Scam Brokers – Common Tactics They Use

The Forex industry is very exciting! It is open 24 hours per day, 5 days a week, offers plenty of possibilities and attracts millions of traders from around the globe. Unfortunately, there are scam brokers in the forex realm who try to take advantage of those not paying attention; and not paying attention means you know at least something about the industry. They know how to be convincing and claims extremely attractive opportunities, which means that many people don’t find out that they are being scammed until it is too late.

You can avoid scam brokers by studying their operations. When you know the common ways that they scam people, it is much easier to spot them.

1. "Guaranteed" Profits

The promise of guaranteed or easy money is the oldest trick in the book. Scam brokers will use marketing like “Earn 20% a month” or "Guaranteed profits with no risk."

The truth is that no broker can guarantee profits - Forex trading is a risk and no matter how much experience a person has, there is no guarantee. If someone makes it sound like a money machine, then it is a scam broker.

2. Insane Bonuses

Many scam brokers will draw people in with large deposit bonuses: "$500 deposit and get $1,000 to trade!" It sounds like free money, but the truth of the matter is, normally there are conditions attached to that free money.

You may never be able to withdraw your funds based on how much volume you would have to trade, which is usually impossible. Most people will fall victim prior to coming to realization that their money is nowhere to be found. A legitimate broker may offer some reward rendering small incentives for some things, but nothing that imposes an undue restriction on your funds.

3. Outrageous Withdrawal Reasons

One story goes like this. A trader speaks to a scam broker, makes a small profit, and they want to withdraw it.They tie you up indefinitely asking for more paperwork or unplanned expenses or another deposit to actually release your funds.

Sometimes they just stop responding when you ask for your money. If you're ever feeling like you have to plead for a broker to return your own funds to you, you're probably being scammed.

4. Fake Regulation

Scam brokers know traders want assurance they are regulated, so they freely make use of fake regulation claims in the hopes of hitting the regulatory criteria of legitimacy. They will use the logos of regulation from people like FCA, ASIC, or CySEC and hope you won't bother to check.

Smart traders will verify a broker's regulation. Good regulators will have registries available on line by which you can verify a broker through its license numbers. If you cannot locate it - or the information does not seem to match up, then its obviously a scam.

5. Aggressive Sales Calls 

Countless traders have stories of aggressive phone callers posing as "account managers" who harassed them to deposit more. These folks seem friendly at first; but they obviously are structured and trained to get as much money from you as possible.

They will always say something like: "this is a once in a lifetime trade" or "if you deposit just $1,000 more, then you could double your profit". Legitimate brokers do not follow up daily with you on the phone. Their job is to provide a platform, not to pester you into gambling.Manipulative Trading Platforms

Some scam brokers even provide fake trading platforms with indicated “winning trades.” Your account balance increases. It appears you are making a lot of money. However, once you try to withdraw, the platform suddenly shows “losing trades” or the broker devises reasons for why your money has disappeared.

Brokers can make this work because traders value what they see on their screen. But one thing to always remember – if the broker "owns" the platform with no accountability, they ultimately control the numbers you see.

7. Playing on Emotions

Scammers are very clever psychology-wise. They use greed, fear, and urgency. When you constantly hear how the “deal is closing in one hour, do it quickly” or “everyone is cashing out money, you don’t want to miss out,” you begin to panic. Unbelievable - pressure and you’re likely not going to research, you are going to act. In Forex, urgency is almost always a scam. Genuine opportunities do not disappear in seconds.

A Quick Table

To clarify, here’s a simple comparison in table form of differences between a legitimate and scam broker:

If your broker behaves like the right-hand column, you better act fast.

How to Stay Safe

Just because you now have a better understanding of how to not get taken by a scam broker is not to say you should stop trading Forex. You simply have to be diligent:

Do your Research – Always check their regulation and read reviews from credible sources. 

Start Small – Make a test deposit, test withdrawal first before using larger sums of money.

A little caution goes a long way in protecting your hard-earned money.

Conclusion

Scam brokers exist because they know what buttons to press to get you to act. They get you excited about fast wealth, they entice you to react to incredible fake bonuses, and they will use pressure to get you to perform or react without thinking. But now that you have a better understanding of what they are doing, you will now see the "dodgy" signs much better and much quicker.

If you are wanting to learn more ways to trade safely and recognize brokers that you can trust, the Learn section on Wikilix is a great way to start. The more you know, the harder it becomes for the scammers to con you.