The rapid development of technology causes the rapid spread of the fraud epidemic. Compared to the 20th century, when the foreign exchange market was available only to a narrow range of people, now currency speculation is a way to make money for millions. Currently, FX can boast of the largest daily turnover.
According to the latest published report of the Bank for International Settlements, the daily turnover of Forex in 2019 reached 6.6 trillion dollars. The desire for easy money attracts thousands of novice traders.
However, to enter the “game,” you need to meet some conditions. The most important is obtaining a license and quite impressive liquid capital. Unfortunately, most individuals don’t have enough knowledge, experience, and money to start trading independently.
This is where brokers come into play. So far, brokers licensed by reliable financial authorities are the only ones who can open the world of trading for literally everyone. However, crazy turnovers attract not only honest investors but also shameless scammers.
Forex Trading Scams – Why More and More People Find Themselves Being Scammed
As mentioned above, trading has become available to everyone with the advent of the Internet. You can find hundreds of offers to buy an account from brokers from all over the world and cooperate with them remotely.
On the one hand, it is really convenient; on the other hand, where is the guarantee that the investment company you have chosen can be trusted?
Every year, scammers come up with more and more sophisticated deception schemes that leave no chance of success for unsuspecting traders. Fraudsters take advantage of the Internet’s possibilities to create a legitimate-looking website and use any trick to influence customers’ decisions.
Favorable conditions transformed into beautiful words by talented copywriters, high leverage with the lowest commissions, fake data about reliable regulation, counterfeit but literate documents – these are the main ingredients of the cocktail called online forex scam. If you want to gain experience and find out how to spot a scammer just by checking their website, you can start by reading the InvestBY broker review.
Forex Trading Scam Overview
Although the main goal of scammers is to get your money, their methods are different, making them difficult to spot. However, it is possible to avoid brazen deception if you understand its principle. Let’s take a closer look at the schemes that scammers use most often.
Ponzi And Pyramid Schemes
The oldest and most time-tested method is the Ponzi scheme, named after its inventor, Charles Ponzi, who in 1919 first demonstrated the effectiveness of a fraudulent model by defrauding honest investors. Both Ponzi and Pyramid schemes generate income for investors by influx funds from new depositors. The main difference between the two schemes is that the pyramids have a shorter “lifespan.”
Classic pyramid schemes rely on an uninterrupted flow of investors, while the Ponzi scheme creates favorable conditions for retaining the investors it has already attracted. However, both methods are doomed to failure because any stream of new investors will exhaust, as well as funds to fulfill obligations to old customers.
HYIP is a High Yield Investment Program, a more modern analog of the Ponzi scheme, widely used in the network. Usually, HYIPs position themselves as investment fund and offer huge returns for temporarily holding your money (similar to a deposit). The companies using HYIP-based schemes promise to trade in Forex, but in reality, your profit will come from new investors.
Trading Robot Scams
Some companies offer unique robot trading services. Brokers promise 100% successful income thanks to a fully automated trading process operated by robots. Companies claim that robots are not subject to emotions and always follow the algorithm, bringing a stable income.
However, who would share inventions that can enrich their owner in a matter of months? Robots are not immune from mistakes, and this is exactly the phrase that you will hear when scammers misappropriate your money.
Price Manipulation Scams
This type of Forex scam involves spread manipulation. Pay attention to the normal spread offered by the broker for certain currency pairs. To avoid this scam, you must be able to convert pips into cash equivalents, understand the terminology, and possess fairly deep knowledge.
How To Avoid Forex and Crypto Trading Scams?
Global Fraud Protection regularly conducts investigations to protect you from experienced fraudsters. Our posts contain information about exposed fraudulent organizations, as well as tips on how to protect yourself from online forex and crypto scams.
Regular reading of educational content will help you avoid unpleasant consequences caused by cooperation with shady brokers.
However, if you encounter a scam, feel free to contact Global Fraud Protection managers, and we’ll try our best to restore justice.