Red flags and scams

Forex attracts scams because it combines real money, real complexity and a steady supply of beginners. Most of them use the same handful of tricks, and once you know them they are easy to spot.

The patterns

• The unlicensed broker. Offshore or no regulation, very high leverage, a deposit bonus, and a withdrawal process that stops working once the deposit is large.
• The clone. A copy of a real, regulated broker’s name and licence number, with a slightly different web address. Caught by checking the regulator’s register for the exact website.
• The account manager. Someone who will “trade for you” for a share of profits, usually met through social media. The profits are fictional; the deposits are real.
• The signal seller. Guaranteed pips, screenshots of winning trades, a monthly fee. Losing signals are deleted; the screenshots are the survivors.
• The recovery scam. After you have lost money to any of the above, someone contacts you offering to recover it, for a fee paid in advance.

All five use pressure, promises and a reason to act before you have time to check.

The checklist

Before any money moves

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• The licence number is on the regulator’s own register, with the same company name and website.
• Leverage offered is within the limits that regulator allows.
• No deposit bonus, or a bonus with no trading-volume conditions attached.
• Nobody has promised, guaranteed or shown me returns.
• Nobody is managing my account or asking for my login.
• I was not contacted first by phone, social media or messaging app.
• A small withdrawal has been processed without delay or persuasion.
• The company has a physical address and a working support line that I have tested.

Any unticked box is a reason to stop. Several unticked boxes are a scam until proven otherwise.

Try it

What would you do?

A broker you have used for a year without problems now offers a 30% bonus on your next deposit if you add $2,000 this week. The regulation is strict and withdrawals have always been fine. What do you do?

Take it; the broker is trustworthy and it is free moneyRead the bonus terms and, in almost every case, declineReport the broker to the regulator

Notice how the broker’s track record did not change the decision about the bonus.

If you have already deposited

Stop depositing. Request a withdrawal in writing and keep the correspondence. Report to the regulator the broker claims, and to your own country’s financial authority. Contact your card issuer or bank about a chargeback if the payment was recent. Do not pay anyone who offers to recover the money for an advance fee.

Quick check

1. Question 1 of 3

   Which is the single most reliable warning sign?

   AUnsolicited contact leading to a broker recommendationBA professional-looking websiteCTight spreads

Go deeper: Forex broker scams: 9 red flags and how to check a licence · Forex Deposit Bonus: Why It’s Usually a Bad Deal