Despite enforcement action on behalf of the Commodity Futures Trading Commission (CFTC) and the formation of the National Futures Association, the number of scams operating within the forex (fx) market continues to grow. Below are a few examples of popular scams currently operating.
Forex robots are systems that can be used to conduct 24 hour automated trading on the fx market. The claim is that they are able to analyse the trends and subsequently make the most savvy investment choices, earning the owner vast amounts of profit. Unfortunately, while there do exist robots which have been formally assessed and approved, the majority of these programmes have been neither reviewed nor tested by independent bodies. It is therefore rare to find a forex robot that actually operates as successfully as their developers will have claimed. If an investor does decide to purchase a robot to conduct their trading, it is imperative to carry out extensive research before deciding on the most suitable product and most notably, one that matches their trading style.
Signal sellers are companies or individual traders who guarantee to conduct trade for investors, based upon professional recommendation. Others, who will speak highly of the service and make promises of sure-fire profits, often support these companies. There are plenty of genuine signal sellers who have a legitimate role within the foreign exchange market and who go on to conduct transactions exactly as promised. However, a significant number of people making such claims will quite literally take trader’s money and run.
Commingling of funds
By merging funds it becomes very difficult for investors to stay abreast of their individual accounts and how they are performing. As such, it is easy for fraudulent companies to steal a customer’s money without them even noticing. With a distinct lack of regulation within the forex markets internationally, there is little deterrent for these operators and not much protection for the victims. Therefore, it is advisable that when using brokers to run their portfolios, investors insist upon segregated accounts.
Other warning signs in the foreign exchange market
There are a number of other signs that a scam may be in operation. These include:
Brokerage firms who operate policies that prevent the customer from making financial withdrawals from their accounts. Instances where the customer cannot retain enough control to exit or enter a trade if they wish to, should the market takes an unexpected turn.
Brokers guaranteeing very high profit margins.
In the end it is down to the investor to be absolutely sure as to the honesty of their chosen broker. Before making the decision to invest through them, careful research should be conducted to ensure they are reputable and are going to be working in the customer’s best interests.
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