A regulated trading scam is just as evil as an unregulated scam.

regulated trading scam

So you’ve done your homework, checked and double-checked the online trading company you are planning to trade with. They are a regulated trading company. Maybe this is your first foray into trading. Perhaps you are hoping to make some money trading foreign currency, binary options, contracts for difference or even cryptocurrency. Next, you logged on to the company site, located their trading license number and finally, you checked it on the relevant regulating body’s website (Asic, the SEC, Cysec etc). Maybe you even started educating yourself on how to trade wisely, joined a few forums like babypips and began getting your feet wet so to speak

Meeting your broker

Now, you start trading on the platform and all seems well. Your broker, let us call him John, seems really nice and helpful. He even gives you some helpful trading tips and compliments your performance. This is the first sign that you may be trading on a regulated trading scam. John advises you and appears to be holding your hand each step of the way. Then, suddenly and without warning, the market takes a dip and you are out 10k, 20k, or maybe even more. You feel lost and confused. John gets on the phone with you and offers his condolences. He explains that this is the nature of the game and you could check out of the markets if it isn’t for you.

But, he just got a hot tip that the dollar is about to take a beating and if you buy pounds today, you could triple your investment within a week. Even better, if you go in for the equivalent of your previous loss, you can earn back everything you lost and come out ahead by a handsome margin. If this is starting to sound like gambling at a casino, you are dead on. Trading online is a lot like betting at a casino. Even worse, companies like the one we are describing here make their money when their clients lose, just like a casino. But your broker didn’t disclose that, did he? This is how a regulated trading scam works.

The two key ingredients

There are two key factors that make a regulated trading scam work. First, they seduce inexperienced investors with empty promises of huge potential winnings. Why inexperienced investors? Because inexperienced investors are all but guaranteed to lose in the long term. All the scammer must do is keep you trading. Eventually, the odds will ensure that you lose and the “house” wins.

Secondly, and perhaps the more devious ingredient in a regulated trading scam is that they deliberately offer bad trading advice. Of course, this is highly illegal but for the scammers, it helps them speed up the process of getting their clients to lose in the markets, so they can cut you lose and move on to their next victim.

So how do regulated trading scams get away with it?

Regulated trading scams make sure not to give any investment advice via email or anything that can be recorded. Therefore, it is all done over the phone. This helps them avoid getting reported to regulators. If someone does report them, they simply deny culpability and the burden of proof lies on the victim.

One other point that is worth discussing is the following: Before a broker allows a new client to trade, they are required by the regulators to provide the client with a written assessment to ensure they are educated enough to trade. Many regulated trading scams skip this step which is an opening for victims to claim their money back. If the above sounds like something that happened to you, please reach out to one of our fund recovery consultants and we will see what we can do to help you. At the minimum, we can help you assess your options and you can then decide how to proceed. Fill out the form here to claim your free consultation.