As the world’s largest financial market, it will come as little surprise that, unfortunately, the forex market brings with it a range of immoral hustles and scams specifically crafted to try and separate you from your hard-earned cash. While we all know that these kinds of operations exist, knowing how to spot a con is often far more difficult – meaning it’s not uncommon for people to fall victim when not equipped with the necessary know-how.
That’s why today, we’re detailing all of the key takeaways established in Greg Secker’s YouTube video on the 5 biggest forex scams, showing you how you can take the required precautions to ensure you avoid getting cheated out of your cash and enjoy learning how to trade forex with a secure peace of mind as a result.
There’s a guarantee of profit
No matter if they’re an established forex training company, an experienced forex mentor or an active forex broker, if they’re promising guaranteed profits of 100% or more, this should always be seen as a major red flag.
As any forex trading veteran will tell you, the market’s extreme liquidity and volatility means that unforeseen and unpredictable market movement can occur in any place and at any time, making the claim of guaranteed profits a near impossibility.
Of course, to the ill-informed trading novice looking to make a quick buck, the promise of profit can be all too appealing, which is why regulators have been warning us against these kinds of claims for over two decades. Inexperienced traders with little to no market knowledge will often invest their capital under these false illusions of safe profit, quickly losing it thanks to insufficient mentoring and a distinct lack of trading strategy.
With this in mind, we recommend challenging any company making these kinds of promises by requesting a minimum of 3 years’ worth of audited results, analysing month-by-month figures accordingly. Our guess is, with some proper evaluation, you’ll expose their deceit in no time. If you’re not sure how these results should look, head over to FX Capital and request to view Learn to Trade’s.
‘Too good to be true’ marketing
One of the biggest appeals of forex trading for beginners is the indulgent lifestyle often sold with it. Whether it’s fancy cars, sharp suits or expensive watches, many scammers take advantage of the excessive wealth of the most successful forex traders by packaging this lavish lifestyle as an instantly achievable goal. While these luxuries can be achieved through a successful forex career with the right time, training, knowledge and work ethic, this is often marketed as an ‘overnight’ benefit of trading forex. If you spot this type of untruthful marketing technique, stay cautious.
The concept of tantalising ads promising ‘riches and women’ is nothing new, being typically utilised by organisations looking to make a quick profit off financially vulnerable leads. Unsurprisingly, these schemes eventually fall flat once customers start to become wise to the lies, so checking the organisation’s company history, documentation and associations is usually a good indicator should you expect foul play. As a rule of thumb, adopt the age old mantra: if it looks too good to be true, it probably is!
Inaccurate trading signals
Trading signals are a fairly recent development in the world of forex trading scams, gaining popularity over the past decade with the rise of SMS platforms like WhatsApp. The premise is simple: companies will provide convenient trading signals to those learning to trade forex, giving novices a straightforward way to begin trading with minimal investment required.
This technique looks to capitalise on the lack of knowledge possessed by newbies to the market. Scammers provide you with trade signals to buy or sell a product that they know has a high probability of going against you, with the scammer than placing an opposing trade. By using spreads that are tighter than that of the underlying market, the scammer can then profit from your misguided action – in short, they intentionally mislead you to make profit off their own trades.
Targeted social media marketing
Given the sharp rise in the popularity of social media over the past decade, it’s little surprise that forex scamming has branched out to all the common social platforms – indeed, this technique contributed to over £30 million worth of scams and thefts in the crypto and currency markets in 2019 alone.
Whether it’s Facebook, Instagram or Twitter, targeted ads have up to this point been completely unregulated, leading to many young investors wrongly parting with cash under the fake promise of quick and simple profit. This highlights the importance of checking any trading company against the FCA regulated database, where it warns traders against using a list of unregulated companies and bodies. This is particularly important given that, should you find yourself using an unregulated company, you won’t be offered any protection by the FSCS (Financial Services Compensation Scheme).
In the world of ecommerce shopping, online reviews are a tried and trusted way of gauging the quality of a product and service. Unfortunately, when it comes to forex companies, these have to be taken with an extra pinch of salt. Competition can often be ripe between forex companies, trainers, brokers and platforms, meaning that in recent years the use of fake reviews has become increasingly common. Positive reviews can be left anonymously by the company themselves, whilst negative reviews can be left by competitors as a means of undermining the competition.
So how do you navigate this issue when shopping around for the right option for you and your trading? Well, look for authenticity by prioritising real interactions – reach out to company graduates, mentors and staff members, for example. Anyone without anything to hide will happily show you their trading account, for example, allowing you to obtain more confidence regarding the authenticity of any operation before signing on any dotted line.
The best way to ensure you’re staying safe against the many forex scams out there is to equip yourself with all the necessary market knowledge and skills – after all, with experience comes familiarity with what’s right and what’s wrong. With this in mind, why not learn more about forex trading by checking out the rest of our handy blog or visiting Greg Secker’s YouTube channel today?