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Choosing a forex broker, although much easier than it was in the nineties, is still a daunting task. Technology has changed everything in such a way that anyone with criminal intent on their mind can easily set up a virtual website, appear to be the most creditable broker known to man, and then scam its victims outside the long reach of the law.

Forex scams may fall into the following categories:

1. Fake / Unregulated Broker

Fake, unregulated brokers can lure traders through promises such as high and guaranteed returns and zero spreads. Traders should consult whether the broker is registered with a regulatory body before making the intial deposit.

2. Clone Broker

Some firms may appear to be regulated at first glance, as they are registered on the regulator’s official website and able to provide a registration number. However further investigation reveals that they are just extremely similar to a genuine, regulated broker. They may have just used a slightly different spelling or a variation of the registered broker’s name.

3. Clone Regulator’s Website

Forex scammers may clone a regulator’s website with its information registered as a “regulated broker”. The website entry may appear on a fake broker’s website to convince traders. But all the “authentic information” are just ploys made by those fraudsters to gain from victims’ losses. 

4. Signal Sellers

Signal sellers are those companies and individuals who claim to be able to identify the best trading opportunities. They often promise quick and easy returns for traders.

They may label themselves as professionals who have extensive experience and expertise, remarkable technical analysis abilities, or privileged access to news affecting the markets.

5. Trading Robot Sellers

Forex scammers also claim they have “trading robots” that can guarantee risk-free high returns for traders by examining price volatility and finding the best entry and exit time. As a matter of fact, these “trading robots” can only lead to substantial losses. 

6. Overpriced Training & Education Programs

A beginner may easily dream of becoming a billionaire through forex trading within a few days, and this psychology becomes a tool that can be taken advantage by forex scammers who provide overpriced trading and educational programs, claiming anyone can be an expert in no time. As an old saying goes, “haste makes waste.”

7. Manipulation of Spreads

This scam relies on the naivety of traders, as it assumes that they are going to focus more on market movements instead of spreads. The wider the spread, the more money is being pocketed by the broker, and this reduces any potential profits for the trader. The scam is not as common as it used to be thanks to better regulation of the industry. Nevertheless, traders should still keep vigilant when noticing abrupt widening spreads in trading.

8. Untimely Execution

An order may be deliberately held by a deceitful forex broker after reaching the stop-loss, causing worsened results. It is unlikely to occur with a regulated broker, but it is still a trap worth noticing, particularly when you are trading with a B-book broker.