Forex Trading Scams: How to Spot & Avoid Them?

Now, let's take a close look at a case study, FVP Trade, to show how such scams operate.  

Start with its newly registered domain: FPV Trade asserts a 5-year operational history. However, after a Whois query, we found their domain registered on February 9, 2023. This tactic is commonly employed by deceptive brokers to inflate their history and build user trust, laying the groundwork for potential fraud. Established brokers usually possess lengthier operational backgrounds and older domain registrations. Thus, when a broker touts a significant operational history, it's wise to confirm their domain registration date on relevant

Then its fake regulation come into light: FPV Trade operates through the domain https://fvptrade.info/ and claims regulation by the FCA to assure clients of secure trading. However, a check on the FCA's official website reveals a regulated entity named “FVP Trade UK Ltd” with a website domain of https://www.fvptrade.co.uk/, completely unrelated to the current FVP Trade domain.

Traders are strongly advised to verify a broker's regulatory status on relevant platforms before making a choice. If this process seems complex, using WikiFX's forex regulatory inquiry platform directly is a viable option. Remember, if a broker lacks proper regulation, it's crucial to refrain from engaging in any transactions with them.

FVP Trade boasts about having earned significant user trust, striving hard to present a flawless image. Yet, upon our investigation, these claims seem to be merely promotional materials without any concrete evidence. However, when we looked up the broker's name on professional rating agencies and dedicated forex industry inquiry platforms, we stumbled upon remarkably low ratings. Now, that indicates a poor reputation and a lack of user trust. So, trading with them appears to be quite risky. On the forex regulation inquiry platform WikiFX, FVP Trade only managed to score a meager 1.89 out of 10 points. This score is based on real assessments of its regulation, licenses, risk management, trading software, and overall business performance.

On the Trustpilot review website, this broker holds a mere 2.4 out of 5 stars, derived from 141 reviews. Clearly, this rating indicates a significantly poor reputation for the broker.

Then dig deeper into FVP Trade trading conditions: FVP seems to offer an attractive trading environment, boasting a minimum deposit of just $5 and a wide range of tradable products including forex pairs, metals, oil, CFDs, and stocks. They tout starting spreads from just 1 pip and provide leverage of up to 500:1, aiming to enhance traders' flexibility. However, these are just lures to entice users into opening accounts.

Yet, regarding core aspects such as deposit and withdrawal processes, demo account, FVP Trade prompts worries. The broker's opacity, particularly concerning deposit and withdrawal procedures, suggests a deliberate effort to hide crucial information. If specific withdrawal channels were disclosed, it might unveil potential fraudulent schemes. Additionally, the absence of a demo account maintains the secrecy surrounding FVP Trade's real trading environment.  Employing false promises of trading advantages without executing them practically is a classic strategy seen in scams.This implies that FVP Trade may be fixated on denying withdrawals to further amass funds from traders while keeping the reality of its trading environment hidden.

As expected, our findings on the WikiFX official website unveiled 109 scam exposures regarding this broker. One of these exposures, posted by an Indian trader on October 23, 2022, caught our attention. The trader mentioned depositing $2000 while engaging with this broker. However, within weeks, the broker's platform inexplicably ceased operations, followed by a sudden loss of communication. This led to the trader incurring a total loss of $2000.

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Not to forget its promotional contents on social media: Furthermore, FVP Trade, the broker in question, manages multiple social media accounts such as X, LinkedIn, YouTube, and Instagram. Across these platforms, the content shared predominantly consists of promotional material aimed at enticing investors to deposit funds. Take, for example, their post on X where they boast about being one of the fastest-growing brokers globally, offering users the swiftest order execution. Such claims come across as rather ironic, indicating the broker's extensive efforts to package itself in a way that hooks more traders.

Forex Brokers Scams

This is considered the most common forex broker scams we've discussed above. The tactics used are pretty standard across the board. They include posing as regulated entities, manipulating prices, offering excessively high leverage, setting low minimum deposits, mishandling client funds, and promoting misleading bonus schemes.

For instance, when it comes to regulatory claims, some brokers falsely assert they're regulated by esteemed bodies like the FCA or SEC, using logos to create an illusion of stringent oversight. Yet, closer examination shows their true face.

Price manipulation involves tweaking bid/ask spreads or executing trades at unfavorable rates, favoring the broker over the trader. They often lure traders with enticing high leverage, like ratios of 1000:1, but the reality is it heightens risks, leading to great losses. Besides, these brokers may attract traders with minimal deposits, sometimes as low as $1, aiming for a broader client base. However, this often hides hidden fees or unfavorable trading conditions.

Another concerning tactic is the failure to segregate client funds. Legit brokers maintain a separation between clients' and operational funds, brokers, however, tending to blur this line. Lastly, false bonus schemes promise appealing rewards for deposits or trades, but they're often accompanied by stringent conditions or impossible withdrawal terms, effectively trapping clients' funds within the broker's system.

Trading Singals Scams

A trading signal scam misleading traders with false or exaggerated trading advice or signals. And now let's firgue out how trading signal scams happen. A trader, Andrew, subscribes to a trading signal provider, attracted by their promised high success rate and expert trading recommendations. However, she soon realizes that the signals provided by this provider are inconsistent and often result in losses. Upon investigation, Sarah discovers that the service selectively displayed only winning trades in their advertised history, misleading subscribers with inaccurate information.

EA Trading Scams

EA (Expert Advisor) trading scams involve deceitful practices associated with automated trading systems in the forex or financial markets. These scams typically include:

 • Fake or Exaggerated Performance Claims:  Scammers tout EAs with manipulated or overstated performance records, flaunting high profits while hiding associated risks to lure traders into buying their EA.

• Unverified Backtesting Results: Scammers often display backtesting results that are manipulated or tested in unrealistic settings, presenting exceptional profits that do not align with real market conditions. This deceives traders, making them believe the EA is more profitable than its actual performance would indicate.

• Overpriced or Ineffective EAs: Deceitful vendors might market EAs at steep prices, promising substantial returns. Yet, these EAs often disappoint, delivering minimal trading advantage and possibly causing losses.

• Plagiarized or Stolen EAs: Certain scammers peddle stolen or plagiarized EAs from legitimate developers, breaching intellectual property rights and misleading traders with illegal products.

Managed Account Scams

Managed account scams involve fraudulent individuals or entities posing as expert money managers or advisors. They promise investors high returns while offering to manage their funds. However, instead of making genuine investments, these scammers often misuse the funds for personal gain or engage in risky or non-existent ventures.

Ponzi Schemes

A Ponzi scheme is a deceptive investment scam promising high returns with low risk. It operates by using funds from new investors to pay returns to earlier ones, creating an illusion of profit. Inevitably, the scheme collapses when new investments decrease, leading to great losses for most involved.

Bernard Madoff's Ponzi scheme stands as a prime example. A respected financier, Madoff promised high returns through a supposed legitimate strategy. Instead, he used new investors' money to pay fake returns, unraveling when investors withdrew funds during the 2008 crisis. His confession exposed the scheme, causing massive financial losses for many and leading to Madoff's imprisonment for 150 years.

To spot forex scams

•  Check Broker's Regulaton  

Verify the regulatory status and registration number of the brokerage firm on the official websites of regulatory authorities. Below is a list of global regions along with the main regulatory agencies' websites and methods for verification:

ASIC in Australia: ASIC, the Australian Securities and Investments Commission, is generally considered a Tier-1 regulator due to its stringent regulatory framework and oversight in supervising Australia's financial services industry. Its significance lies in maintaining market integrity, investor protection, and ensuring fair and transparent financial dealings within the country's financial sector.

LOGO
Regulator	ASIC
Check Portal	https://connectonline.asic.gov.au/RegistrySearch/faces/landing/SearchRegisters.jspx?_adf.ctrl-state=15m80r60zg_4

FCA in the United Kingdom: The Financial Conduct Authority (FCA) is a leading Tier-1 regulatory body in the United Kingdom, responsible for overseeing financial markets and firms, ensuring their integrity, and maintaining consumer protection. Its significance lies in its stringent regulatory standards, commitment to market stability, and fostering trust in the UK financial system.

LOGO
Regulator	FCA
Check Portal	https://register.fca.org.uk/s/

FSA in Japan: The Financial Services Agency (FSA) in Japan serves as the regulatory authority overseeing the country's financial sector, aiming to ensure stability, integrity, and investor protection. Its significance stems from its role in maintaining a robust financial environment, supervising market activities, and safeguarding consumer interests within Japan's financial industry.

LOGO
Regulator	FSA
Check Portal	https://www.fsa.go.jp/en/

MAS in Singapore: The Monetary Authority of Singapore (MAS) plays a pivotal role as the country's central bank and financial regulator. Renowned for its robust regulatory framework, MAS ensures financial stability, fosters economic growth, and upholds Singapore's reputation as a reputable financial hub.

LOGO
Regulator	MAS
Check Portal	https://eservices.mas.gov.sg/fid

CFTC in the United States: In overseeing derivatives markets, the Commodity Futures Trading Commission (CFTC) in the United States acts as a guardian, ensuring fair and transparent trading while shielding individuals from scams and manipulation. This oversight plays an essential part in maintaining the honesty and safety of commodities and futures markets for American investors.

LOGO
Regulator	CFTC
Check Portal	https://www.cftc.gov/

FMA in New Zealand: The Financial Markets Authority (FMA) in New Zealand serves as a key regulatory body overseeing financial markets and services, aiming to promote fair, efficient, and transparent financial conduct within the country. Its significance lies in upholding market integrity, safeguarding investors, and fostering confidence in New Zealand's financial markets.

LOGO
Regulator	CFTC
Check Portal	https://www.fma.govt.nz/search-results

•  Check Their Physical Address 

Checking the actual address of a trading firm is crucial. Legitimate trading entities typically have authentic office addresses and operate on a significant scale. On the other hand, a trading firm without a legitimate office address could 

likely be a scam. Wikifx hosts a 'field survey' where their team travels worldwide to physically check the real addresses of trading firms, unveiling their true nature. Numerous inspection cases are available, and Wikifx rates the  results, offering users a more intuitive understanding. For more information on trading firm inspections, please visit: https://www.wikifx.com/en/survey/all/1.html.

•  Read Genuine User Reviews

Checking different websites where people share their complaints can help you understand what users really think. These websites have feedback from people who used the service or product. By reading what they say, you can get a good idea of how happy they are. Doing this helps you make smarter choices and avoid problems with a service or product.

•  Steer Clear of Promised Profits  

Be cautious of claims that seem too good to be true, especially promises of guaranteed profits or extremely high percentage returns per month. These 'get-rich-quick' schemes often make unrealistic claims, offering assured profits or unrealistically high returns in a short time. Such claims can be deceptive and might lead to financial losses.

To avoid forex scams

•  Use Demo Accounts First

Before you start real trading, beginning with demo trading first is a smart move. This way, you can explore the trading platform without risking your actual money. While trying it out, be wary of platforms that might not be fair. Some platforms could have strange spreads or might not activate stop losses when needed. These issues could affect your trades, so it's crucial to keep a close eye and confirm the platform's reliability before investing real money.

•  Review Withdrawal Policies  

Before you deposit any money, make sure there are no vague or unclear clauses that might cause issues when you want to take your money out later. Understanding these terms in detail can prevent unexpected surprises or difficulties during the withdrawal process.

•  Be Wary of Third-Party Referrals

Take care when considering third-party referrals or account managers offering to handle your trades.  Even though they may assure profitable results and manage your investments, proceed with care. Entrusting funds to non-affiliated individuals poses risks. They might not prioritize your interests. Research before granting control of your investments.

•  Don't Send Money on Social Media

Sending money to individuals encountered on social media should be avoided. Interacting online might create connections, yet transferring funds to these contacts carries risks. Various scams and frauds operate on social platforms, making such transfers unsafe. These actions pose a significant threat to both your finances and personal security. Always exercise caution and refrain from sending money to individuals you've only connected with through social media.

Typically, once forex traders are deceived, it's challenging to reclaim their funds as fraudulent schemes promptly vanish after seizing traders' capital. Nevertheless, you might attempt a few methods:

Reporting this to the local regulatory body. Provide comprehensive details about the incident, including the broker's name, evidence, transaction dates, and the amount lost. Visit the regulatory authority's website, locate their complaints section, and follow their guidelines for filing a formal report. Be thorough and accurate in your submission, attaching any supporting documents. This proactive step may aid authorities in investigating and preventing future fraud.

Seek help from the police. Approach your local police department or the relevant law enforcement agency. Provide a detailed account of the fraudulent incident, including the trader's identity, transactions, and the amount lost. Submit any evidence or documentation supporting your claim, such as transaction records, emails, or communications with the trader. 

Seeking external aid. When grappling with the challenge of fund recovery, seeking external aid becomes pivotal. Entities like Financial Dispute Resolution Centers or Consumer Protection Organizations can offer valuable assistance. Moreover, turning to WikiFX for help in reclaiming your funds can be quite beneficial. Start by furnishing WikiFX with evidence of the scam. They'll step in by coordinating with the trader involved and reevaluating their credibility rating. This reexamination can effectively pressurize the trader, potentially aiding in fund retrieval. Relying on WikiFX as an intermediary significantly streamlines the process of recovering funds lost to deceitful practices.

Some Trusted Brokers Here

After delving into common forex trading scams and understanding how to identify and avoid them, sustaining confidence in the forex market remains crucial. Many reputable brokers operate under stringent regulations, ensuring transparent fee structures, stable execution speeds on their trading platforms, and expedient withdrawal processes. Additionally, they prioritize responsible customer service, fostering a trustworthy trading environment. Here let's take a look at IC Markets, Forex.com and Exness.

Broker	IC Markets
Regulated by	ASIC, CYSEC
Min. Deposit	$100
Tradable Assests	Forex CFDs,Commodities CFDs, Indices CFDs, Bonds CFDs, Digital currencies, Stocks CFDs, Futures CFDs
Currency Pairs	70+
Trading Platform(s)	MT4, MT5, cTrader
Order Execution	Under 40 Milliseconds
Leverage	1000:1
Trading Fees	Spreads from 0.0 pips, with a commission at $3.5 per lot traded on MT4/MT5 trading platform, $3.0 per lot traded on cTrader
Payment Methods	Bank / wire transfer, Paypal, credit card, Skrill, Neteller, UnionPay, Bpay, FasaPay and Poli
Copy Trading	✅
Demo Accounts	✅
Educational Resources	Web TV, Webinars, Podcast, Tutorial Videos
Bonus	❌
Customer Support	7/24 Multilingual

Established in 2007, IC Markets is an Australian broker. It has a solid trading platform, and it provides traders with access to a wide variety of assets like FX, indices, commodities, and cryptocurrencies. The broker supports trading on the widely used MetaTrader platform. IC Markets stands itself due to its low minimum spread of 0 pips and variable maximum leverage of 500:1. Orders are typically executed in less than 40 ms, which is an extremely quick execution speed. To further accommodate Islamic traders, IC Markets offers swap-free Islamic accounts in line with Sharia law.

✅Where IC Markets Shines:

• A trusted broker, with a solid reputation for providing transparent pricing and dedicated customer service

• Providing access to 2250 tradable instruments, including over 70 currency pairs

• Robust trading platforms, including MT4, MT5, cTrader, ensuring fast order execution

• Lower trading costs on cTrader platform, cTrader copy trading

• 7/24 multilingual customer service available in 16 languages, inquiries via email replied the same day.

❌Where Plus500 Shorts:

• International Bank Wire Transfer takes up to 14 days, credit card withdrawals may not be for all countries

• Not globally regulated，investors in other countries may lack protection

• Demo account only lasts for 30 days

Broker	Forex.com
Regulated by	FCA, CYSEC, FSCA, FSA
Min. Deposit	$10
Tradable Assests	Forex CFD, Commodities CFD, Stocks CFD, Indices CFD, Crypto CFD
Currency Pairs	Over 120
Trading Platform(s)	Exness Trade app, Exness Terminal, MT4, MT5, MetaTrader Webterminal, MetaTrader Mobile
Order Execution	Under 25ms
Leverage	Unlimited
Trading Fees	Spreads from 0.2 pips, 0.3 pips on the Standard account, the Standard Cent account, with no commissions appledRaw Spreads from 0.0 pips on the Raw spread account and the Zero account, with a commission up to $3.5 each side per lot, a commission from $0.2 each side per lot, respectively
Payment Methods	Bank Card, Skrill, Neteller, Perfect Money, SticPay
Copy Trading	✅
Demo Accounts	✅
Educational Resources	Analytical Tools, Investment Calculator, Trading Central WebTV and more
Bonus	✅
Customer Support	7/24 Multilingual customer service

Founded in 2008, Exness is a Cyprus-based broker renowned for its transparency and solid reputation. It offers unique features like unlimited leverage and a wide range of trading instruments, including forex, cryptocurrencies, and metals. Exness operates on the MetaTrader platform, providing a familiar and robust trading experience. Leverage of up to 1:unlimited can be advantageous but should be used judiciously. Additionally, Exness accommodates Islamic traders with swap-free accounts, aligning with Islamic finance principles.

✅Where Exness Shines:

•A well-established broker, offering vast markets, including over 120 currency pairs

•Easily accessible, only $10 to open two types of standard accounts

•Unlimited leverage ratios giving clients, giving traders more room for imagination

•Offering some of the lowest trading costs in the industry, extremely tight spreads on currency pairs

•Robust trading tools provided, including VPS hosting, and Trading Central WebTV, social trading solutions provided

• 7/24 multilingual customer support, recognized for its responsiveness

❌Where Exness Shorts:

• No educational content for beginners

Broker	Exness
Regulated by	FCA, CYSEC, FSCA, FSA
Min. Deposit	$100
Tradable Assests	Forex, stocks, Futures and Futures Options
Currency Pairs	80+
Trading Platform(s)	Mobile App, Web Trader, MetaTrader 5 (Mobile, web), MT5 expert advisors, MT5 VPS Hosting, MT4
Order Execution	Average 0.02 seconds
Leverage	2:01
Trading Fees	Spread-only account: EUR/USD pair from 1.2 pipsRaw Pricing Account: spreads from 0.0 pips, with commission charged
Payment Methods	Bank transfer, Credit/debit cards, Skrill, Neteller
Copy Trading	✅
Demo Accounts	✅
Educational Resources	News and Analysis, Insights,
Bonus	4.5% interest, 5% cashback
Customer Support	5/24 multilingual customer service

Founded in 2001 and headquartered in the United States, Forex.com is a well-established online forex and CFD broker. The platform offers a user-friendly trading experience with the widely-used MetaTrader 4 and its proprietary Advanced Trading Platform. Traders appreciate competitive spreads that start from as low as 1.2 pips, and flexible leverage of up to 50:1, along with fast execution speeds. For Islamic traders, Forex.com provides Islamic (swap-free) accounts, allowing them to participate in interest-free trading activities in accordance with Sharia principles.

✅Where Forex.com Shines:

• A well-respected forex broker with a solid reputation, recognized by traders from all over the world

• Multiple trading accounts, giving traders more choices based on their trading perferences and styles

• Offering some of the most competitive spreads in the industry, lowering overall trading costs

• Over 80 currency pairs to choose from, good for these FX trading lovers

• MetaTrader platform combined with VPS, ensuring high-effiency trading

❌Where Forex.com Shorts:

•Restricted leverage ratio compared to other reputable forex brokers, generating a constraint for clients

• No account protection and guaranteed stop losses for U.S clients