Forex Scams To Watch Out For: A Complete Guide For 2023

forex scams

Forex refers to the Foreign exchange market, which is the biggest financial trading marketplace in the world. The total turnover daily is over $5 trillion, which is exponentially greater than any national stock market. This makes it a mandate for the investors to know about the Forex scams to watch out for.

The Forex market allows multiple players to trade within its system. Central banks and established corporations can trade with each other. Since currencies are traded in this marketplace, it has few trading restrictions.

Additionally, speculators can profit from trading that goes on continuously for 24 hours a day, 5 days of the week. 


What Are Forex Scams?

Due to the growth of the Forex market and the digital trading options, it has become universally accessible. Thus, individuals from all over the globe can trade in multiple currencies at any time. All participants have free reign over the trading choices they make independently or through brokers. 

While the prospects of participation and profit are greater than ever, there are also downsides. To begin with, Forex trading is not simple. It does require expertise and knowledge of risk management to avoid devastating losses. 

Since the process can be overwhelming and complex, there are also numerous scams proliferating the marketplace. There is no shortage of suspicious brokers or fake agencies ready to exploit you at a moment’s notice.  

If you are a beginner or amateur trader, scammers are likely to target you to make some easy money. Although there are some regulatory bodies in place, such scams cannot be completely weeded out.

That is why knowing the nature of scams and how to avoid them during Forex trading is an essential step. This is the knowledge you should invest in on top of the fundamental education of effective Forex trading techniques. 

Before you begin learning about scams, keep in mind that they come in many forms. Since they do not fit into one category, it is much easier to be tricked by different kinds of scams. The one thing in common is that they unscrupulously and unfairly make off with your money through pretenses. 

Some such scams are so popular that they have even been named after their creators. For example, the name for Ponzi schemes is derived from their initiator Charles Ponzi. 


One of the best ways to avoid Forex Scams is to make sure you trade with a reputable broker that is regulated in a tier 1 country.  See the below table for who we believe are currently the top forex brokers online.


Red Flags To Look Out For

The way Forex scams convince new traders is by promising great investing opportunities. Beginners may want quick returns to make some fast cash. Scammers are sure to capitalize on this inexperience and enthusiasm. 

  1. The primary red flag in the case of scams is the unrealistic profit they guarantee. A scammer is likely to tell you that there is a minimal or even no risk involved at all. 

You should know that this is suspicious because a 100 percent risk-free trading system does not exist! Not to mention, no authentic trader would want to give away their secrets of risk-free trading if it was possible. 

Thus, the more enticing a scheme sounds, the higher the chances of it being a scam. 

  1. Another red flag to spot scams are the assurances of “secret formulas for success,” or “secrets traders don’t know about.” Such schemes are a waste of time at best and will cost you heavily at worst. 

Additionally, there are a few technical steps you can take to avoid being scammed. For instance, installing unknown programs onto your device can cause infiltration and thus damage your device. Also, stay away from doubtful websites for trading and other unreliable internet sources. 

  1. Lastly, always ensure that the brokers handling your trading are registered with some regulatory body. A scammer will not make use of any registered brokers. Thus, it’s an important red flag if an unregulated broker is involved. 

You can always ask a broker for proof of their registration. If they refuse to comply, you can look for lists of regulated companies and their open cases.

Before you begin trading, it’s best to keep your lofty expectations at the gate. Only start trading if you’re ready to incur some initial losses and gain experience with patience and effort. This will automatically make the red flags more transparent.  


Types Of Forex Scams

If you are a new trader, then scammers are already on the lookout to take advantage of you. To protect yourself, you need to know the exact ways in which they can scam you. 

Only once you are equipped with this knowledge can avoid them to become a practical possibility.

Three major scams exist in the Forex marketplace that traders fall prey to. 


Robot Scams

Robot scams involve Forex robots, which are computer programs used in the trading process. These robots make use of coded algorithms, acting as technical indicators for opening and closing trades.

You can locate a list of known Forex robot scams online as an initial step towards your security. If you suspect you have come across a Forex robot scam, keep the following things in mind:


Unrealistic Marketing

Messages that are written by scammers will promise you unlikely results that you should be wary of. If a Forex robot is being heavily marketed to you, then projected numbers are likely to be fabricated. 


Unknown Brokers

Forex robot scams often use unknown brokers who are not regulated by the system. This means that the entire projected profit can be called into question. 

Even if you accrue great gains, these scams will sweep them away by charging you high commissions for brokers.  Thus you should make sure to only partake in trading through regulated brokers. 


Extremely High Returns

A Forex robot scam begins with advertising massive yields. These can ensure over 4000 percent return in just a couple of years.

However, you should take a look at all the statistical details in such fantastical cases. This kind of return may just be calculated on the closed trades. There may be other open trades that could disbalance all the profits if stop losses are hit. 


Uniform Scalping Strategies

Scalping systems are often used by Forex robots to trade for small amounts of profit. The result is that the success rate projected is very high. 

In cases of uniform scalping strategies, as long as the market is favorable, the numbers remain inflated. However, as and when the market fluctuates, the system begins to lose at a higher rate than their profits. 

Ultimately, the promised profit is quick and easily lost. 


Although Forex robots might make great pitches to you, ensure that you remain professional if using one. Robot scams are most likely to occur if you get swept away by emotions and skip out on research. 


Signal Seller Scams

Signal sellers in the Forex marketplace are those who exchange in the trade involving currency pairs, entry prices, directions, target levels, and stop losses. 

These are a kind of scam that can be avoided if you look out for the following signs:


Subscription Payments

The first step in these scams is the promise of great results without any authenticity. You will be asked to pay for a subscription to access these benefits. However, the subscription fees are a trap themselves.

Subscription payments begin at misleadingly low prices. These are meant to lure you in, and then your banking and credit details are used for higher-level scams. 


Absence Of Performance History

Signal sellers are likely going to scam you by telling you about a lofty track record. They will claim they have a high return percentage as well.

However, it would help if you never took them at their word. If they cannot verify their results, then chances are the signals aren’t being traded by them. 


Broker Related Deals

In some signal seller scams, you will be offered trading signals with the catch that you hire a particular broker. This is never a good sign since a suspicious broker will siphon off your resources and easily keep you in the dark.

In other cases, some scammers will take their kickbacks from the broker and let you retain profits. This is meant to benefit their services through a constant source of payment.


To avoid signal selling scams, don’t get your feelings involved. Continue to think clinically and dissect every statement and promise made by the other party. 


Fake Investment Scams

Another major scam to look out for is a fake Forex trading investment scheme and false investment funds. 

The basis of these investment scams is phony marketing. A salesperson or sales pitch will promise you results if you invest, without any verification. The idea is that they will pay you the returns on investment in their Forex fund.

Since these are all unofficial and unregistered dealings, you are most likely to lose all your investment. The company will then claim they never had any dealings with you. 

This is essentially a form of Forex trading investment, which turned into a basic money scam.

The other way scammers get you is by opening up an account in your name. This will be done in association with an unregulated broker. After a few trades, the entire account will be wiped clean. The company will shrug off responsibility and say it was because of market conditions. They will claim that the brokerage company has taken all proceeds.

In such cases, there is little chance of fighting legal battles. There is also no chance of recovering your money since there is no official track record. 


Other Common Scams Or Risk Factors 

Apart from the three major scams, look out for the following types of scams during Forex trading.


Scams Related To Trading Systems and Education 

Plenty of scammers are in the business of selling Forex trading education and trading systems. However, they will not be able to provide any authentic proof of their trading history if demanded. 

These scammers are even referred to as “snake oil merchants.” Some of them will offer you trading systems without any services or trading rooms. 


Scams Related To Lacking Background Information 

In the Forex marketplace, you cannot trust anyone who refuses to provide background information. By bypassing important details, any broker, Forex educator, financial manager, or trader can easily scam you. 

With adequate information in hand, conduct an online check before proceeding with any financial interactions. 


Scams Via Email

Many times scammers take the digital approach by contacting you via email. Once they have established communication, they ask you for personal details like your phone number, address, and full name.

Keep in mind that your personal information can be used for multiple shady purposes. 

If a broker wants to know your information before they have provided you with a risk disclosure, then steer clear. If a risk disclosure has been provided, then go through it thoroughly before relaying your details.


How To Avoid Forex Scams

Most new traders fall for scams due to their inexperience and carelessness. Here are a few ways to avoid scams by being more mindful.


Educate Yourself And Steer Clear Of Irresponsible Trading

Apart from the deliberate scams mentioned above, you can also lose your money due to careless trading. Risk and losses are always possible in the Forex marketplace. At times, retail speculators can even develop gambling addictions, which lead to the exploitation of leverage.

Thus, many brokers in the Forex marketplace lose money not through scams alone but due to unskillful trading as well. 

The best way to avoid such risks is by developing your trading techniques and becoming independent. You will not only avoid irresponsible brokers but also have nothing to do with scammers. 

Not to mention, developing trading skills will be an added protection because you will see through shady trading deals.


Invest Some Time

The other golden rule for responsible Forex trading is to take it slow. If you rush your trading decisions, not only are the losses likely, but anyone operating forex scams will probably get to you as well. Weigh all the advantages and disadvantages and put in the time to find the right Forex broker. This is a safer long-term approach to trading. 


Conduct Research

Additionally, always look for references and backup any information through online customer reviews. Many such reviews can be fake, so always be on the lookout. Any legal suits against a broker are an immediate red flag. 

While doing your research, don’t just satisfy yourself with basic information. Cross-check the company’s claims against the information on the website of regulatory authorities. This is the only sure shot way to avoid fraudulent brokers. 

If you find inconsistencies in the information on the two sites, don’t ignore this red flag.


Seek Financial Advice 

It may be the case that you don’t have time to look into all the details of the broker. On the other hand, you may not feel equipped to make a judgment on the company in question.

Either way, it’s safe to seek the professional services of a financial advisor. Again, it would be best if you practiced the same degree of caution while hiring an advisor. 


Avoid Trades That Are Too Good To Be True

Lastly, it cannot go understated that Forex trading is not a quick fix for making money. If any trade deals start to sound too good to be true, then ask yourself why this is the case? 

When looking at the fine print, you’ll find they are too good to be true. Since Forex trading takes time and expertise, any promises of quick returns are sure to be false.


How To Test Authenticity

After taking all the steps to avoid forex scams, the final step is to test the authenticity of your chosen broker. Ensure you have all the required information before you begin trading. 

If at any time during your trading experience, you feel uncomfortable, the best thing to do is inquire. Ask specific questions that your broker cannot sidestep. This will help you confirm the trustworthiness of the broker. 

Any broker you choose should also be from a regulated company. A reliable company can be found online with all their details. 

If you are unsatisfied with the responses, then chances are you are dealing with a Forex scammer. 

Additionally, all the information you gather from a broker should be put down in writing. Oral promises on calls or those made informally will not stand as binding. 

To test the authenticity of your Forex trading brokerage, keep the following pointers in mind:

  • Can you comfortably communicate with your broker or a customer service representative?
  • Is your broker available through acceptable mediums like email, call, skype, etc.?
  • Do you have all the official names of company members and brokers?
  • What are the crucial aspects of your contract?
  • Is the company officially registered?
  • Is there a physical location of the company? Does a proper office or headquarters exist?
  • Can you access the performance history of the company?
  • Can you decline the offer made by a broker after discussion, or are your options limited in this regard?



Since we live in a digital age, the chances of getting scammed during Forex trading are much higher. However, on the flip side, you can also secure yourself against scams by gathering the right information.

Always look for dependable online reviews for potential brokers and their companies. Make sure you can guarantee transparency for all your transactions as well.

Finally, your security during Forex trading is in your own hands. Act wise and responsibly by avoiding any alluring traps!