No amount of skill in a trader can make them successful with an unregulated broker. Brokers are responsible for providing the fairest conditions to execute any strategy successfully. Essentially, they are the only ones standing between you and any profits you would derive from trading currencies. Finally, no proper identity verification exists on popular social media platforms. This means one can operate under many fake profiles to remain anonymous. It’s among the many reasons why getting any money from a scam that was promoted online is almost impossible.
Forex Trading Scams Exposed & Tips to Avoid Scammers in 2025
As you would expect, most of these guys will provide information that one can simply source from the internet. They may only have limited trading experience, meaning their results aren’t impressive, nor that they possess unique knowledge. Fake forex gurus ultimately derive their income mainly from course fees. Another example is churning, where the designated trader opens positions excessively to generate commissions for themselves. Finally, scammers may simply take the funds and disappear with them.
- Through these profiles, they might promote fraudulent courses, sell ineffective trading tools, or directly solicit funds for trading, only to disappear once they’ve collected enough money.
- Also, expect a social media influencer to be involved in the whole scheme, who would heavily promote the broker and provide fake reviews.
- Scammers also target consumers searching for investments online through search engines like Google and Bing.
Fake Forex Broker Websites (Cloned Brokers)
And those who know currency trading must know that trading is never guaranteed with the highest return. In a trade, one loses and another makes profits; this is how it goes.So, if any person claims the highest returns with the lowest investment or guarantees you the highest profit, they are doing fraud, for sure. This type of forex fraud is also known as a High Yield Investment Program (HYIP).
Guaranteed profits
There are a few common types of forex traders scams to watch out for. My goal is to enable forex traders to trade the foreign exchange market profitably and confidently, without fear of forex trader scams. So, while forex trading may be legit in certain countries – such as the Marshall Islands – that doesn’t mean you should trust a broker that operates exclusively from offshore jurisdictions. To make it easy for investors, we’ve developed a Trust Score rating for all 60+ forex brokers reviewed on ForexBrokers.com.
How to Avoid Forex Trading Scams in 2025
A persistent scam, old and new, presents itself in various kinds of automated forex trading systems. The scammers tout their system’s ability to consistently generate money with automatic trades that require little to no human input. The trading systems are often referred to as “robots” or “bots” and are offered for a one-time or recurring fee. Many of these systems have never been submitted for formal review or had their performance claims verified by independent parties.
According to the Bank of International Settlements, foreign exchange trading volume reached a staggering $7.5 trillion daily in April 2022. Scam brokers will often post out-of-date post fake awards, because those are more forex trading scams difficult to verify than awards from the current year. It’s never a bad idea to double-check the sources for any awards your broker is claiming to have won. If those awards were real, you would have been able to click on a link and view them (or, easily find them by running a basic Google search).
Ponzi and Pyramid Schemes:
It’s important to perform due diligence when trading forex, even in a regulated environment. As an investor, you should stay alert by checking for regulated brokers, such as through the NFA’s BASIC system. Warning signs include brokers or services that offer unrealistic promises, unusually high returns, or unreasonable pricing, all of which could indicate potential scams. No, legitimate forex trading isn’t a pyramid scheme but, fraudulent schemes masquerading as forex trading platforms definitely exist.
Don’t fall for such trading frauds, as the IRS is not responsible for collecting fees. Recognizing these red flags is the first step towards safeguarding yourself in the forex market. Always approach new trading opportunities with a healthy dose of scepticism and conduct thorough research before committing your funds. Creating a lookalike site for a legitimate, reputable, and regulated broker is possible with a few smart developers. This ranges from duplicating the visual branding to the domain name (except perhaps a letter change or a different suffix like ‘.net’ instead of ‘.com’).
- Steven Hatzakis is the Global Director of Online Broker Research for ForexBrokers.com.
- Stronger enforcement has led to jail time for some bad-faith actors, but the risks cannot be entirely ruled out.
- Forex scammers won’t benefit from this model, as it’s necessary to have individuals invest actual money rather than simply promote their scam.
- Others will occasionally recommend a good trade, to keep the signal money flowing.
- No, legitimate forex trading isn’t a pyramid scheme but, fraudulent schemes masquerading as forex trading platforms definitely exist.
It starts with a so-called successful trader publicising how profitable they are using manufactured results online, particularly on social media platforms. Now that you’ve seen our picks for the best brokers on this guide, check out ForexBrokers.com’s overall broker rankings. We’ve evaluated over 60 forex brokers, using a testing methodology that’s based on 100+ data-driven variables and thousands of data points. Another forex scam to look out for is the phenomenon of impersonators and imposters. Scammers will steal photos and personal information to create fake social media accounts of high-profile traders (I’ve been impersonated dozens of times). When deciding on a forex broker, it’s always worth taking the time to read multiple reviews.
Claims for Non-Existence of Market Downturns
If a binary options or forex broker promises you big returns on your money, this is a clear sign of a scam. You will not make $100,000 on a mega trade; you will not make a 96% profit in 30 seconds; and you will not win a $40,000 car by depositing $2,000. Sarah Thompson is a professional Forex trader with over 7 years of experience in the financial markets.
Regulated firms
Yes, Forex trading is legitimate only if done through regulated platforms. Forex trading is one of the largest, most liquid markets in the world, with over $6 trillion traded daily. Though investor reimbursement is not always guaranteed, you have the laws at least to file the case and expose the scammer. In this guide, I’ll explain how to spot potential scams by looking for key red flags.
I’ve been covering the forex industry for over 20 years, and I’ve been reviewing forex brokers at ForexBrokers.com for over 7 years now. Keep an eye out for anyone making unbalanced claims, promising huge profits, or using the word “guaranteed” in relation to investment returns – those are huge red flags. No investments or investment opportunities – even AAA-rated government bonds which have fixed income returns – are guaranteed to turn a profit. They promise very high returns and guaranteed profits, either through a managed account where the firm makes trades on the investor’s behalf, or by using the firm’s trading platform. Find out how unauthorised forex trading and brokerage firms work, how to avoid scams and what to do if you’re scammed. These schemes are age-old but have found their way into the forex space.
