Avoiding Forex Scams
The internet is full of distressing scams. Most of which seem to imitate a tax authority or promote some sort of get rich quick scheme. Some scams even promote goods that don't exist, such as concert tickets. All scams have a common thread though - they want your money and will give you nothing - or very little - in return.
The false promises made by some of these scammers have included; 'get a tax rebate' or 'you owe tax', 'learn to sell on Amazon and make six figures with no stock and no upfront costs', 'make a living from your phone', etc, etc.
It seems that there are scams in all industries. Forex is no different. In fact, there seem to be a lot of trading related scams out there, perhaps more than most industries, especially when it comes to brokerage services, automated trading, and trading educators.
Obviously, there are genuine brokers and trading services, just as there are genuine messages from tax authorities and genuine workshops on how to make money online. The purpose of this post is not to tear down Forex businesses that provide honest trading services or products. Rather, this post is to help you to discern between a Forex trading scam and a legitimate Forex business...
Forex Trading Scams - the BIG THREE
I have received countless emails from victims who have lost money through some sort of Forex scam. The amounts that people have lost varies greatly. Some victims have lost a few hundred pounds/dollars, some have lost tens of thousands! My heart just breaks for these people.
The Forex scams that have ensnared many innocent people vary greatly in their names, tactics and lies. But victims are usually scammed in one of the following three ways...
Scam Forex Brokers
A scam that pretends to be a Forex broker.
These "brokers" will encourage you to deposit funds with them that you will never get back. Often, these brokers promote that they will trade on your behalf and make you profits. All of this is a lie and is just a tactic to make you handover your cash.
Scam Trading Products
Usually, these products are for trading robots (EA's etc), trading indicators, or trading courses. All of which are promoted as holy grails - items that will provide high returns with very little effort or risk. Once again, a complete lie.
Counterfeit Trading Educators
This scam is usually over social media, most commonly on Instagram. Basically, a scammer will open a profile in a trading educators name and will mimic the real educators posts. Over time, the scammer will contact followers and offer "services", which victims pay for, thinking that they are communicating and paying the actual educator. They are not though, they are talking to and giving away their money to a scammer.
There is currently a fake Samuel Morton (that's me) profile on Instagram. Despite me (and many others) reporting this to Instagram, the profile is still running, pretending to be me, and regularly taking the money of innocent people.
Have you been scammed by the above? Is there a new trading scam tainting the industry and claiming victims? Please let me know ( firstname.lastname@example.org), so that I can keep this page up-to-date with the latest information.
Forex Trading Scams - how to fight back
Often in the emails I receive from scam victims, the victim will ask 'is there anyway that I can get my money back?'
I wish the answer was 'YES'. Sadly, in 99% of cases, your money is gone and you will not get it back. You can try contacting your bank or credit card provider but most will not compensate for scams that you voluntarily paid for - I am sorry.
Unfortunately, there is not much I can say or advice I can give regarding getting your money back. There is also not much that can be done to stop these scammers, apart from reporting them and making others aware.
Just like temptation, the key to not being caught prey is to avoid rather than fight.
If more people are educated about trading scams, there will be fewer victims. Hopefully so few, that these scams will not be worth a scammers time - ultimately ending them.
To help with this education, I have provided some top tips to recognizing trading scams and avoiding them...
Top Tips for Avoiding Forex Broker Scams
Tip #1 - Check the "brokers" website
Most of the time, a scam broker will have a very unprofessional looking website. It may look dated, glitchy or contain spelling errors (yes, scammers are often terrible at spelling and grammar).
Check their website against the websites of real Forex brokers such as IC Markets, Darwinex, IG and Oanda. Do you see a big difference? If you do, then your "broker" may not be a broker after all!
Legitimate brokers generally have very flashy, professional looking and sophisticated websites. Anything that looks too simple and contains spelling and/or link errors should be a red flag.
Tip #2 - Regulation
Any broker that is not well regulated should be avoided at all costs. The most trustworthy regulators are based in developed countries and include the FCA, ASIC, NFA and CySEC.
Scam Forex brokers generally are not regulated or are regulated but by exotic regulators based in financially under-developed countries.
To check a brokers regulation, check their website (usually regulation details are listed in the footer at the bottom of the site). You should also check a financial regulators register or directory, such as this.
Tip #3 - A Forex broker that trades on your behalf?
This should be the biggest warning sign that a broker is not genuine. Why? Because brokers do not trade on behalf of their clients!... I repeat... FOREX BROKERS DO NOT TRADE ON BEHALF OF CLIENTS!
A common broker scam is to get you to "invest" your hard-earned cash and the broker will handle the rest by trading and making profits on your behalf. You will see fantastic "returns" but you will never see your deposit again or ever be allowed to withdraw your "returns". No real Forex broker trades on behalf of their clients, this just doesn't happen!
Some of these broker scams can often get their victims to deposit two to three times before the victim is aware that they are being scammed! I have met people who have lost thousands through these scam Forex brokers offering to "trade" on behalf of their clients.
Do not fall for this scam. Do not fall for this scam. Do not fall for this scam.
If you would like someone honest to trade for you, consider investing in a hedge fund or something like Darwinex. The investment service at Darwinex is FCA regulated and is a very palpable and transparent service.
Tip #4 - Forex broker asking you to deposit?
Some brokers do have a hard sales team, meaning that they will phone you and try to get you to deposit into an account, but this is becoming less and less common in the Forex and trading industry.
If a broker is nagging you to deposit, especially by constantly phoning you, then they could be a scam.
A summary of what to look for when choosing a broker...
A professional website
A broker offering access to a financial market, not an investment service
To see the brokers that I personally trade with, check out my Forex broker guide.
If you want to just jump right in, then you can open free demo trading accounts with my recommend Forex brokers here and here.
Top Tips for Avoiding Scam Trading Educators and Scam Trading Products
Okay, so you now know the key differences between a genuine Forex broker and Forex broker scam. Time to move onto Forex trading educators, trading services and trading products...
Tip #1 - You cannot trade from your phone
An ad, website, post or video that states you can make a ton of money by doing very little is likely a scam. Anything that states you can make a healthy living by trading on your phone is also likely a scam. It's just not possible. If/when it is possible, no one in their right mind would sell the strategy over YouTube ads for a quick buck!
Wake-up. Don't get sucked into these false claims. You and your wallet are only going to get hurt.
Tip #2 - Find an educator that actually trades
Any Forex educators that travel the world to provide training workshops and spend most of their time in webinars and uploading YouTube videos are likely not trading - their time is being spent running their Forex education business instead.
Find someone that legitimately trades the markets and is a bona fide trader. Find someone that provides live trading videos and is mostly based at their trading desk because they are actually trading.
Tip #3 - Find an educator that has verified trading results
If a trader is profitable, it is easy to provide a proven track record. This can be done using third party verification, such as myfxbook or Forex Factory. A luxurious sportscar or a screenshot of a few profitable trades is not enough to prove how successful a trader is.
Traders that cannot provide third party verification (such as stock traders), can provide account statements and brokerage reports - there is always a way to provide proof of a traders performance and the results of a strategy.
This tip is applicable for Forex trading courses, trading signals, trading robots, EA's, indicators and any other trading related products or services.
Tip #4 - Use your common sense
If something doesn't feel right, then trust your judgement. Don't get sucked into something that sounds too good to be true - because it likely is too good to be true.
Tip #5 - Forex trading is NOT 'get rich quick'
Trading the Forex markets is not a quick way to get rich... Trading takes time, effort and patience. Anyone that promotes trading as a 'get rich quick' scheme, does not have your best interests at heart.
An honest educator will be real with you, especially when it comes to capital, returns and performance.
A summary of what to look for when choosing a Forex educator...
Someone that actually trades
Someone not promoting large returns with little effort
Top Tips for Avoiding Counterfeit Educators
Have you received messages over social media encouraging you to sign up to a trading or investing service? Perhaps you've been contacted by a trading educator?
Tip #1 - Do not speak to educators over social media, especially if they contact
This is really the only tip you need, as it solves the problem...
There are scammers that will create social media accounts that counterfeit real trading educators - the username is usually very similar and the posts are usually identical. The counterfeit accounts are used to contact potential victims through private messaging. These messages often contain some sort of offer to buy trading signals or to invest in some sort of scheme. The victim signs-up and never sees their money again.
The answer to all this nonsense is simple - don't speak to trading educators over social media!
Tip #2 - Use the social media accounts linked to the educators website
If you are going to follow and contact educators by social media, then it's best to use the links provided on the educators website. This will ensure that you directed to the correct social media account, not a counterfeit scam account.
Please, please, please read all of the above. Do some research. If somethings sounds too good, it is likely not true. Use your common sense.
I wish you all the best with your trading
Actual Forex Trading