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Forex scams like any other type of fraud reflect an attempt by individuals or entities to take advantage of investors. This can include defrauding them or stealing funds, credentials, or jeopardizing accounts.
All markets are susceptible to fraud with the FX industry being no exception.
Several attempts have been made in recent years to help shore up compliance and regulatory efforts to help mitigate schemes however.
Brokers are now forced to much higher standards with most jurisdictions requiring licenses and registrations that help hold these companies accountable.
This of course is a net positive for investors and traders, who are better safeguarded against abuse. Still, a number of scams still exist and it’s important to be aware of them.
The Most Common Forex Scams
Defense against scams starts with proper education and common sense. Simply avoiding things that sound too good to be true is an excellent litmus test for anything, be it FX or otherwise.
Forex scams look to capitalize on fears, optimism, and a sense of urgency. Be on the lookout for aggressive language or these labels when approaching offers.
The most important tool in any forex scammer’s arsenal is the guarantee of unusually large profits with little or no financial risk.
No investment is 100% guaranteed and this includes forex. If something sounds too good to be true, it always is.
Traders should be especially wary of software that claims to have found a 'secret formula' as well. Be mindful of install any programs until you are certain they won't damage your computer.
It is also important to do your research on any broker before using them. All regulated brokers are included in a register in their respective jurisdiction and can be looked up.
The best defense is to simply stay informed with a broker.