Forex Trading Scams and The Top 5 Preemptive Measures

Forex trading scams are on the rise, even as traders continue to lose millions to scammers every year. The UK’s Financial Conduct Authority website reported that traders lost over £27 million to digital currency and forex scams between 2018 and 2019 alone.

This paints a worrying picture of the increasing threat these fraudulent schemes pose, highlighting the dire need for investor awareness and more effective measures to curb the menace.

But the good thing is that with solutions like Forex Factory, defeating fake brokers has never been so easy. 

I’ve exposed numerous scammers posing as forex brokers, here on Scamreader. If you’ve been reading my posts, you know well that websites such as Fxonic, SwiftTrading, and RontoXM are no-go zones. 

One of the reasons why a lot of people get scammed when it comes to cryptocurrency or FX trading is ignorance. Scammers take advantage of the fact that many traders are generally unaware of the necessary precautions to take to trade without getting duped. 

I thought I’d share those precautions to keep you safe from these cybercriminals as a trader. Without further ado, let’s delve into it:

1. Use Forex Factory Against Forex Trading Scams

Have you ever heard about a website called “Forex Factory?”

Operating under the domain, forexfactory.com, it’s a reliable forum website that serves as a reliable source of information on brokers and the forex industry in general. Think of it as a place where traders can share valuable information, talk, and ask questions about FX trading, brokers, and everything in between. 

You can seek information about a broker before considering investing with them. If the broker is not legit, other traders will warn you about that and perhaps point you to the right broker.

A lot of people don’t know that Forex Factory can be a good source of information about all manner of fraudsters who pretend to be forex brokers.

2. Check Out Scam Alerts On Scamreader and Similar Blogs Frequently

Besides Forex Factory, Scamreader is another good source of information about fake FX brokers. Though it’s still relatively new, it covers some of the most well-known scammers. If you can’t find information about a broker, be sure to leave a comment in the comment section. We’ll be sure to investigate them and publish an unbiased review of them.  

You could also look them up on sources such as trustpilot.com, scamadviser.com, or sitejabber.com(even though the credibility of some of these platforms is questionable nowadays). 

3. Defeat Forex Trading Scams Using Social Media and Other Platforms

Avoid falling victim to forex trading scams by leveraging social media, especially if you can’t find information about the broker on blogs. Check if the individual has a  Facebook, Twitter, Instagram, or LinkedIn business page. Also, look them up on YouTube. If you can’t find anything, be warned that you might be looking at a potential FX scam. In that case, you should run for your life!

4. Know a Few Things Before You Jump Into Trade

According to Invesopedia, here are a few things you need to know regarding brokers

• Many legitimate brokers are regulated, and vice versa. If a broker is not talking about their registration status, you know that they are unregulated. This can mean they are a scammer. 

• Real brokers don’t charge too much money(like 5000 dollars or so) as a minimum deposit. Unlike scammers such as Blue Stars FX, they will require you to pay a reasonable deposit(e.g. 250 dollars or so).

•  Unlike many scammers, honest brokers tend to offer Demo Trading. This allows new traders to practice trading with virtual money until they are confident enough to go into real trading. The few scammers who do, do so with unreasonable conditions. For example, Fxonic requires customers to first open a real trading account and deposit money before they can access the demo trading feature.

• What’s more, real brokers don’t offer crazy leverages like 1:300, 1:400, 1:500, or more, as we see with fake brokers. This is due to strict regulations. The ESMA, FCA, CFTC, ASIC, FSA, FINMA don’t allow high leverage offerings. You can read my Fxonic broker review to learn more about their individual stipulated leverage levels. Otherwise, be wary of any broker who provides anything above 1:100 as leverage.

• Lastly, real FX brokers have a proven physical location, not some suspicious offshore locations like in the case of many scammers. Have you realized that a lot of them pretend to be based in the Caribbean region? Be wary of any broker who claims that their offices are located in a city within the region, e.g., St. Vincent and the Grenadines.

My Final Thoughts On Forex Scams

Many people wonder whether forex trading is legitimate, which is why the question ‘Is forex trading a scam?’ is frequently asked.

Well, FX is not a scam per se, but there are just too many criminal elements in it that have left many investors financially devastated.

Increased internet access, advancement in AI and Deepfake technologies, and rising economic hardships are some of the factors that have exacerbated forex and cryptocurrency scams over the years.

Scamreader has exposed many fake brokers to help protect your hard-earned money as a trader.

Unfortunately, many fall victim due to ignorance regarding the basic preemptive measures against forex trading scams. 

Actively following scam alerts on trustworthy scam warning blogs such as Scamreader, news, stories and discussions on platforms like Forex Factory can be a great way to stay informed and avoid scammers.

Similarly, looking up brokers on social media, YouTube, and other platforms online, as well as knowing a few other basic safety tips beforehand can help protect you against these criminal elements.

For example, you should know that authentic brokers are regulated and they don’t charge unreasonable minimum deposits. What’s more, they offer Demo Trading unconditionally and reasonable leverage levels not above 1:100. Last but not least, they have proven, non-offshore physical addresses. 

Report A Scam

Have you fallen victim to a scam broker? If so, go to this page, or email scamread@scamreader.info to report the scam and seek help.