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How to Spot a Forex Scam
The spot forex market trades over $5 trillion a day, including currency options and futures contracts. With this enormous amount of money floating around in an unregulated spot market that trades instantly, over the counter, with no accountability, forex scams offer unscrupulous operators the lure of earning fortunes in limited amounts of time. While many once-popular scams have ceased—thanks to serious enforcement actions by the Commodity Futures Trading Commission (CFTC) and the 1982 formation of the self-regulatory National Futures Association (NFA)—some old scams linger, and new ones keep popping up.
Back in the Day: The Point-Spread Scam
An old point-spread forex scam was based on computer manipulation of bid-ask spreads. The point spread between the bid and ask basically reflects the commission of a back-and-forth transaction processed through a broker. These spreads typically differ between currency pairs. The scam occurs when those point spreads differ widely among brokers.
- Many scams in the forex market are no longer as pervasive due to tighter regulations, but some problems still exist.
- One shady practice is when forex brokers offer wide bid-ask spreads on certain currency pairs, making it more difficult to earn profits on trades.
- Be careful of any offshore, unregulated broker.
- Individuals and companies that market systems—like signal sellers or robot trading—sometimes sell products that are not tested and do not yield profitable results.
- If the forex broker is commingling funds or limiting customer withdrawals, it could be an indicator that something fishy is going on.
For instance, some brokers do not offer the normal two-point to three-point spread in the EUR/USD but spreads of seven pips or more. (A pip is the smallest price move that a given exchange rate makes based on market convention. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point.) Factor in four or more additional pips on every trade, and any potential gains resulting from a good trade can be eaten away by commissions, depending on how the forex broker structures their fees for trading.
This scam has quieted down over the last 10 years, but be careful of any offshore retail brokers that are not regulated by the CFTC, NFA, or their nation of origin. These tendencies still exist, and it’s quite easy for firms to pack up and disappear with the money when confronted with actions. Many saw a jail cell for these computer manipulations. But the majority of violators have historically been United States-based companies, not the offshore ones.
The Signal-Seller Scam
A popular modern-day scam is the signal seller. Signal sellers are retail firms, pooled asset managers, managed account companies, or individual traders that offer a system—for a daily, weekly, or monthly fee—that claims to identify favorable times to buy or sell a currency pair based on professional recommendations that will make anyone wealthy. They tout their long experience and trading abilities, plus testimonials from people who vouch for how great a trader and friend the person is, and the vast wealth that this person has earned for them. All the unsuspecting trader has to do is hand over X amount of dollars for the privilege of trade recommendations.
Many of signal-seller scammers simply collect money from a certain number of traders and disappear. Some will recommend a good trade now and then, to allow the signal money to perpetuate. This new scam is slowly becoming a wider problem. Although there are signal sellers who are honest and perform trade functions as intended, it pays to be skeptical.
“Robot” Scamming in Today’s Market
A persistent scam, old and new, presents itself in some types of forex-developed trading systems. These scammers tout their system’s ability to generate automatic trades that, even while you sleep, earn vast wealth. Today, the new terminology is “robot” because the process is fully automated with computers. Either way, many of these systems have never been submitted for formal review or tested by an independent source.
Examination of a forex robot must include the testing of a trading system’s parameters and optimization codes. If the parameters and optimization codes are invalid, the system will generate random buy and sell signals. This will cause unsuspecting traders to do nothing more than gamble. Although tested systems exist on the market, potential forex traders should do some research before putting money into one of these approaches.
Other Factors to Consider
Traditionally, many trading systems have been quite costly, up to $5,000 or more. This can be viewed as a scam in itself. No trader should pay more than a few hundred dollars for a proper system today. Be especially careful of system sellers who offer programs at exorbitant prices justified by a guarantee of phenomenal results. Instead, look for legitimate sellers whose systems have been properly tested to potentially earn income.
Another persistent problem is the commingling of funds. Without a record of segregated accounts, individuals cannot track the exact performance of their investments. This makes it easier for retail firms to use an investor’s money to pay exorbitant salaries; buy houses, cars, and planes or just disappear with the funds. Section 4D of the Commodity Futures Modernization Act of 2000 addressed the issue of fund segregation; what occurs in other nations is a separate issue.
An important factor to always consider when choosing a broker or a trading system is to be skeptical of promises or promotional material that guarantees a high level of performance.
Other scams and warning signs exist when brokers won’t allow the withdrawal of monies from investor accounts, or when problems exist within the trading platform. For example, can you enter or exit a trade during volatile market action after an economic announcement? If you can’t withdraw money, warning signs should flash. If the trading platform doesn’t operate to your liquidity expectations, warning signs should flash again.
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The Bottom Line
Conduct due diligence on the forex broker you’re considering by going to the Background Affiliation Status Information Center (BASIC), created by the NFA. Many changes have driven out the crooks and the old scams and legitimized the system for the many good firms. However, always be wary of new forex scams; the temptation and allure of huge profits will always bring new and more sophisticated scammers to this market.
How to Avoid Forex Trading Scams in 2020
Forex markets trade trillions of dollars a day. Traders around the globe are always looking for the best broker to trade forex, CFDs, binary options, stocks, cryptocurrencies, etc. With new forex brokers popping up constantly, determining the legitimacy of a broker can be a real challenge. As a consumer, it is vital to research a company before depositing money to trade. At ForexBrokers.com, it’s our mission to assist you as much as possible with that research.
Most Trusted Forex Brokers Comparison
Taken from our forex broker comparison tool, here’s a comparison of the must trusted forex brokers.
|CMC Markets||Saxo Bank
|Publicly Traded (Listed)||Yes||Yes||Yes||No|
|Authorised in the European Union||Yes||Yes||Yes||Yes|
Questions to ask to avoid a forex trading scam
- Is the broker regulated?
- If regulated, how trustworthy is the regulatory body?
- Is the broker offering profits or rewards for opening an account?
- Is the broker offering a cash bonus for opening an account?
- Is the broker offering automatic trades or signals to guarantee profits?
- Is any credible information about the company included on its website, such as company history, financials, headquarters’ address, or similar?
- If awards are cited, can I verify their authenticity?
- If a big corporate sponsorship is promoted (e.g. athlete sponsorship), am I doing my due dilligence to ensure the company can be trusted?
1) Is the broker regulated?
Unregulated brokers do not have to report to a governing body. This means that if they scam you in any way, whether it be “glitches” or “malfunctions” causing sever slippage in their system, or you go to make a withdrawal and they don’t process it (steal your money), you are out of luck. Beyond posting a bad review online, there is little you can do because these brokers have no legal authority to answer to.
How do I check if a broker is regulated? The easiest way to check a broker’s registration is to look for it at the bottom of the website. The picture below is the bottom of 12Trader, a broker we recommend avoiding. You’ll notice that nowhere in this picture is a regulatory body mentioned. The “about us” pages on the site link to an account login prompt. Nowhere on the site is there any mention of regulation or company history. All of these warning signs should make you cautious.
Now let’s look at the bottom of the homepage of City Index, a trusted and regulated broker.
You will notice 1) the company specifically warns of the risks involved in trading CFDs, 2) the company is registered in England and Wales and has posted an address, and 3) the company is authorized and regulated by the Financial Conduct Authority, and has posted a registration number.
Conclusion: A regulated broker is required to include proper risk disclaimers and regulatory information at the bottom of all their website pages. To make it easy for investors, ForexBrokers.com includes a Trust Score for each broker, which assesses overall trustworthiness based on where the broker is regulated and its history as a firm.
2) If regulated, how trustworthy is the regulatory body?
Some scam brokers claim to be regulated and registered by a governing body that does not monitor or regulate forex companies.
For example, let’s look at Evolve Markets.
The disclosures at the bottom of the homepage give the appearance of a regulated broker. There is a warning of the risks of trading CFDs, and there is a legal section. Upon further examination of the legal section, you’ll notice that while the firm is registered as an international broker company in St. Vincent & the Grenadines, it is not regulated.
This statement from St. Vincent & the Grenadines shows there is a warning against false claims of registration or license.
How do I know what regulatory bodies are legitimate?
Forex brokers that are regulated in a major hub are always more trustworthy. Brokers in emerging hubs can also be trustworthy, but caution is warranted. Based on our annual study of regulatory trustworthiness, here is a list of the regulatory bodies we track and how trustworthy each one is:
- FCA Regulated – Financial Conduct Authority – United Kingdom – (Great)
- CySEC Regulated – Cyprus Securities & Exchange Commission – Cyprus (OK)
- ASIC Regulated – Australian Securities & Investment Commission – Australia (Good)
- SFC Authorized – Securities Futures Commission – Hong Kong (Good)
- MAS Authorized – Monetary Authority of Singapore – Singapore (Good)
- FSA Authorized – Financial Services Agency – Japan (Good)
- IIROC Authorized – Investment Industry Regulatory Organization of Canada – Canada (Good)
- FINMA Authorized – Swiss Financial Market Supervisory Authority – Switzerland (Good)
- FMA Authorized – Financial Markets Authority – New Zealand (OK)
Conclusion: Double check the authority of the governing body that regulates the broker you are looking at. You can go to the website of the governing body to search for the registration number and verify its legitimacy. To help investors find a trusted broker where they live, we have created country-specific forex broker guides.
3) Is the broker offering profits or rewards for opening an account?
Scam brokers often make claims such as “make $50 a day from a $250 investment” or “make 80% returns on profit signals” or “96% success rate.” These claims are a scam, regardless of whether they are being made for forex, CFDs, or binary options. Forex brokers should not promise returns at all, small or large. Simply put, if a broker is promising to make you money, it is a scam. Other common scam practices include advertising pictures of expensive cars that are given away to lucky investors.
This Wikipedia page on binary options does a great job of summarizing risks related to binary options:
“Many binary option “brokers” have been exposed as fraudulent operations. In those cases, there is no real brokerage; the customer is betting against the broker, who is acting as a bucket shop. Manipulation of price data to cause customers to lose is common. Withdrawals are regularly stalled or refused by such operations; if a client has good reason to expect payment, the operator will simply stop taking their phone calls. Though binary options sometimes trade on a regulated exchange, they are generally unregulated, trading on the Internet, and prone to fraud.”
Conclusion: If a binary options or forex broker promises you big returns on your money, this is a clear sign of a scam. You will not make $100,000 on a mega-trade; you will not make a 96% profit in 30 seconds; and you will not win a $40,000 car by depositing $2,000. Save your money and STAY AWAY.
4) Is the broker offering a cash bonus for opening an account?
When a broker offers an abnormally high cash bonus, is not regulated, and does not show offer details for the bonus, then you are likely dealing with a scam broker. For example, 1000Extra hints at a bonus of $1,000 with their vague promotional offer. If you click around trying to gather more information you are redirected to sign up for an account.
1000Extra is not regulated, has minimal information about the company, and has scam reports across the web.
Conclusion: In most regulated regions around the world, promotional bonuses for opening a new account are not allowed. The two exceptions are the United States, which is for US citizens only, and Asia.
Is Forex Trading A Scam?
This thread is created to enlighten as many new traders that have been misguided about what Forex really is. And therefore, honest and responsible contributions will be appreciated from experienced traders. I believe this will definitely help many traders to know and to understand forex trading from a vast perspective.
Please tell us why you think forex trading is a scam or why you think it is not.
- Post # 2
- Dec 29, 2020 1:52pm Dec 29, 2020 1:52pm
- Post # 3
- Dec 29, 2020 10:32pm Dec 29, 2020 10:32pm
Patience, together with good timing, is the ultimate strategy.
Trade safe and prosper.
- Post # 4
- Dec 29, 2020 10:59pm Dec 29, 2020 10:59pm
- Post # 5
- Dec 29, 2020 11:12pm Dec 29, 2020 11:12pm
it’s both scam and not .
scam because it’s best business to open broker because you know people will going to lose money and winners rate will be low and even some brokers don’t pay any thing to winners just scam them like what happened to me with NPBFX they give me no 20$ deposit bonus and i turned it to 200 and ignored my withdraw request and all i get rude replies from there support team lol . some brokers also good and pay your profits..
second thing is: it’s not scam when you really understand value of every cent in your account . if you have 10$ in your account and you acting like that 10$ is all you have you will be very careful and you will force yourself to manage risk and you will surprise your account get grow..
but if you don’t have that and you just have account with 2000$ and you don’t care about value of money . it’s turn to gamble then you going to lose and deposit again and again..
third:it’s not money machine forget that at all . it’s will not going to make you rich .. just forget it and be realistic..
4 people who post how they turn 10$ to 10000$ in no time . stay away from them . those can be very unhealthy on your account and in your mind . because when you looking at them you will start lose trust in yourself as trader even if you have perfect result like 10% or 20% per month. then you will start try to copy them . and as a result you will lose everything you built before .
5: if you have strategy that work just stuck to it
BoxInvesting Review – 5 things you should know about Boxinvesting.com
Beware! BoxInvesting is an offshore broker! Your investment may be at risk.
RECOMMENDED FOREX BROKERS
Don’t put all your eggs in one basket. Open trading accounts with at least two brokers.
BoxInvesting is a Forex brokerage registered in the Marshall Islands. It provides the Sirix trading platformand an extremely generous leverage of up to 1:500. Furthermore, there is a wide range of trading products from which to choose and a required minimum deposit of $250 which is about the industry average. The spread on EUR/USD is as low as 0.6 pips which is quite favorable in our view, especially compared to the industry average of a pip and a half.
BoxInvesting regulation & safety of funds
According to the website the company behind the brokerage is registered in the Marshall Islands by the name Software and Media LTD. However, in the terms and conditions of the brokerage another company name turns up – Boxinvesting Limited. Such irregularities in the corporate informations are usually signs of trouble. Furthermore, t he Marshall Islands is a favorite destination for would-be scammers due to its very liberal laws regarding the registering of companies. The government does not even require for someone to be physically there in order to register a company. Such a loophole has surely been noticed by many ill-minded brokers and utilized. Here is a screenshot
It’s safe to assume that the brokerage does not fall under any regulatory oversight because the government of the Marshall Islands does not include forex trading within its regulatory framework. However, in order to be impartial – we must say that the brokerage provides the Sirix trading platform which is well-received by traders and reviewers alike. Here is a screenshot:
Through a demo account we could sea a spread of 0.6 pips on EUR/USD which is quite favorable and very low. However, the offshore location of the brokerage and the obvious lack of regulation highly inclines us to suspect that potential clients of the brokerage may be open to substantial risk.
We urge traders to exclude such risk in trading by only associating with brokers regulated by prestigious regulatory agencies, such as the FCA and CySec, which require compliance with a number of strict rules that give significant assurance for the security of the clients funds.
The segregation of accounts is among the rules which are especially important in the trading world, because it drastically lowers the risk of possible commingling.
Another is the participation in a compensatory scheme by which the client’s losses will be covered in the unlikely case the broker goes bankrupt or attempts to swindle traders.
BoxInvesting deposit/withdrawal methods and fees
Potential clients of the brokerage may deposit or withdraw via a number of payment methods. They include: Visa, MasterCard, Maestro, wire transfer, WebMoney, QIWI and Yandex money. We could not find any disturbing withdrawal provisions on the brokerage’s website, nor in its terms and conditions. However, this should not be seen as a guarantee there aren’t any because more often than not offshore brokerages charge unexpected fees once the clients make the initial deposit.
This is why we always advise traders to put up only the required minimum deposit, instead of risking a bigger amount with no certainty. Afterwards, they may also try to withdraw a small amount in order to check for any unexpected fees or delays. Such fees and delays are usually the signs of a scammer.
How does the scam work?
Unfortunately, the possibility of a scam looms over almost every trade in forex, especially if you are dealing with an unregulated brokerage. That is why we believe traders should be acquainted with the methods of a scam. Here is how it would typically go about:
Through clicking an ad with promises for fast money, you will be redirected to a website such as Bitcoin Evolution or Crypto Cash where registration will require you to give your address, email and phone number. After sharing your personal information, you will being receiving calls from brokers, compelling you to invest with them and win big. After a few minutes hearing their pitches, you decide to deposit some $200-250. And just like that – the scammers take a fat commission from this initial deposit.
After they are done with you, senior scammers begin working you into putting even more money. They say it’s the only way to profit from trading even more. After making the mistake of investing even further, you’ll begin wanting to get out of this and withdraw what you have left.
Unfortunately, the con-artists have no such thing in mind. They will now begin persuading you to wait it out and not withdraw right now. The motive here is quite straightforward – traders have a limited time window for filing a chargeback with their bank and get their money back. The “recovery department” will simply want to mislead you into missing this crucial period and, along the way, losing any chance you might have of getting the money back.
What to do when scammed?
As was mentioned above, scamming is quite the common in the trading world and, sadly, even you might suffer from it. In such an unfortunate case there still may be some available options for you.
You may contact your bank or credit card provider and file a chargeback. Furthermore, due to the high instances of fraud – both Visa and MasterCard have decided to sidestep scammers as best they can in Forex trading. The first thing we have seen so far is that MasterCard has increased the previous time period of six months for filing a chargeback to a year and a half with their rival Visa expected to follow suit in December.
If, however, you have provided the broker with your credit card details, immediately cancel your credit card.
If you have given information regarding your online banking pass – you should switch it asap!
Beware of potential calls from self-described “recovery agencies”! They prey on scammed and vulnerable traders who are desperate to recover their losses. They will require an “up-front” payment to help you, but after paying them, no such help will be coming your way!
Top Forex Brokers
|Cyprus, Australia||5 /5||$5||Click for a special offer Website|
|Cyprus||4.97 /5||$10||Click for a special offer Website|
|UK||4.93 /5||$50||Click for a special offer Website|
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|Australia||4.90 /5||$100||Click for a special offer Website|
We have had a very rude lady from box calling us every now and then even when we told them we were not interested. They are very pushy and on the last call, extremely rude when we told them we were not interested. The lady literally told me to go to hell, for wasting their time! I would never invest a dollar with tem considering how they treated us. I think its a scam
Trish you did well not to invest it’s a total scam. Sadly for me they have my $$$$
They are total scam and I have been able to get hold of one of their receiving accounts in foreign country.. good news coming soon…
I am trying to get my money back from Box Investing for three weeks and I don’t know how it is possible. May be someone of you had the same experience and can advise me?
I received a call from BoxInvesting I’m not sure if I should invest or not
Don’t do it BoxInvesting they are scammers. You will regret it
Don’t invest your money they are scammers. You will lose your money
Добрый вечер я пытаюсь вывести деньги из Boxinvesting.com не могу найти брокера в течении 2 недель а самостоятельно не дают.если кто либо сталкивался с этими мошенниками помогите
Good evening, I’m trying to withdraw money from Boxinvesting.com. I can’t find a broker for 2 weeks, but I don’t give it on my own. If anyone has come across these scammers, help
Boxinvesting is a scam. My personal broker Fedrick Johnson persistently convinced me to invest over £6000 early this year. I realised they are scammers when I could not withdraw from my account since April. I have reported them to the UK fraud agency. Please avoid this company. It’s a scam
When you reported them to the UK fraud agency, what did they say? Is it possible to get money back?
They are still investigating. Possible looking into their data base for similar complaints. I would suggest you report to you local police as well. Those guys are scammers and the more we could expose them the less likely for them to scam others
Добрый вечер,кому нибудь получилось вывести деньги с boxinvesting.com и каким способом?
I just logged into my account with them and I realised that they have depleted my account from $17,000 to $7. This is after I have made a withdrawer and account closure request. Please advise you relatives and friends to run away from these people. The main person that from these company is a guy called Fredric Johnson. And I have emailed him that I would do everything within the law to get him prosecuted.
Добрый вечер,ищу пострадавших от черных брокеров [email protected]
Hi, Very very disappointed about how BoxInvesting is treading their clients. April 25,2020 I have made $250 USD and there after $5000 USD after I have spoken so called ( Broker) that BoxInvesting assigned for me to handle my investment. (Name) Fredrick Johnson was the the broker who contacted me and explained everything I should do and how. We spoke until end of May. Since then, I have no any contact with him. I am calling and emailing to him, support team, financial team and even legal team who I had captured their emails through our communications. Since today, no any sign or reply from Mr. Fredrick Johnson who should be my broker adviser. PLEASE, STAY AWAY FROM THESE PEOPLE. What they are saying and how they treat is BIG different. I am calling twice a week. They just talk like a recorded voicemail. “I will forward your information to your broker and they will contact you ASAP”
SO, PLEASE WATCH OUT AND NEVER GIVE YOU MONEY PEOPLE LIKE BOXINVESTING. You have been warned if you see this message.
ciao, anche io sonno stato raggirato da questa societa’ truffa ho investito il mio denaro .ora non li sento piu’ addirittura mi hanno scollegato telefonicamente mi hanno spillato piu’ di 2.000.00euro ma e’ possibile che non si possa fare niente contro queste persone, il mio broker si faceva chiamare francesco . ma se ci organizziamo perche’ non andiamo a trovarli personalmente faccia a faccia, da qualche parte dovranno pur stare giusto per rinfrescarle la memoria e ricordarli chi siamo
hello, I too have been duped by this scam company I invested my money. now I don’t hear them anymore they even disconnected me by phone they stapled me more than 2.000.00 euros but it is possible that nothing can be done against these people, my broker called himself francesco. but if we organize ourselves because we are not going to personally find them face to face, somewhere they will have to stay right to refresh their memory and remember them about us
mi hanno rubato 50.000 euro, minacciandomi che avrei perso tutto. ho fatto denuncia alla polizia postale. ma come facciamo a sapere dove di trovano?
they stole 50,000 euros, threatening me that I would lose everything. I made a complaint to the police post. but how do we know where to find them?
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