Scams and fraudulent operators are prevalent in just about every industry. Therefore, it is important for the public to be aware of the latest scams and cons to protect themselves and their investments. We take a look at how to spot a Forex scam.
Warning signs of Forex scams
The first and most obvious warning sign to look out for is when companies guarantee exorbitant returns and promises of phenomenal results. The Forex market can be unpredictable and it is dangerous to assume that profits can or are guaranteed. There are no guarantees in Forex, full stop.
When looking at brokers, be sure to check they have a thoroughly kept record of segregated accounts. This allows investors to track the performance of the fund. In some cases, it has been reported that in case of a lack of a record of segregated accounts, brokers may have used investor’s money for themselves.
Finally, the warning light should come on if you can’t withdraw your funds.
How to spot a Forex scam
Signal Seller Scam
This is one of the most popular scams. It usually consists of companies or individual traders whom offer a system to investors that identifies good opportunities to buy and sell. You will see a guy probably lounging in a pool in some exotic location telling you that you could also be living la vida loca if you only do x, y, z. Well, he is probably sipping a pina colada next to the pool with other people’s money and not his own. ‘Anyone can get into Forex trading and become wealthy beyond their wildest dreams.’ Sounds familiar? It’s a trap. Their websites will include testimonials from happy customers who will tell you this guy is such a great trader and an even better friend.
All you have to do is deposit a certain amount of money into their accounts and next thing you know, the trader has run off with your funds.
However, there are legit signal-sellers but it is wise to be skeptical. The truth is that trading Forex is risky, as is all other forms of trading and profits are not guaranteed. If you sign up with a reputable broker that offers conservative profits, you are looking at the real deal.
The Point-Spread Scam
This is actually an old Forex scam that is making a comeback. Out of sight but clearly not out of mind. This is how it works – the broker’s commission is usually reflected in the point spread between the bid and ask price. Sometimes the brokers make this spread wider amongst themselves. A normal spread is 2 – 3 points on the EUR/USD trading pair but these brokers offer spreads of seven pips or even more.
Signing up with Bit4X
Bit4X is an algorithm driven automated trading service. With multiple traders around the globe, take advantage of 24-hour trading to maximize profits with an exclusive algorithm developed purely for Forex trading. Investors can choose from a variety of brokers whom are linked to Bit4X with a PAMM account. Investors can expect up to 4% profits on a weekly basis. Please note that this is not guaranteed and is a conservative amount.
For more info, check out the Bit4X website, click here.
In conclusion, there are many more scams and one should be careful not to give into temptation of huge profits. Whilst there will be some months investors can expect big profits, it is unrealistic to expect this every month. This is mainly due to changing market conditions.