Scammers in the Forex Market: Who are They？
Forex scam brokers are not always represented by brokers themselves. They are most likely to be individual players without companies but who position themselves as broker companies. Often they are very experienced Internet users who can fabricate false information on the site they created.
The owners of such scam sites do not have a license and are therefore not properly regulated. Sometimes they dont even have basic knowledge of the Forex market. But for a novice trader who does not have an education in economics or finance, not everything is so obvious.
For example, a person may visit a beautifully designed website, see catchy promises of profit, and words or phrases like “spread” and “instant execution of orders”. That for the novice, could add a semblance legitimacy to the dishonest website. As a result, a person signs up, makes a deposit — and here is where the most interesting part begins — and there is the deception by technology. Blacklists of Forex scam brokers mainly include three types:
1
Fly-by-night brokers
Until recently, this type of scam was the most prevalent. The idea is that a group of people (or even one person) creates a site. Often it is just a landing page that urges the public to invest and earn lots of money. This may also include PAMM accounts. The scammers don‘t care what they say, the main thing is to attract people and their money. As a result, they collect deposits from traders and close the site, sometimes they declare a preplanned bankruptcy, and sometimes they don’t make any announcements at all.
2
Forex bucket shops
This type of scam is more refined and requires more careful preparation, but the potential profit of the scammer is also higher. In this case, they create a full-fledged platform that duplicates the functionality of leading Forex brokers. The trader does not play on the world interbank market, but with other traders registered only on their fraudulent site, or even with the platform itself. Naturally, Forex bucket shops create impossible conditions so that the site itself remains in the black while traders constantly lose their money.
3
Pyramid schemes
Perhaps this is the most famous type of scam that is used everywhere, not only in the foreign exchange market. This type of scam is not about Forex brokers at all. It is about the company positioning itself as a broker but, in fact, it only collects deposits from traders, often without even faking activity on the interbank market. They just keep issuing empty promises and slogans. Today, this type of scam is less common than others.
How to Identify Forex Trading Scams？
In the early 2000s, when the Forex market became accessible to everyone and was just reaching the peak v of its popularity, it was not easy to tell a scam broker from a legitimate broker in the interbank market, especially if the novice trader was just starting out. But today, in the era of total globalization and informatization, general information is easy to check on the Internet in a matter of minutes. Today, it has become much easier to protect against fraudulent schemes of blacklisted Forex brokers. The easiest way is to study our site because we have already saved you time and selected both reliable brokers and scammers among all companies. All you have to do is simply check our ratings lists.
