Forex scam victims are increasing every day. If you have seen one of those enticing forex trading adverts promising to make you huge returns trading forex on their reliable trading platform? Or if you perhaps even clicked on the link and saw their professionally made website and read all of the testimonials of how their clients managed to double their money trading in the forex markets in just six months? What did you do next? Hopefully, you clicked off and steered clear realizing that it’s a scam.
Here’s what you need to know about Forex Scams.
1. They are VERY deceiving.
The reason the website looked very professional, is because it was professionally designed. Everything the Forex Scam company does they do with the full intention of presenting themselves as legitimate. The unassuming victim will only know the truth once the Forex scammers have squeezed every last bit of money out of them. Often victims are manipulated into taking out bank loans and pushed into financial ruin.
2. They don’t care about you. They are criminals.
The victim’s personal financial situation makes no difference to the Forex Scammers other than their interest in how much money they can get from their victim. This means, sick family members, medical bills, elderly individuals, students. It’s open season and everyone is a potential target. Multiple cases a month come by our desks where individuals are contemplating taking their lives or on the verge of losing their marriages because of the “stupid investment” that they made. These are not unintelligent people, often these are doctors, lawyers and retired professionals with high levels of accomplishment and education. These are the common victims of a Forex scam.
3. They are professional marketers, they find you
Forex scam companies are very clever when it comes to targeting and marketing their product. You don’t need to work hard to get on their radar, you may have already clicked on their link. Unfortunately, Google doesn’t have the capabilities or willingness to police companies who present themselves as legitimate. The scammers know the demographics that they’re looking for, and once they find them, they know how to reel them in. A client once told us how the scammer had overheard her saying that she had just inherited a large sum of money and they constantly pressed her to invest all that money. She ended up losing all of the money she gave them as they continuously denied her request to refund her money.
Here is an explanation of what these forex scam companies actually do that perhaps even guided you into sending them some of your savings to “invest” in forex.
What is a Forex Scam?
A forex scam is when you sign up to invest in a forex platform thinking that you are trading foreign currencies. You plan to buy foreign currency in a certain country and hope that the currency increases in value and then you will be able to cash in those profits. Instead what happens is the system that you buy the foreign currency on is not connected to the actual exchange rate. The Forex scammers manipulate the platform and in some cases create their own algorithms so that they can control your profits at will. This means that they decide how much money you are going to make or essentially lose. It’s only a matter of when they decide to either place the trade themselves or advise the unassuming victim to place a losing trade.
To explain this more specifically, one example of how the Forex scammers manipulate the platform is by delaying the time. This means that the chart that is shown on the platform, (often the Metatrader 4), will not actually have the real-time. It will be delayed by any amount of time. For this example let’s say that it will be delayed by 10 minutes. By delaying the time, the scammer will tell the victim who thinks he’s trading live forex to place a trade. The scammer already knows what will happen in that trade because ten minutes’ worth of price fluctuation has already happened. In this way, the scam broker can easily force an account into a margin call. This is one of many examples of how the forex scam industry is operated.
What are the different types of Forex Scams?
Binary Options is another forex trading scam that fits into the same category. Binary options are very similar to CFD trading. It is betting on any asset class like stocks or fixed assets like property, to appreciate or depreciate overvalue in a certain time period. You are betting that something will be worth more or less than it is now in a certain time frame. If your prediction is correct, you will earn the amount that the instrument changed its value. If you are wrong, you will lose the amount the instrument changed in value.
You are betting that something will be worth more or less than it is now in a certain time frame. If your prediction is correct, you will earn the amount that the instrument changed its value. If you are wrong, you will lose the amount the instrument changed in value.
Legitimate Binary options trading (which is almost non-existent today ) is when you bet on real asset classes and your money will truly depend on how the asset performs. However, the way the scammers work is by claiming that you are betting on an asset but they show you prices that are not actually what is going on in the world. They can program the asset to increase if you bet the opposite and you would not be able to tell that they were actually manipulating the trading platforms. This is why about 85% percent of people lose their money when investing in binary options/CFD’s, as you are putting your money on something that can be manipulated to ensure you lose your money.
Is cryptocurrency a forex trading scam?
The big craze now is cryptocurrency. This is all because investors are betting that blockchain is the future. Real Crypto Trading is based on supply and demand. There are platforms that you can buy and sell your cryptocurrency for a price that someone else is willing to pay. It is like buying art. There is no intrinsic value to the Mona Lisa, rather it is priceless based on what someone would pay for it. The same applies to cryptocurrency. Your cryptocurrency is only worth what someone else will pay because he thinks that real money is going to become obsolete and cryptocurrency will end up taking its place. Crypto trading scams have evolved into their own class and you can read more about it here.https://www.moneybackhero.com/the-various-crypto-scams/
However, cryptocurrencies are now able to be traded on most Forex trading platforms and very easily blend into the material that Forex scammers are using.
The scammers manipulate the crypto platforms and instead of buying real crypto you are buying thin air that, appears to be crypto on your screen. When you are ‘trading’ your crypto, no one is actually buying it from you. The computer screen is just programmed to look as if someone is buying your cryptocurrency.
Does legitimate Forex Trading exist?
Actually yes. In its origin, foreign currencies are exchanged by professionals to make a profit. Big multinational companies also trade on the foreign currency exchange to ensure that their money won’t be dependant on the exchange rate. An easy example is Starbucks. When they buy their coffee beans from Brazil, they need to make sure that the exchange rate to the dollar will be in their favor. So, they trade dollars for Brazillian Real to ensure they do not end up losing too much money.
However, trading in the forex market takes a lot of skill and macroeconomic analysis and should not be done without extensive research. When endeavored by an individual who hasn’t received extensive education and training, Forex trading or any type of stock trading carries tremendous risks and could hardly be called an investment of any sort. In fact, uneducated trading is no more than gambling!
Risk is equal to the Reward
The only equation that you need to know when doing any business deal is RISK=REWARD. If you are ever promised returns that are abnormally high you should immediately be suspicious. When you put your money in the bank you earn a small percentage of interest. There is a minimum amount of risk that the bank will not be able to pay you back. If you want to be a bit riskier and invest in stocks and bonds your returns will usually be higher. This is because you are taking a bigger risk that the stock price will not drop dramatically or that the business will always be able to repay their corporate bonds. This is what the books call the risk premium. This refers to the risk that an individual takes in a particular investment.
So when you are promised returns to double your money quickly when trading forex don’t be fooled. You should know that the risks of losing your money are enormous.
What are the risks?
As we’ve mentioned earlier, These forex brokers are not regulated by any financial authority. There is no one ensuring they act correctly in a legitimate manner. If these forex companies decide to deny you a refund of your money, there may be nothing you can do about it. You have no way to make sure they give you your money back.
More than that the whole forex platform you are trading on is a scam. You are not trading in the real markets. You are trading based on the platforms made up algorithms that they manipulate to make you earn lots of money, to begin with, but slowly but surely is programmed to make you lose all of your money.
Based on the above we hope it is abundantly clear why it is very unsafe and unwise to even start investing with fraudulent Forex trading companies and why due diligence is absolutely necessary before engaging in any sort of online trading. For more information on how to avoid falling into forex trading scams check out this list that we’ve compiled: https://www.moneybackhero.com/top-50-ways-to-avoid-getting-scammed/
If you have already given your money to a Forex trading scam and want to get it back click here to receive a free consultation on how to get your money back.