Beginners Forex Education Forex Basics

Guide to Identifying and Avoiding Dangerous Forex Scams

The Forex market is filled with competitors, and more brokerages pop up every single day. With so many options out there, comparing choices can be difficult or even overwhelming. Novice traders may not be apt at spotting scams, since many of these brokerages have nice websites and seem legitimate to the untrained eye. Unfortunately, there are a lot of scammers out there, and opening a trading account with one of them is one of the worst financial mistakes you could make.

Don’t let us scare you – good brokers are out there; you simply need to be able to identify the difference. Below, we will provide some tips that can help our readers know what to avoid when searching for a broker. 

-Transparency: A good broker offers a transparent website. Details about their account types, funding methods and fees, leverage options, and minimum deposit requirements should be clearly explained. If you’re left with more questions than answers, look for a broker that provides this information upfront. After all, this is need-to-know information!

-Check to see if the broker is regulated. This should be clearly indicated towards the bottom of the website, but you could also check the broker’s “About Us” page. Regulation is a good sign that the company is legit, although US-based residents may need to lower their standards because many regulated brokerages cannot offer service to these clients. 

-Remember that it is impossible for any brokerage to promise they will make you rich. There is no way for them to know that you will make profits, so any such claims are a bad sign. 

-Searching for background information about the company is a great way to see if things are legitimate. User reviews can also give insight into any hidden issues. Reviews might detail issues where brokerages won’t release funds to multiple clients, or other problems you wouldn’t otherwise know of.  

-Be sure to check the funding page for withdrawal rules. Some brokerages impose ridiculous rules and minimums that make it difficult for traders to withdraw their profits. 

-Check out the customer service options offered by the broker. Now, bigger brokerages can generally afford to employ LiveChat agents where smaller companies can’t, but listed contact methods and an address are all good signs.

-Use common sense: if something seems too good to be true, it probably is. Forex trading is risky no matter what, and brokerages need to make a profit. 

-Always check to see what type of spreads are being offered by the broker. On the benchmark pair EURUSD, spreads should be around 1.5 pips or less. We wrote about the importance of transparency earlier – never open an account with a broker that isn’t upfront about their spreads.

Forex Robot Scams

Although Forex robots are different than brokerage-based scams, they can still cause a lot of damage. Before purchasing a robot, do some research about the company or individual that is selling the product. Avoid any claims that the product is guaranteed to make you rich. Instead, look for good backtest results and tips from the author. Many providers will allow users to rent such a product before paying full price, or to at least test it on a demo account.

If you’re ever unsure, then reading user reviews and testing are the best methods of finding out the truth. Know that many of these products aren’t profitable and companies may present one backtest out of hundreds to trick traders into thinking their robot is more profitable than it really is. 

Forex Brokers

Five Signs that Your Broker is a Scammer

30Are you here because you’re having doubts about your forex broker? The truth is that while there are a ton of legitimate companies out there, scammers are often mixed in with those offers. Many of these scammers are good at blending in and they might present you with a polished website that managed to pass your initial inspection, or you could have hastily chosen a broker in the beginning only to run into issues later on. Something must have caused you to click on this article, so read on to find the 5 key signs of a scamming broker.

Sign #1: A Vague Website

Before signing up for a brokerage account, you should be able to gather most of the details about their accounts and fees by simply checking out their website. If you can’t figure out how much it costs to open an account, what leverage is offered, what kinds of funding methods are available, how much spreads and commissions cost, and so on, then you should probably skip that broker. Of course, you could always try to reach out to an agent to ask for answers, but you’ll want to move on if you get vague answers or if customer support doesn’t respond to you within about 24 hours. 

Sign #2: Problems Withdrawing Funds

Most brokers do verify your identity when you open an account and might ask for a photo of the front and back of your credit card (with all but the last four digits of the card number blacked out) if you plan on funding that way. There are usually other requirements, like the need to withdraw through the same method that was used to fund the account. However, some scammers will do everything they can to block your withdrawals, from imposing crazy rules to offering dodgy customer service when you try to figure out why you can’t receive your money. Payment agents at reputable brokers are always willing to provide detailed solutions and explanations to help you understand what’s wrong if you haven’t received your money. 

Sign #3: Customer Service Isn’t Dependable

Each broker will offer different options for contacting their customer service representatives, along with different work hours. The best brokers offer fast contact options like LiveChat, which allows you to instantly connect with an agent, in addition to more traditional methods like phone and email. Some scammers will only get in touch with you through email, or they might falsely advertise an instant contact option when in reality agents are never available to chat. One of the biggest signs of a scammer is a customer service team that is unreachable. If you send an email and haven’t heard back after a few days, or if you never get a response to an inquiry about a missing withdrawal or another important issue, you probably need to look for a more reachable broker to work with. 

Sign #4: Bad Reviews Online

One of the best ways to find out if a company is reliable is by checking for reviews online. Of course, you’ll want to check out several different websites in case any of them are biased. There are also some things to keep in mind when looking at broker reviews. If you can’t find any feedback online, you know that the company isn’t very popular so you’ll need to be cautious. If reviews are mostly bad, you should think twice before opening an account. However, a bad review here and there is normal because some clients might blame the broker for their own losses, so try to look at several different reviews to get the best idea of what kind of service is offered.

Sign #5: Things Seem too Good to Be True

We’ve mentioned that a vague website is a sign that a broker is not forthcoming with information, but you also have to watch out for one that seems to good to be true. For example, a broker cannot “guarantee” that you will make x amount of money by trading with them. They can’t promise to make you rich or change your life because there is no way for them to know that you will make any money. However, some scammers fill their websites with flashy promises and guarantees that you’ll make money, which usually covers up the fact that they aren’t offering any details. 

Forex Basics

Do Forex Scams Still Exist in 2020?

After the financial crisis of just over a decade ago, there have been many questions about whether any kind of investment or trade is really profitable. Looking further, if you want to explain to other people that “exchange money,” then they are even more skeptical because very often it is something that they had no idea that the general public can do, much less than the money was exchanged against each other.

The Main Culprit

Is Forex a scam? The main culprit, of course, is that every time there is a lot of money at stake, there are many scammers. All you have to do is write “Forex trading” on a search engine, so there will invariably be many websites that offer all kinds of scandalous benefits. For example, you will see things like “this operator made 200% returns in just one month”, which are usually attached to some kind of negotiating methodology. But what they don’t tell you is that the trader will eventually explode. If you don’t think so, look at the ranking of some sort of trade tracking forum, and watch as people come and go from above. They will have scandalous twists for a moment, and then they will suddenly disappear. This is because they exploded.

But the reality is that Forex trading is different from any other market. Yes, the potential rewards are much higher, but the reality is that some of the world’s best traders earn 20% a year. That’s not exactly sexy when it comes to a $5,000 bill. For what it’s worth, I recently had conversations with a friend of mine with one of the largest brokers in the United States, he assumed the average account was probably somewhere in the neighborhood of $2000. Even in the best of returns, you’re seeing the gain of $400 for the year. That’s not something to be moved by. With a small account, greed takes centre stage and you’ll want to double your money quickly, and then you do it again.

Think about it this way: people who exchange their retirement accounts usually do so at around 8% a year. You seem very happy about that, but very upset if you don’t double and triple your money every two months while operating on Forex. There’s a reason that a lot of the currency trading ads present something like a private jet.

The Reality

The truth is that one of the advantages of trading with currencies is that you can trade with smaller positions and build a much larger one. That said, keep in mind that leverage works against you if you abuse it. As long as you keep leverage under control, you can benefit from long-term trends. Short-term scalping is a trading style available to a few people, especially those who have jobs during the day.

That said, you can add to a trading account as you build it simultaneously. If you are given enough time and are patient enough, you may find yourself handling a relatively decent account. However, most people do not have the patience or professionalism to take the time to build that account. The real reality about Forex is that you can certainly make money doing it, but it all comes from within.

It may be a little ironic for someone who makes a living as a technical analyst to tell you this: The secret of success has nothing to do with reading graphs. Yes, you have to understand that technical analysis can give us bits of information, but the reality is that the main reason people succeed is their emotional regulation. If you can manage the losses and let the winners run, that’s what makes the difference between winners and losers.

Forex Basics

Different Forms of Forex Trading Scams

When it comes to money, the one thing you can be certain of is the fact that there will be some trying to take advantage of others, either through deception or outright scamming. It is the same in any industry when money is involved, fak clothes, fake concert tickets and you would be correct in assuming that there are trading and foreign exchange related scams. In fact, there are a lot of them, so many that we won’t be able to go through them all, but we will be looking at some of the more prevalent scams that you see about and the ones that are most heavily advertised. So let’s take a little look at what they are.

Fake mentor/account manager:

We have combined these into one as they are pretty much the same thing. If you have been on Facebook, Instagram, or Twitter, I am 100% sure that you would have come across at least one of these people. I am sure you have come across a post similar to this:

“I see a lot of people’s chill and wait for the right time, My friends the truth is if you keep waiting for the right time, you will never get things done. Invest in Forex and Binary Options to earn massive profit weekly ($600 to earn up to $6000 return of your investment or more) Everyday is an opportunity to get started, just give it a try . Invest in yourself and start now, Dm me for more info. I would guide you through the financial free lifestyle”

Looks legitimate right? Anyone offering this kind of money is not a real mentor and they certainly aren’t an account manager. In fact, their only purpose is to try and get your hard-earned money. It is as simple as that, if you come across anyone offering this kind of service, or offering to look after your money and trade for you, avoid it like the plague. Legitimate account managers will not use social media to try and get you to invest. You will simply send your money and never hear from them again.

Trading signals/expert advisors (not all):

I will start by pointing out that not all signal providers and expert advisors are scams, in fact, there are some out there which can be very profitable and are there to legitimately help otters to earn, the problem is that they are often the diamonds in amongst the thousands of pebbles. There are so many expert advisors and signal providers available that it is impossible to find the real ones from the fake ones, and the scammers love this as it makes it so much harder to spot the fake ones. It also does not help that some statistics and account monitoring sites actually let you upload your own data, meaning that all results can be completely fabricated. It also does not help when they want you to sign up with a specific broker that they either work for or get compensated for bringing in new clients.

It can be quite hard to work out what is real and what is not, people will also look at the reviews, but they can be just as fake as the software. Our only advice for finding legitimate signals or EAs are to look at the statistic sites that do not allow for manipulation of the data, only go with personal recommendations from people you know, and also try looking for the ones that don’t require you to sign up with a certain broker or to pay a subscription fee.

Ponzi schemes:

You have probably seen these being advertised, sign up for $xxx and get a monthly return of 40%, well let’s face it, you won’t, or if you do, the first will be the only payment that you get, you get that initial return as a goodwill gesture to try and get you to deposit more. If you do, that money will be gone and any further payouts will be delayed. These are seriously popular, which is unfortunate as they all eventually fail. There are some legitimate MLM companies out there, but these are all about selling and not the actual product that they are advertising unless you are a marketing guru, you are almost always guaranteed to make a loss, so our advice is to avoid them at all costs.

Fake broker:

This is where some of the cammers go the extra mile, they will set up an entire broker in order to try and bring in customers, who will deposit into the accounts and place some trades. The broker will then either trade against them and cause a stop out so the customer loses, or they will simply make up excuses as to why they cannot payout. These sorts of brokers also often use scare tactics or harassment to try and get their customers to deposit more money, something that unfortunately can scare a lot of people into doing, any money you put in you will not be getting back.

In order to avoid this it is important that you do your research, always check for reviews on reputable sites (not just any review site), check the trading communities where people often post their honest views about things, and check for various scam warning such as limited ways to contact, the location, and who the owners are, often scammers are serial scammers so you may find the same names popping up in a number of different places.

Those are just a few of the many ways that people try to scam others when it comes to trading, it is important that you are frugal with your money, do your research before ever departing with any, and while it may sound counterproductive, always assume something is a scam until you are able to prove that it is not. This way you will be able to keep both your money safe and your mind at ease. There are a lot of scams out there, so stay alert and diligent, then you will be fine.


How to Spot Cryptocurrency Scams

Cryptocurrency plays a big role in the world of Forex trading. This is because cryptocurrency, or virtual currency, can be used as a funding method for brokerage accounts, or it can be traded as an asset with many different brokerages. Unfortunately, there are many cryptocurrency-based scams out there that savvy forex traders need to be able to spot. We’ve compiled this guide to help point out some of the things you’ll need to look for to avoid being scammed.

Conditions for Scammers

First, many traders don’t entirely recognize what cryptocurrency is or how it works. The lack of understanding, in combination with lenient regulations or lack of them all together creates a recipe that scammers can take advantage of. Some countries have even banned the use of cryptocurrency altogether because regulating it is so complicated or next to impossible for some governments to work out. Regulation is something we can look at with many brokerages to see if they are legitimate, but you’ll need to do more research when it comes to cryptocurrency. We’d suggest sticking with safer, more well-known options, like Bitcoin, Litecoin, Ethereum, Ripple, PayPal, etc. Otherwise, try doing some research online to find out what type of experience others have had with a lesser-known option. Educating yourself about cryptocurrency and how it works is crucial to avoiding these types of scams. 

Types of Scams

There are a couple of common cryptocurrency scams out there that we know about: 

  • A pump and dump scam happens when creators of a certain cryptocurrency own a large portion of it. Once the cryptocurrency is released, the price increases, and more people buy into it. Then, the creators sell off their large portion after the price increase. Once the company has sold its holdings, the value of the cryptocurrency drops drastically and the company disappears completely. This leaves traders with a useless coin that isn’t worth anything. 
  • OneCoin is surprisingly still an active scam to this day, despite the fact that its creator has disappeared and with FBI involvement. These scammers didn’t use a blockchain, so this cryptocurrency did not have a public ledger, nor was it a real cryptocurrency. 
  • Fake mobile apps on the App Store and Google Play Store have become a nuisance lately. If you’re downloading an app for a trustworthy currency, be sure that it is the legitimate one. Read comments and try to choose the option that is highest on the list of search results. 
  • Email scams involve providers asking for cryptocurrency payments. These usually revolve around Bitcoin and scammers often give themselves away with poor wording or misspelled words. 

Avoiding Scams

We’ve covered the best conditions for cryptocurrency scammers and some of the most common types of scams revolving around cryptocurrencies. Below, we have also provided some tips that should help stop scammers in their tracks. Before giving out your personal information or purchasing any cryptocurrency, be sure to research the company thoroughly and follow these guidelines: 

  • Make sure that the cryptocurrency uses blockchain technology. This offers more protection against manipulation from scammers.  
  • Check for the small lock symbol near the web address and ensure that ‘https’ is included in the address. 
  • Look beyond the wording on any website. Many might claim to be better or faster, but you’re actually looking to see how the provider plans to accomplish these things. 
  • Another red flag to look for promises that a company will make you rich or that it is the magic answer. Most legitimate cryptocurrency companies are focused on the bigger picture, such as how cryptocurrency can improve the world’s financial system. 
  • Trading cryptocurrency as a CFD is one way to trade the currency without actually owning it. 
  • Always research the company behind the cryptocurrency. Does the company reveal who they are and where they’re located? If not, it’s a good idea to stay away. 
  • Try reaching out to the provider’s customer service team. You’ll want to see if they seem professional and polite. Are they willing to answer all of your questions? If support is hard to reach or pushy, or if they dodge some questions, then these are signs that they are scammers. 
  • Be careful with your personal information. If you hand out as much as your phone number to a scammer, you’ll open the door to a headache. Be sure that you trust the provider before disclosing any of your information, or use fake info when testing out customer support.
Beginners Forex Education Forex Basics

Forex Ponzi Schemes To Be On the Look Out For

You have probably heard about Ponzi schemes or at least the fact that a lot of people have lost a lot of money to them. To the outside world, they are an opportunity to make a lot of money very quickly, however in reality they are a ticking time bomb that will only make money for the owner and no one else.

A Ponzi scheme is basically a financial service or activity that aims to give you a very high above market return on your investment. In reality, they simply use investments from newer investors to pay the older ones. The percentage being offered is often far beyond anything reasonable with things like 1% to 5% per day being offered. A Ponzi scheme will ultimately fail once the number of investors starts to slow down, at this point, they are no longer able to payout the earlier investors, at this point the owner normally shuts up shop and runs, leaving all those that have invested with the loss.

So how do you tell whether something might be a Poni scheme? There are a number of warning signs that you should look out for, some of them include the following.

Guaranteed High Returns – Anything that is offering you guaranteed returns is a bit of a red flag, what makes it even more obvious is when the returns are far higher than most reputable places such as banks or building societies.

Consistent Returns – If you have already traded, you will know that you do not make exactly 1% per day or week, each day is different as it depends on the markets, so when someone is offering the exact same return every day it can send out a few warning signals.

Not Licensed – The majority of Ponzi schemes will not have any regulations around them and they won’t have been registered with any governing bodies, so if you are thinking of investing somewhere, be sure to take a look to see if they are in fact regulated, you could also call the regulator to double-check as some have been known to put that they are regulated even when they are not.

No Information Of Strategy Or Process – If a scheme is using the Ponzi method of paying their investors, then there may not actually be a strategy or process available. Not knowing how they will be generating their money to pay back investors should be a huge red flag and something that should certainly make you think twice.

So what makes a Ponzi scheme different from a Pyramid scheme? Both are primarily built around the idea of recruiting new people into the system in order to make money, both often have a product attached to it which is pretty much nonexistent or useless to the customer. The main difference between the two is that for a Pyramid scheme, recruitment is done at all levels, while with a Ponzi scheme, it is normally just those at the top that do the recruitment. So there isn’t much difference between them, and they should both be avoided as much as each other.

If you are ever in doubt or you see any of the warning signs, the best advice that you can be given is to stop and find something else, investing into such a scheme will only result in a loss of everything you have put in.

Forex Basics

A Detailed Look at Forex Bonus Types & Scams

When choosing a Forex broker, we look at many different aspects of their services, including available account types, deposit requirements, fees, and so on. While bonuses are not enough of a reason to choose a broker on their own, traders should know that a good bonus opportunity can provide several benefits. Unfortunately, some brokers advertise opportunities that seem amazing, when the bonuses are almost impossible to earn or withdraw realistically. Within this article, we will cover the various types of Forex bonuses and how to avoid being scammed.

Types of Forex Bonuses

Deposit Bonus

One of the most common types of bonuses available are deposit bonuses, which add a certain bonus percentage based on the amount of one’s initial deposit. The exact amount varies by broker and usually falls in a range from 25% to 100%, although we have seen higher offers in rare cases. For example, if you deposit $100 with a 50% deposit bonus, you should have $150 available in your trading account.

Welcome Bonus

A Welcome Bonus is something that brokers offer to attract new clients; however, terms vary by brokers. Some offer a certain bonus amount (typically around $30 or so, but sometimes higher) for a trader to open an account without requiring that they make a real deposit. This is the best scenario for beginners and may help one to see if they are truly prepared to begin investing real money. Of course, the money must be used for trading, and bonus funds cannot be withdrawn. The other scenario works like a deposit bonus, where the Welcome Bonus is awarded if the trader meets an initial deposit requirement, or fulfills a set requirement when signing up, such as selecting a certain account type.

No Deposit Bonus

This bonus works very much like the Welcome Bonus, except the broker never asks for an initial deposit. Traders can simply open an account and start trading with the bonus they are given, without risking anything or owing to the broker if the bonus funds are lost. Once you’ve used up all of the bonus funds, the brokerage would hope that you would then decide to make a real deposit into the account, but this is optional.

Reload or Re-deposit Bonuses

These bonuses are more beneficial to existing traders who have deposited with the broker at least once before. It works very much like a regular deposit bonus by applying a certain percentage onto the deposit. In some cases, a broker may offer a different percentage than they would with the initial deposit, which allows traders to rack up bonus funds in larger quantities.

Special Bonuses

These bonuses fall into more of a miscellaneous category and often require certain tasks to be performed on the website before being earned. For example, one might need to trade a certain number of lots to earn the bonus. In many cases, these bonuses are reserved for certain account types and usually focus on VIP accounts or other high-tier accounts.

Avoiding Bonus Scams

While there are many reputable brokers out there, traders need to be aware that scammers are among them. Throwing out unrealistic sounding bonuses to lure customers in is just one of many ways that an untrustworthy brokerage may try to trick potential clientele. Here are a few tips to avoid being scammed with Forex bonuses:

Always read the terms and conditions in full, both for the broker in general and for each bonus opportunity outlined on their website. Write down any conditions or alarming facts that you find for reference.

Check to see if there is a limit on the number of bonuses that can be earned. If a broker offers various deposit bonuses and other options, then chances are that traders will only be allowed to claim 1-3 of them, so you will need to choose the ones that will benefit you the most.

Check to see if certain bonuses are only available to certain account holders. Many brokers reserve the best options for VIP accounts or accounts that require the largest deposits. In some cases, micro/mini/cent accounts are not allowed to take part in any special bonuses, or their participation is severely limited. On the contrary, we have seen some special bonuses that are only offered to low-tier accounts. This is something that varies widely by the broker.

Look in the terms & conditions to see what needs to be done for the bonus to be withdrawn. Many brokers will require you to trade a certain number of lots. There are always limitations on Welcome and No-Deposit Bonuses as well that keep traders from simply withdrawing those free bonus funds into their bank account. You will need to trade so many lots, make a profit from a real deposit, deal with some type of profit limitation, or deal with other restrictions before brokers release these funds.

Check to see if there are any restrictions that will wipe out the bonus. For example, many brokers will not allow the trader to make a withdrawal until the bonus has been completely earned. Other times we see limitations on what leverage can be used when trading with bonus funds.


Traders should always figure out their potential broker’s pros and cons before opening an account, and this decision should never be made based on a bonus opportunity alone. However, good bonus options offer several benefits, such as helping a beginner ease into trading without using their own funds, by simply providing one with extra money based on the amount they deposit, and so on. Once you have identified which types of bonuses are available with a certain broker, always be sure to read through those terms and conditions to be sure that earning and withdrawing will be within possible means. Be sure to write down any conditions or rules related to the bonuses that you will be able to earn.