In this financial market, you will find people and situations, from professional brokers to Forex scams and scammers, who will want to take advantage of you.
We know that, in many cases, when IBs start researching how to get started in Forex from their broker, they are exposed to falling into fraudulent trades that will most likely drag down their clients.
For this reason, we know that being up to date as a Money Manager, Broker, or Broker Introduction, is not a luxury but part of successful work.
So, we will refresh some concepts you may already know to trade Forex and not get scammed.
Forex Scam, how to know if I fell into the trap
This market is not small. It is enough to look at the amount of money that moves every minute in the transactions to get an idea of how enormous and powerful the legal buying and selling of currencies can be.
And as in all big-moving trades, some traders work in good faith, and others with intentions to make money with fraud and deceit. Detect these traps used by wolves in sheep’s clothing:
● Promises of big profits in an easy and risk-free way
This Forex scam is easy to spot because nothing in life is free and effortless, even more so if you know that working on platforms like MT4/MT5 requires study and dedication.
Likewise, the risk is always present, and the volatility of this type of business is not something new, so do not be taken by surprise.
You should know that high yields are generally not maintained for a long time, nor in large amounts.
In other words, it is relatively easy to maintain a high yield with a moderate amount and for a short time.
For a yield to be considered optimal, it must be stable for a minimum of two years. In addition to being audited by an external account, screenshots are useless.
High returns can’t be sustained in large quantities (more than 10% per month, being very generous). The larger the amount invested, the more difficult it is to get a good return.
● Unprofessional practices
When you receive a phone call or email with fantastic promotions like the ones we are telling you about, and they ask you to give them personal or bank details or any other survey, it is most likely a scam.
Remember that if you manage regulated CRM platforms, like the ones we offer you at SBS, many of that data can be used to make all kinds of Forex scams.
● Use of dubious tools and without SSL certification
As a broker, you will be able to recognize the most commonly used platforms in Forex and that MT5 or MT4 alone are not enough to start your Forex business.
Likewise, pay attention to the SSL certification of websites as a guarantee that you are not a victim of identity theft (phishing).
The Most Recurring Forex Scams
From what we have shown you, it will be easier for you to notice when you are dealing with clients to work reliably in the Traders Room of your broker and invest legally and when, on the contrary, the intentions are different. It is convenient for you to know which are the most common Forex scams.
High-yield investment programs
They are known as high-yield investment programs (HYIP) or arbitrage programs, and work in a very similar way to Ponzi schemes in which, in exchange for a small investment, as a hook, they promise you that you will obtain a high return.
This type of trading only works for small amounts. For higher quantities, no liquidity provider supports this strategy, and that is when the Broker becomes a Market Maker and the manipulation starts to deliver the promised returns.
New investments hold the older ones until there are no more investors; the owners close down and disappear with the money, a recurring Forex scam you should know about.
Signal Traders
It is a scam that relies on the promotion of information that ensures the earning of money through the forecasts provided by the company that sells signals.
Of course, within this Forex scam, they will charge you a fee for their advice, which will be daily, weekly or monthly, and does not produce any profit.
Manipulation of bid and ask spreads
It’s a more common practice than people think. When it comes to making money, the scammer will use any method.
Usually, the scam focuses on manipulating spreads, orders, prices, and executions.
No matter how many regulations a broker has or does not have, that does not imply that it does not manipulate when acting as a counterparty.
Scams through automated software
In this scam, they advertise robot programs that will make it easier for you to profit in Forex without having much knowledge or effort. The figures they use to promote the product are usually false.
What does not fit in this type of Forex scam is that a robot alone can adapt to all the variables of the market and its trends and they want to sell it; strange, isn’t it?
Therefore, bots are only valid after proving their worth for at least two years and being audited by an external, independent company.
Ponzi and Pyramid Schemes
It is a form of large-scale scam, and its strength is that it spreads among like-minded people who have your trust and have been scammed as well. Like HYIPs, the attraction is the fabulous profit you’ll earn with a small investment.
This first investment supports the whole scaffolding, since it serves to pay the first investors because this “Great Opportunity” does not exist.
Boiler Room Scams
What works in this type of Forex scam is the haste with which they induce the unwary to invest. The objective here is to promote shares of phantom companies or very little value with the promise that when they are in the market, their value will rise, which leaves little room for prior research.
Recommendations to avoid scam
Formulas such as “You can make money easily and with little knowledge” are alerts that tell you to move away from the place where you hear them.
Just ask yourself one question. If the system they promise is so fantastic, so winning… what need do they have to share it with other people?
That’s why building experience and knowledge takes time and not a few hours of work; we offer you the Start-Up Forex program to become a Broker, four weeks of training, and guaranteed accompaniment so that you can learn with experts and professionals.
Likewise, we advise you to start your new business as a broker from a brand new White Label. Your objective is to have control of your client portfolio and keep them all of them away from any Forex scam.
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