Forex is that grandpa’s old leather suitcase for traders; it’s a trading platform for currency exchange and commerce purposes. But it has its own 2 equal halves of good and bad. It is a platform where we can exchange a huge range of currencies and gain huge profits as well as fall trap to many frauds.
These are trading frauds or schemes that are used to trap the traders by convincing them that the price of a particular currency would be increasing, and they could buy it; later this may cause huge losses to him, hence scamming the trader.
The Forex tradings are intensively monitored in the US due to such scams. These scams have caused huge losses and have profited many conmen and fake organizations.
Some of the common Forex scams are listed below:
- Signal sellers: These are individuals who send ideas to other traders about their predictions about the market’s downfall or profit. These send out wrong information and scam the traders to invest in those biddings where there is surely a loss. They also extract subscription fees, ask for fees in exchange for information.
- Fake trading schools: These offer to teach you trading and make you the best in a very short time, and take up your money. These are frauds as they either teach you the wrong tactics, which may cause huge loss or might not teach you anything useful at all.
- Management frauds: In such frauds, the traders are asked to let a manager handle their funds; the manager is usually not a professional as they would have advertised, by doing this, the investor loses all his control over his funds.
- Pyramid schemes: These schemes give high hopes to traders by asking them to invest a little now and gain high profits later. Usually sounds like “double your money in 25 days!” which is a lie as they would never return your money.
- Trading bots: Some investors use automated bots that do the trading for them, they survey the social media for what predictions to make and do the bids as per, but this is a big disadvantage for unsuspecting traders; it will be like a gamble for them.
- Dishonest brokers: These are the ones who do the trading for you or would create an account and set up a platform for you, would let you do some trading, and then wipe out your funds. One can, and one must expose dishonest brokers.
Forex is a very good trading platform, but it can be very dangerous for all the rookie traders if they are not aware of such frauds and might lose their funds. So taking precautions while trading and looking out for such frauds would be very helpful.