigators to report these scams online.
Forex exchange is a legal trade, but it doesn’t have a centralised exchange, and that’s what scammers take advantage of. They use unethical and dishonest practices, causing financial loss to the traders. Traders lacking a basic understanding of the field are targets of scammers.
The fraudulent individuals target investors with different age groups and experience levels in trading. They have also reached social media platforms such as Facebook, YouTube, and Instagram. With this, it has become necessary to have the know-how of the world of forex trading.
Different kinds of forex scams
As the term gives a hint, the robot trading system is about computers for automated exchange decisions. This can allure the trader by promising an eased method of making money. The reality is that these systems are not tested or screened by an external source that could validate them.
These are the people or companies that offer advice on transactions of a currency pair in exchange for some fee. They charge a recurring fee for the information they provide. The fraudulent part is that they take money but do not issue any information.
This isn’t the worst case as many times they are not even qualified enough to exchange any advice. They often come with a track of making profits, which makes it hard to distinguish them. They give you more reasons to stay alert or file complaints about these frauds.
- Multi-level Marketing scam
A multi-level marketing strategy needs independent agents to advertise the products or services. In it, the client starts acting as an agent and promotes services or products in exchange for a reward of interest. In forex trading, brokers can extend advantageous promotion terms so that partners can keep promoting brokerage services through the means available. However, the focus is on linking more people and less on trading.
A broker is a professional that allows you access to the trading platform to exchange currencies. However, the point is that not every broker you meet can be an honest person. Many of them can even work with the intent to overwhelm the trader with fees or just take away all your money. Some are not even regulated, which means, they are not answerable to any governing body. If you know someone who has come under the trap of one of them, it is advised to file a complaint against that broker.
As a trader, you might have encountered forex funds that assure you assured returns on your investment. In the case of fake forex funds, the scammer boasts an immense amount that can appear to be alluring. To play on the safer side, you can look for less risky and certified funds for the investment attempt.
Identifying Forex Scam
As a part of their dishonest practice, a scammer does much of an excellent job to make his big money. However, if you are able to identify the fraud beforehand, you can safeguard your interest from it. Here are some of the methods to differentiate a scammer:
- Assured big bucks or immense success
The forex market is affected by numerous factors that can change accordingly. No one can guarantee or forecast the happenings. However, a scammer can be someone boasting about particular results or making assured profits.
Scammers can take you to the presentation of immense profits and no losses within a specific timeframe. They might even present charts that are from a demo trading account. As a result, it becomes necessary to seek full information on the basis of limited information.
Ask the person to provide you with the whole background and details of profits and loss. If they refuse to do so, you must not proceed with it.
Uninvited and constant marketing can be an indication of a scam. With this, If you find the other party putting efforts to persuade you for the transaction in a short period of information, possibilities are that this can be a fraudulent practice. Before trusting anyone, you must learn about the other party properly.
What to do after getting scammed?
If you suspect a fraudulent act to have happened to you, it is necessary to step up and take action. You can reach an online fraud investigator and file a complaint against the scammers. These professionals will look into the case and assist you to get the compensation for the same.
In the pursuit of generating money through forex trading, it is not uncommon to come across scammers. Most fraudulent acts happen due to the lack of knowledge about financial marketing and foreign trading. That makes it necessary to become well-versed with the platform. The purpose of this blog was to educate you on forex scams and the possible methods to avoid them. Learn about the background of a broker or the third party showing interest. You must also know that the market can change now and then, with which, you must not trust any person promising assured success. Nevertheless, if you have found yourself trapped in a forex scam, it is advised to report that. Upon reaching the professionals, you must share the details of incidents that happened and wait for them to initiate the processes.