Have Eyes Like a Hawk Spotting Forex Scams (Part 1)

For victims of a forex scam, recovery can be difficult and time-consuming. It is best to recognize the typical warning signs before becoming one. When it comes to marketing their expertise or service to prospective investors, legitimate forex traders are not aggressive. On the other hand, if an individual or a company contacts you repeatedly and persuasively when you do not know them personally, proceed with caution. These people could be lurking on social media platforms, dating sites, and even in real life. Seek recommendations or advice from people you know for their honest reviews.

Exaggerated claims of massive returns on passive investments are a classic indicator of a forex fraudster. If you are promised guaranteed high returns, it is most likely a scam. Your investment's success is highly dependent on a volatile market. You may or may not receive returns quickly. However, a company that claims to provide consistently high returns is making empty claims because nothing is guaranteed in the volatile foreign exchange trading market.

Every broker quotes prices with a “spread” between the bid and ask (the prices at which clients can buy or sell). This is naturally a source of profit for brokers, and this is legal throughout the industry. Unfortunately, some Forex brokers either constantly charge excessive spreads or suddenly dramatically widen the quoted spread temporarily. Keep in mind that major currency pairs have a four-decimal price. Be wary of any forex trader who offers spreads of up to seven points.

This is similar to the widespread tactic. Forex brokers can see where traders stops are, which frequently cluster together at obvious levels. Scam brokers may be tempted to widen the spread by suddenly quoting an ask price 5 pips lower for a split second and then suddenly normalizing the spread. Only the most dishonest brokers do this because it is so obvious to a trained eye when it occurs, but a broker may be able to use a news release or other spread-widening event as cover where the scam is less obvious.