Trading is a risky business. You need to be aware of the common scams and how they work so you can avoid them. When it comes to Forex trading, there are many different types of brokers out there. Some are legit while others aren’t. Find out what makes a broker legit and what makes one scammy.
Trading forex is risky, be aware of these scams:
- Fake accounts
- how to check if an account is fake:
- Pump and dump
- Mirror trading
- Managed accounts
- Signal selling
- Affinity fraud
- Don’t fall victim to forex fraud.
“Fake accounts” are one of the most common scams. You might be familiar with fake accounts on Facebook and Twitter, but you can also fall victim to a fake account in the forex world and this is one of the harsh truths about forex. They may mimic a particular trader’s profile or play into your desire to do business with an industry leader.
You see this tactic used all over social media these days, Facebook has even taken steps against it by banning large groups of accounts for having too many friends who aren’t real people.
There are two types of fake accounts: those that mimic real traders and those that mimic real companies. The former is often done simply to scam people out of money, it’s not uncommon for scammers to set up profiles using photos from other traders’ websites and then use them as bait for trades (or just steal their pictures).
how to check if an account is fake:
- Verification tick next to the profile name(if they are not verified the account is probably fake)
- little or no information about themselves and usually they flood their account feed with fake thank-you messages and pictures of fake money.
Pump and dump
Pumps and dumps are a form of securities fraud in which a stock price is artificially inflated through false and misleading statements, before selling off into the market. The perpetrators behind such schemes are typically organized groups that work together to manipulate a company’s share price for personal gain.
These scams can be difficult to spot, but it’s important to keep an eye out for warning signs if you’re thinking about investing in penny stocks or other speculative investments.
Mirror trading is a form of front running, which means that the trader or broker executes your order immediately after you place it. The difference between the bid and ask prices is called the spread, and mirror traders can profit from it by buying when they see you’re going to sell, and then selling when they see your sale happens.
In effect, they profit from the price disparity by executing their orders in such a way as to take advantage of yours. This is one reason why brokers are required to execute your order at “the best execution price”–the price at which an order was executed most efficiently for its client (i.e., with no slippage).
You’ve probably heard this term before because it’s something brokers will say if you call them up about an execution issue: “Sorry for any slippage on that trade.”
Managed accounts are a way for brokers to make money. Brokers act as a middleman between you and the market, taking a cut of the profits in return for their services. The truth about forex trading is that they’re not guaranteed to make you money they might lose it all.
They send fake screenshots to trick you into believing that the signals do work and might blame you for not using the signals the right way/say that you took too long to place a trade.
Affinity fraud is like any other type of scam, except that it targets members of a group instead of individuals. Scammers often seek out groups where they can gain the trust and confidence of those in the community. For example, religious institutions or even social media groups such as Facebook.
Jump to: Brave vs Firefox- Which Browser Gives Full Privacy Control?Suggested
The scammer may be a member of the group, or they may have infiltrated it somehow. The goal is always to get people to invest their money with false promises and lies.
Don’t fall victim to forex fraud.
Forex fraud is on the rise. The practice of scamming traders has become more common as the popularity of online trading increases. Forex scams are increasingly sophisticated, with criminals stealing millions from their victims each year. Here’s how to avoid being a victim:
- Avoid social media scams. Scammers can post fake ads for free forex robots or signals on Facebook, Twitter, and other social media sites, which may look genuine at first glance but are designed to steal your personal information by getting you to click on links containing malware (malicious software).
- Don’t fall for pump-and-dump schemes. This type of scam involves artificially inflating a stock’s value through false statements about its prospects before dumping it onto unsuspecting buyers who believe it has real value and are willing to pay top dollar for it.
In the world of currencies, there are many ways to lose money. If you’re new to forex trading, it can be easy to get confused by all the jargon and scammy tactics out there. But don’t worry, we know what we’re talking about. We’ve put together this list of common scams so that no one slips through the cracks and gets tricked into losing their hard-earned money.