Is Forex Fraud? See Everything You Should Know

Is Forex Fraud? See Everything You Should Know

Trading the Forex market is not only an opportunity to make money, but also to risk losing money. Also, people often lose money not because of their trading skills, but because of their lack of diligence in selecting a suitable broker. Daily Forex trading volume exceeds $5 trillion and interest from private investors is constantly growing.

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?

Is Forex Fraud or Legitimate?

Before starting to work on trading, many people ask the question “Is Forex trading legit? The answer to this question is yes, and trading on the financial markets is absolutely legal. But as with any legitimate business, you still have to be careful not to get scammed by the ubiquitous fraudster and con artist.

Previously, access to exchange-traded assets was available to a small number of investors who had a large budget and could transact at exchange offices.

However, with the development of technology, traders have access to Forex trading even with a small budget of around $5.

But why do people often ask questions like, “Is Forex trading a scam?” The reason lies in a large number of fraudulent projects. There are many deceptive schemes. To avoid becoming a victim, you just need to work with regulated companies.

The financial activity license is a document that certifies that a brokerage firm operates legally and meets all security requirements for withdrawing funds and guarantees that the company has liquidity providers.

The financial license attests to the broker's solvency, that he regularly fulfills his obligations and that the quotes provided are fair. So when choosing a broker, be sure to check for a license from a reputable regulator.

Is Forex legal in my country?

Whether Forex is legit may also depend on the country the trader resides in. In most countries, foreign exchange transactions for private investors are legal. However, there are states where the trade is prohibited by law.

Countries where Forex trading is prohibited by law include:

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Belgium

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Malasia

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Bosnia and Herzegovina

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
India

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Coréia do Norte

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Israel

 

Also, there may be a ban on trading in countries that live by the laws of Islam such as Iran, Saudi Arabia, Pakistan, etc. Also, there are some peculiarities regarding trading.

Trading on the financial markets can be legal when using the so-called Islamic account, which implies trading without exchanges (according to Sharia law, it is forbidden to receive or pay interest).

Main elements of Forex scams

There are a large number of fraudulent projects in the financial markets. Measures against Forex trading fraud are carried out regularly, but it is not possible to completely eradicate them.

There are many ways to get scammed in the financial markets. Let's consider the main ones:

Known financial regulatorsRefusal to allow fundraising.

 

Scammers do not send earned money to users. Tech support first responds with apologies and advises the victim to wait, and wait, and wait and wait some more. Shortly after, the fraudster completely stops responding to the customer.

Known financial regulatorsFraud in the payment of commissions.

 

In that scheme, the trading scams Forex ask a trader to replenish an account with a certain amount. It is presented as a (false) commission for an unspecified trade. However, the money is still not credited to the account and the fraudsters receive the additional money.

Known financial regulatorsFraud with quotes.

 

A fraudulent broker manipulates quotes and allows short-term prices to rise or fall in order for traders to close their trades for insufficient funds or Stop Loss.

Known financial regulatorsIncreasing the spread.

 

By manipulating the quotes, the broker widens the spreads for the trading pairs, so that all the trader's profit goes towards the supposed payment of trading commissions.

Known financial regulatorsFalse signals.

 

Forex trading scams provide signals to traders through personal analysis. First the user wins and then he is persuaded to increase the deposit. After that, the signals become false and aim to make the customer of the company lose money.

One type of Forex fraud is a pyramid scheme. The essence of this scheme is that new customers fund the old ones with their deposits.

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?

Traders at the “top” of the pyramid can generate income. But if the flow of users decreases, the pyramid collapses. All customers who were unable to withdraw their money lose it.

There are several signs by which you can recognize a fraudulent broker or pyramid scheme. Let's consider them in more detail.

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?lack of license

 

Only one broker that holds a license to conduct financial activities from a reputable regulator may be considered “legal” and legitimate. Fraudulent companies cannot obtain such a document.

Instead, unscrupulous brokers often employ the following tricks:

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?Register in a jurisdiction where a license is not required (eg Saint Vincent and the Grenadines);

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?Obtain a license in offshore areas that do not disclose company information and have formal requirements to obtain a document (eg Belize, Antigua and Barbuda, Bahamas and Vanuatu);

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?Obtain certificates from so-called “private licensing centers”.

If the broker is not licensed by a reputable government financial regulator, this could be a sign that the broker is fraudulent.

Known financial regulatorsPromise of big profit

 

Fraudsters try to influence greedy and inexperienced traders and investors by providing them with fantastic “guarantees” of profit. Promises of profitability like 30% per day, 100% per week, 500% per month.

These are the bait lines pattern for scammers. Furthermore, promises will never be confirmed by portfolio managers and their identities will never be revealed.

Remember that even the most successful marketers cannot guarantee profits. They always warn about the existence of risks of loss of funds or have a loss compensation mechanism.

Scammers focus on assuring the customer that they will receive huge profits, while the scammer is not at risk. If you see or hear these statements, this is a Forex trading scam.

Known financial regulators'Cold' calls and social media contacts

 

Scammers often look for new victims through contacts in free or public sources. Calls can be made to a phone number that is not hidden during registration on any profile site.

In addition, victims are often sought after by trolling social networks, where young and solvent audiences are found.

Once the fraudster selects a victim, active persuasion begins. A person can be persuaded and promised huge profits with plenty of reassurance that the victim's investments are completely safe.

Furthermore, a common persuasion scheme is not on behalf of the company representative, but on behalf of the customer. A person accidentally meets a broker's customer and he tells how he made a big profit and gives the target the fraudster's contact information.

No legitimate broker will ever call a potential trader over the phone or contact him on social media, at least not until the client himself provides a phone number after registration.

If they are trying to persuade you to invest in any platform, there is a 99% chance that you will face (a team of) scammers.

Known financial regulatorsAccount replenishment through unknown sources

 

Often scammers try to persuade customers to transfer a payment other than through the payment form on the website. For example:

  • To a bank card;
  • For a Bitcoin wallet;
  • To PayPal wallet number or other payment system.

Attackers also ask you to provide a comment or write them the amount and account number after making the payment.

After that, your deposit will supposedly appear in the account. However, in reality, this deposit is no different from a demo account, money is virtual. Actual funds will go to the scammer's card or account.

A legitimate broker will never ask a trader to transfer money other than through an official payment form. A transfer transaction to a wallet or card is a transfer to an individual, not a company.

And most likely, you will never see that money again. Never transfer money by any means other than through the broker's official payment service.

Examples of Forex Scams

There are many scammers in the Forex market. Most work for only a few weeks or months, attract audiences, receive a large number of negative reviews and delete the site, after which they start working under a different name.

Consider some brokers that show signs of a fraudulent or pyramid scheme.

770capital brokerage

Broker 770capital offered its clients Forex and CFD derivatives trading services. The company was registered in Saint Vincent and the Grenadines and did not have a financial services license.

The broker had an affiliate program that offered 15% of the affiliate's top-up amount. The company was accused of aggressive marketing, irritating marketing, and withdrawing funds. Representatives of 770capital demanded the payment of “insurance”. Customers complained that they lost money.

 

  • In 2021, the brokerage does not work, the company website is no longer available.

Alfatrade

Alfatrade offered traders Forex and CFD trading services. The company operated without a license. The broker was discredited by problems with withdrawing funds.

Traders claim that the company does not allow the withdrawal of funds and that its representatives constantly call customers with requests to deposit more money into the account or to increase the amount of deposits.

Furthermore, traders faced a loss of funds on successful trades due to “technical glitches” of the terminal.

 

  • In 2021, the brokerage closed operations. Alfatrade's official website is not available.

Atiora

Atiora has positioned itself as an ECN broker. The managing organization was registered in São Vicente e Granadinas and had no license to operate. The claims against Atiora related to problems with withdrawing funds.

Customers in reviews say that company representatives justify this for a variety of reasons, including errors in documents. In addition, users paid attention to the incompetence of technical support.

 

  • In 2021, the company domain is still valid, but the website is no longer there. Instead, there is an empty model.

5 tips for choosing a reliable broker

We offer five tips to help you avoid cooperating with illegal and unreliable brokers.

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?License

The license is the main document of any broker. It is a guarantee that the company operates in accordance with regulations and laws. However, only brokers who have received licenses from reputable regulators can be considered trustworthy, such as:

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
USA - SEC

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Great Britain – FCA

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Cyprus – CySec

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
United Arab Emirates – DFSA (Dubai) or FRSA (Abu Dhabi)

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Australia – ASIC

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Germany – BaFin, etc.

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Japan – JFSA and FFAJ

 

Offshore licenses cannot be considered reliable as there are often no formal requirements for companies. However, if the broker has financial authorization from a reputable regulator, it can be considered trustworthy.

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?Assessments

One of the main factors in choosing a broker is feedback on their activities. Users often share their opinions about the work of companies.

If there are a lot of negative comments about the broker, it is dangerous to cooperate with him. It is also risky to work with companies that are not rated.

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?company longevity

When choosing a company, you should pay attention to how long it has been continuously operating as a broker. As a rule, scam brokers and pyramids don't work for very long — from several weeks to several months.

After the company discredits itself, the site is removed and registered under a new name. It is rare for a fraudulent company to operate for more than a year.

The older and more reliable the broker, the better. However, you must not believe what is written on the website. You can check the deadline on the certificate of registration, on the license, as well as by the date of written reviews.

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?Internal documents

Before registering on the broker's website, be sure to study the internal documentation.

The company must provide the following documents:

  • User Agreement (Terms and Conditions);
  • Privacy Policy;
  • Order execution policy;
  • Risk warning.

Documents should not contain “risky” provisions. In particular, the broker shall not reserve the right to block accounts, refuse withdrawals, cancel trades at its sole discretion, etc.

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?contacts and support

Fraudulent brokers or pyramid planners often do not provide contact information to users. These sites usually only have a contact form or callback service.

Therefore, having contacts is an important factor in choosing a broker.

In addition, the website must contain the following data:

  • Legal address and addresses of the company's physical offices;
  • Email address;
  • Phone number;
  • Contacts on social networks.

It is also recommended to check the work of technical support to see if it is competent and efficient. Contact service with a question. Make sure you are answered quickly and to the point.

The 2 main brokers

By working with a trusted broker, you can be sure that you are protected. Verified and reputable companies will never commit fraud, and if any technical issue arises (for example, time-consuming processing of a withdrawal), the broker will promptly resolve it.

XM Group

XM-Logo-1

$30 Bonus
Free account

Visit Now!Visit Now!
*Your capital may be at risk
Investing in Forex, CFD and FX options involves substantial risk of loss and is not suitable for all investors.

The company has three licenses from government regulatory bodies, such as:

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Cyprus – CySEC 120/10;

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Australia – ASIC AFSL # 443670;

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Belize – IFSC No. 000261/106

Trading on XM is performed on MetaTrader 4 and MetaTrader 5 terminals. The company offers instant order execution.

The broker offers trading without requotes. Replenishment and withdrawal of funds are commission-free. The company has more than 1300 trading instruments available, including 55 currency pairs, criptomoedas etc. In addition, the XM Group offers customers a large number of bonuses and other special offers.

AvaTrade

logo iq option

$ 100.000
Free Demo

Visit Now!Visit Now!
*Your capital may be at risk
Investing in Forex, CFD and FX options involves substantial risk of loss and is not suitable for all investors.

The broker AvaTrade appeared in Ireland in 2006. As of 2021, the company offers services in 150 countries and has over 300.000 active accounts.

AvaTrade is licensed by the following regulators:

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Ireland – Central Bank of Ireland No. C53877

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
British Virgin Islands – SIBA / L / 13/1049

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Australia – ASIC AFSL # 406684

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
Japan – Financial Services Agency No. 1662 and Japan Financial Futures Association No. 1574

This has led to the emergence of a large number of fraudulent companies and pyramid schemes. Because of this, people often ask the question: Is Forex a scam? This is usually followed by “How much can you trust the companies that are represented on the Forex market?
South Africa – FSCA # 45984

 

The company offers its customers 250 types of trading instruments. You can also work with options. The broker has its own terminals — AvaTradeGO and AvaTrade Options, MT4 and MT5 are also available.

AvaTrade offers good opportunities for automated trading. You can work with trading advisors, install additional indicators, analytical tools, etc.

The question “Is Forex fraud?” is often questioned by novice merchants or customers who have encountered a scam.

Unfortunately, there are many scammers online. But Forex itself is legal and reliable. This is a financial market that anyone can access online. However, in some countries there are restrictions on Forex work, and before starting to work, you need to check the details.

In order not to face Forex scams, you need to choose well-known and reliable brokers. If you are asked to work with a little-known company, check carefully. Make sure the broker has all the required documents and that there are no signs of fraud.

Frequently Asked Questions About Forex Scams

The broker offers a private company certificate instead of a license. Can it be trusted?
It is not recommended to trust these companies. Only licenses from government regulators can be trusted.
Is it possible to be scammed by a broker licensed by a trusted regulator?
In theory, yes. But in practice, it takes so much time and money to comply with the requirements of reputable regulators that it's not worth it for scammers to go to the trouble of getting a legitimate license.
I saw a website branded by a well-known broker, but with a different domain. Is it worth investing in it?
Be careful, scammers often disguise their designs as popular brands. So, if you are not sure about the broker, check it out or ignore it. Major regulators indicate the real domains of their brokers (eg CySec).
Can I sue a fraudulent broker?
Yes you can. But the court often faces mountains of inconsistencies and problems holding a fraudulent broker to account. So, it is better to check the company in advance and not agree to dubious offers than to try to get your money back.

 

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