Scam Alert: Revealing Top Four Forex Scam Tactics Employed to Dupe Investors

Forex trading is lucrative when done tactfully. It can also bring a mountain of losses when done without it. Thats part and parcel of a forex trading journey. But scams siphoning out millions in no time is never welcome!

Despite tight regulations, scammers manage to dupe investors. In this article, we will reveal those forex scam tactics. So that you can stay alert and secure.

Forex Scam Tactics You Should Not Fall Prey to

These include scamming in the name of a guaranteed return lure and copying trades. Without any further delay, lets discuss each of these forex scam tactics in greater detail.

The ‘Guaranteed Return’ Promise Never Fails to Disappoint!

Duping investors in the pretext of a guaranteed return is increasingly becoming the trend among scam forex brokers. These brokers are usually not regulated by any of the competent financial authorities.

In countries like India, this phenomenon is deeply rooted. Many fake call centres are run by brokers and non-brokers with the objective of scamming people by promising guaranteed returns.

They all operate by letting their investors see some profits on the trading software early on. Encouraged by these, investors put in more, allowing scammers with enough cash to play their dirty game. Suddenly, investors would stop receiving withdrawals. Because that was never used for trading purposes in the first place.

What‘s the truth? There’s no guaranteed return in forex trading. Prices fluctuate based on the trading volume. So, if someone promises you guaranteed returns on forex trading, dont deal with the concerned person/company.

PAMM Scam

The Percentage Allocation Management Module (PAMM) is employed by scam forex brokers to attach your account to a different one to mimic the performance. This is called copying the trades. Although it is legal and is performed through a restricted power of attorney, it is often used inappropriately by illegitimate brokers to dupe investors.

A PAMM owner will most likely be an unregulated offshore broker. Such a broker can easily manipulate accounts and lure investors by accessing the software. Once funds come into the fake account, it either gets crashed or the investors capital is stolen.

Expert Advisor Scam

Expert Advisor remains a trading algorithm that facilitates the automatic purchase and sale of securities in the forex market. Despite the availability of legit automated systems, investors are falling prey to EA scams. Verifying results is tough with EA. Backtesting does not seem to be as reliable as forward testing. The system fails eventually owing to challenging market conditions.

The EA seller will tell you to open a trading account with a market maker broker, which will trade against your positions. The seller even tempts you to deal with a shady offshore broker. You will pay a fee in any of the options you choose. As the EA fails, your trading account will lose all of its balance. Its like a robotic forex scam.

Signal Scam

This is much like the EA scam. But it will involve your participation. You will receive instructions directly on the purchase and sale time to make a profit. Scammers will usually project too good to be true success rates and high returns. They will tell you to pay the membership fee or deposit funds to offshore and unregulated brokers through affiliate links. There will be a broker-agent to trade your funds. You will see fake results (profits) early on, so you can easily fall prey to their call for more deposits. This will keep happening until customers demand a hefty profit withdrawal. At that time, everyone will vanish, resulting in a significant fund loss for you.

Conclusion

Forex scams are not unusual. However, with increased awareness and vigilance, there can be a full stop to these heinous financial crimes. Dont rush to invest in forex just for the sheer returns you can generate. Gather knowledge, both basic and strategic, before investing in the foreign exchange market. Better preparation is the pathway to better returns.

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