While it might come as a surprise, it turns out millennials are the most likely generation to fall for financial scams.
As more people start trying out forex trading, the number of forex trading scams will continue to grow. Staying alert and avoiding them can be a full-time job for traders.
Here are 5 warning signs of forex trading scams.
1. Beware The Signal-Seller
Forex trading scams are rampant across the internet. Since so few people know everything there is to know about forex, every person entering the market has the potential to make mistakes.
If a retail firm is offering you a system to help you identify the best times to trade two currencies, promising instant wealth, that should raise a red flag. This is especially true if they’re asking to charge you daily, weekly, or monthly fees.
Not all signal sellers are scammers, the best way to tell if they are legit or not is to ask for their historical performance results audit by MyFXBook or even an investor password to their MT4 Trading account.
These performance results will immediately tell you two things:
- Whether the signal provider has been trading their own trades or not.
- If they have, than you’ll immediately be able to gauge whether the trades have been profitable or not.
We have put together an informative guide on forex signals here.
2. The Robo-scammer
Between Russian hackers, “deposed” Nigerian kings, and random followers on social media, there are scams galore on the internet. One of the hottest ones in forex is of trading systems that promise to do the work for you while you sleep. Supposedly they’ll work automatically and be tested by experts.
The problem is, if it’s not properly tested, it could show you it’s working by generating random buy and sell signals. You could end up doing lots of expensive trading at random because of invalid parameters or optimization codes that aren’t your fault at all.
3. Commingled Funds
Lots of inexperienced traders get into the forex market with stars in their eyes. They put their money into systems that commingle their funds without a record of segregated accounts. There’s no telling how well your investments did unless they have a proper demarcation.
Investors will then help themselves to your money simply because the funds weren’t properly segregated.
4. Inability To Withdraw
If you’re noticing that for some reason, you’re unable to withdraw your funds from investor accounts when you want to, you could be being scammed.
Whether the software you’re using is mysteriously down or if the manager of your money isn’t responding, when you can’t liquefy your assets, you might freak out. If the trading station isn’t working as planned, you could be in for a scam.
Better to pull out as soon as possible than take any more risks.
5. Promises of Performance
No reasonable trading system can promise specific levels of performance. While everyone in the forex trading world will swear they’re the best, unless they control the entirety of a currency, they can’t guarantee you any figures.
They might try to woo you with promotional materials or promises of rewards, but stay alert and be wary.
Forex Trading Scams Are Everywhere
Whether you’re a professional trader or a part-time hobbyist, forex scammers will find you. To avoid forex trading scams, stay alert, diligent, and trust your gut. If you’re not sure you’re going to get that money back, don’t send it.
If you want to build a stronger and scam-proof strategy, check out our latest guide.