How to identify a forex scam?
10 years from now, forex scams were based on the computer manipulation of the bid/ask amount spreads. The spread between the bid and the ask amount is the profit earned on a trade. The scam occurs when the spread between the bid and the ask amount differs widely among brokers.
For example, If a trade yields a profit equivalent to a spread value of 7 points and the broker offers a 3 point profit to the investor. The broker scams a profit equivalent to a spread value of over 7 points. Fortunately, due to the tight regulations, the forex market has become comparatively transparent and these kinds of scams are not prevalent anymore. If you come across one such scam, you must file complaint against broker performing unethical practices.
However, it does not mean that you can overlook the possibility of being scammed by the broker. There are still many report forex scams prevalent in the market. Let’s look at some of the prevalent forex scam patterns in the market.
- Be aware of the signal sellers:-
A signal seller is someone who sells information to the traders based on which the trader is supposed to earn a profit on the forex trade. They usually charge daily/weekly or monthly fees for the information they provide. The information they provide does not help traders in any way make profits on currency exchange. If you find one such scammer, you must file a complaint against forex broker. Besides signal seller scams being on a rise, some honest sellers perform functions as promised.
- Automated trading:-
Automated trading technologies are prevalent in the trading market nowadays. It is a codebase based on the patterns of the forex market. Many of this automation software is not tested and is not trustworthy. The examination process for this software must include thorough testing of the parameters used in the development process. It can do heavy damage to the unsuspecting traders investing thoughtlessly in automation technologies.