October 21, 2013

Recognise Currency Trading Scams

This article looks at the various types of currency trading scams.

Currency Trading Scams

The level of funds constantly being traded in the currency trading market attracts fraudsters and scammers.  This is a mostly unregulated, decentralised market which makes scammers believe that it is an easy way to make money from their fraudulent activities.  The regulatory bodies that exist in some countries have managed to get rid of some of the older scams, but new ones appear on the market regularly.

Historical Currency Trading Scams

The manipulation of spreads was one of the main scams in past years.  Forex brokers earn their money from these spreads.  The spreads vary between currency pairs and forex brokers.  The scam is prevalent in cases where there is a huge variance between forex brokers’ spreads.  Often forex broker do not offer the usual one and a half to two point spread as is common with the EUR/USD currency pair, but they may offer you spreads as high as seven or eight pips.  If you were to do a calculation based on this difference in spreads and the amount of transactions done on a daily basis, you would come to the conclusion that your profit margin will disappear quite quickly.

This particular scam is not as popular as it used to be because the regulatory bodies have intervened.  You should still take care if you are registered with a forex broker who is not registered with a regulatory body.

Trading Systems

This type of scam has been practiced for many years and is still extremely popular.  Companies advertise and market their specific trading systems as the ultimate robot that will trade on your behalf and make profits while you sleep.

The main problem linked to this type of offer is that most of these systems have gone untested, hence it is almost impossible to obtain genuine reviews.  You should have the facility to examine the optimisation codes and parameters that have been used.  In the event that these two factors are not valid, the system will generate random purchase and sell signals that provide you with nothing more than a gamble on the value of currency pairs.

To ensure that you are not caught in this type of scam, you should deal with individuals or firms that have solid reputations.  There are suitable systems on the market that have been tested by independent sources.

Signal Providers

The arena of signal providers is a popular scam in the latter day.  Companies and individuals who sell signal services try to make an impression on you with their experience in the market and their trading abilities.  They promise you support and the advantages of dealing with someone who has knowledge and experience of the market.  All they require from you is a certain amount of money and you will be provided with recommendations on the types of trades you should enter.  The problem is that they normally make these promises to several people, take their money and disappear.  In some cases, you may receive a limited number of good signals.  This is done to continue the scam as well as the payments from you.  You should be aware of this type of scam as it is still prevalent, although it is possible to find honest and reputable signal services in the marketplace.

You should be aware of the scams that are out there.  You should check on forex brokers before you sign up with one.  You will always be vulnerable to forex scams and to try and avoid it, you should check on any provider’s reputation.



Get a free Forex PDF PLUS:

  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
Become a forex trader!

Comments are closed.

Free PDF and UNLOCK website features