The following are some of the more prevalent scams/frauds perpetrated by other industry participants:

The Signal-Seller Scam

Some people or businesses sell Forex “signals”. Which are often full trading advice.

These can be quite popular among inexperienced or unsuccessful traders. They believe that paying for trade recommendations is a quick method to locate excellent trades without having to do the research yourself. Although some legitimate signal providers exist. The great majority just churn out “signals” of questionable quality. Some suppliers even display established track records on their websites that are linked to certified trade explorers, which might be falsified. As a result, this can be a fraud inside a scam.

The worst signal fraudsters are those who do not even attempt to give high-quality signals. The simplest approach to identify a signal scammer is to inquire if they provide a high frequency of signals. Even better, access a free trial for two weeks if feasible and verify the track record of the signals. Avoid the signals if they result in significant losses.

“Educational” Scams

There are websites, some of which are extremely persuasive. They promise to teach you how to trade Forex in exchange for a fee. These can be legitimate companies. However, the Forex education market draws those who deliver absolutely little value despite charging often exorbitant prices.

“Robot” Scamming in Today’s Market

Most Forex brokers, a trading platform, allows for automated Forex trading. Trading is carried out by rule-based algorithmic programmes known as “robots”. These are linked to the trading platform. Robots conduct transactions while the client does not have to do anything.

If a realistic perspective is followed, there is nothing wrong with deploying robots to undertake automatic trading. Most of the robots on the market fail early and generate significant losses because they are over-optimized. These robots are frequently sold with outrageous claims as get-rich-quick schemes. Usually with marketing claiming that they can turn a few hundred dollars into a million dollars in a few months of trading. 

If you want to examine the rationale behind the algo used to evaluate the robot, then the robot provider will usually tell you that it is a “proprietary black box” that cannot be shared.

The harsh reality is that basic robots based on trend following or means reversion methods may be effective for some traders. However they are frequently available for free or at a modest cost.

Is Forex a Pyramid Scheme?

A “pyramid scheme” is a sort of investment or sales deception. In this scheme, the “return” paid to investors is subtracted from monies gathered as new subscription investments. The most well-known recent example was perhaps Bernie Madoff’s pyramid scam. 

Although the retail Forex sector is not a pyramid scheme. There have been instances of Forex money managers acting in the same manner as Bernie Madoff. Before entrusting your money to anybody else’s management, use extreme caution. Do thorough due diligence, including a confirmed track record of previous returns.

How to Report a Forex Scammer

If you have lost money as a result of a Forex broker scam, you should first complain to the broker. Then to the regulator, and you may be able to get your money back. This is one of the reasons it is important to utilise a licenced Forex broker. Particularly one regulated by a large top-tier financial centre.

Final Thoughts

Many individuals believe that the entire retail Forex sector is a con. This is not true, but the sector attracts scammers. And there are many dubious Forex brokers looking for your money.

Many people believe that trading Forex is difficult. They believe the system is stacked against the trader. It is difficult to earn a profit trading Forex. And the vast majority of those who attempt, fail. However, if you choose a trustworthy and honest broker, you may make a profit and successfully withdraw it. 

Forex trading is legitimate, however, at least 75% of Forex traders lose money.