The Forex market trades, it is said, over $1 trillion every day, with its traders using any number of techniques and systems to profit from a day’s trading. It is also an unregulated market, meaning that trades can take place with little to no accountability and leaving the foreign exchange open to a wide range of scams and cheats. With the lure of huge fortunes in short time periods proving irresistible to some, it is little wonder that the fx market is littered with them.
Forex Scams Then and Now
Since its conception, the foreign exchange has been pitted with scams, largely based on the computer manipulation of bid/ask spreads. Fortunately, however, thanks in large to the actions of the Commodity Futures Trading Commission (CFTC) and formation of the National Futures Association many of these have ceased. Nevertheless, many still exist, with new scams constantly coming onto the market too.
The signal scam
Signal sellers are those who promise successful trades based on their professional recommendations. These can be anything from individual traders to managed account companies and tout their experience in exchange for money. While many of these signal sellers are honest businesspeople, a number are not, hoodwinking unsuspecting traders into paying them before disappearing with their money.
Trading system scams
Forex trading system scams are some of the most persistent on the market, with vendors selling their system (often known today as ‘robots’) on its ability to automatically generate profit-making trades. However, many of these systems have not passed or even been submitted for the stringent test requirements needed for it to be recognised as a valid system.
This can mean that, rather than offering valid predictions, all the machine does is randomly generate signals, meaning that traders, rather than making informed decisions, are merely gambling their money. It is worth noting that even with the tested systems on the market, traders should fully research them before committing.
Pricing is often one of the first red flags on both ends of the spectrum. Some vendors set their system prices at extortionate rates, but no Forex trader should pay more than a few hundred for a certified system. At the same time, low prices can also be suspect. Keep in mind that if it seems too good to be true, it probably is.
Another warning sign comes when brokers will not permit the withdrawal of money from accounts or to exit a trade, both of which you are well within your rights to do.
At the end of the day, although the sell may be convincing, it is always worth remaining skeptical of any promises. Before laying down money, any Forex trader can investigate their broker through official avenues that have been recently introduced. However, while this has driven many scammers out of the Forex market, the temptation of big profits for no work will always draw new, more sophisticated, ones in, so the bottom line is to remain wary and keep a level-headed approach to any foreign exchange trade.
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