Forex Scams – All Foreign Currency Trading Scams and Solutions

Though trading appears lucrative, it is risky, so the Forex trader should be well-trained and manage risk well. Additionally, many scammers are trying to cheat Forex traders, and some tips to avoid losing money in a Forex scam are provided below. This spot forex market (with its enormous amount of money floating around) has created potential profit-making opportunities for traders. It has also even opened up the possibility of making forex scams by unscrupulous operators.

In past articles, we analyze forex rigging scandals and various forex scams, including forex signals scams. We know that Forex as a business is not a scam, and Forex is not rigged. Businesses can be legitimate, but some people can be greedy or unethical, leading to big corporate scandals.

What are forex scams?

Forex scams represent every manipulation on the foreign exchange market (forex rigging) or any action that misleads traders (advertisements may tout high-return, low-risk investment opportunities in foreign currency trading). Forex scams can be divided into two groups. The first is the forex trading scam, fo, rex rigging, or forex investment scam when parties conspire to fix or inflate currency prices to achieve higher profits at the consumer’s expense. The second one is the promotion of get-rich-quick schemes in the forex industry, which mislead traders, convincing them they can expect to gain a high profit by trading in the foreign exchange market.

We talked about forex rigging in our previous article.

Some scams get their names from their creators, like the Ponzi scheme named after Charles Ponzi. Most traders who get duped are either beginners or uneducated about this market. This is why it is essential to keep yourself updated. This will help you develop practical trading strategies and segregate honest brokers from tricksters.

Famous forex scams often involve large sums of money and deceitful practices that can lead to significant financial losses for investors. Here is a bullet list highlighting some of the most notorious forex scams framed as corporate scandals:

  • Refco Scandal: One of the world’s largest futures brokerage firms, Refco, was involved in a massive accounting fraud. In 2005, it was revealed that the company had hidden $430 million in bad debts from its investors. This led to its bankruptcy and a significant shake-up in the forex and futures markets.
  • Secure Investment Scam: In 2014, Secure Investment, a forex trading platform, disappeared with over $1 billion of investor funds. The company claimed to offer guaranteed returns of 1% per day, but it was all a Ponzi scheme. The disappearance of Secure Investment highlighted the risks of unregulated online forex trading platforms.
  • Crown Forex Scam: Crown Forex, a Swiss-based forex broker, was involved in a Ponzi scheme that led to its bankruptcy in 2009. The firm was part of an enormous scam involving several other companies, collectively known as the Minnesota Forex Fraud. Investors lost millions as Crown Forex promised high returns but failed to deliver.
  • FXCM Ban: In 2017, the U.S. Commodity Futures Trading Commission (CFTC) banned FXCM, a significant forex broker, from operating in the United States. The ban resulted from deceptive practices by FXCM, including taking positions against its customers. FXCM was fined $7 million and forced to withdraw from the U.S. market.
  • Trevor Cook Ponzi Scheme: Trevor Cook orchestrated one of the largest forex Ponzi schemes in history, defrauding over 700 investors of $190 million between 2007 and 2009. Operating through entities like Oxford Global Advisors and Crown Forex, Cook promised high returns but used new investor funds to pay returns to earlier investors.
  • Black Diamond Forex Scam: Black Diamond Capital Solutions ran a forex trading scam from 2007 to 2010, promising investors high returns. The scam was a Ponzi scheme that resulted in losses of $35 million for investors. The scheme was named after the supposed proprietary trading software Black Diamond, which never produced the promised results.

Most Forex trading scams are easy to identify because they are too good to be true. If you are new and believe in the false idea that you can turn into a billionaire in a day, swindlers will catch you with lucrative investment opportunities. Don’t let your lack of knowledge make your trading experience a nightmare.

This article will help you identify scams and learn how to avoid them.

Let us discuss something more familiar: forex trading scams that mislead traders.

forex scams types

How to spot a forex scam?

If someone offers you surmountable returns on your investment that look too rosy, know it is a scam. In real life, you cannot become rich overnight with one trade. Another giveaway is when someone guarantees something. No trading market is devoid of risks. Their degree may vary depending on the instrument you are trading, but it will always persist in one form or the other. No one can ever give you a 100% guarantee on anything. Why would anyone share risks with other traders if there was a way around risks?

Scammers always look for beginners and try to hook them with attractive offers. Don’t be a mouse trapped in the cage for free cheese. In conclusion, if the deal is too good, it is far from accurate.

Please read our article about the pyramid scheme.

Another giveaway would be the lack of regulating authority. As we mentioned earlier, Forex is a decentralized market. Every country has its regulatory bodies. Many don’t even have one. Brokers can offer their services to traders across the globe, which dilutes laws to a great degree. You wouldn’t be filing a lawsuit for $1000 against someone living on a different continent! Always look for regularized brokers. You can always ask them to show their license if you have any doubts. A legitimate broker will never shy away from showing you that. If the broker is regularized, first, you will not be cheated; if that happens, you stand a chance of winning that $1000 lawsuit.

How to avoid forex scams:

  • Educate yourself and keep your expectations accurate.
  • Do not unquestioningly trust anyone.
  • If someone has a secret profit-making formula, it is another Ponzi scheme.
  • Do not install any program suggested by a random broker.
  • Always trade with regularized brokers.
  • remaining safe and avoiding unrealistic offers,
  •  avoid using software that claims to have found a secret moneymaking formula
  •  do not install software, which may be malware or spyware, causing computer damage

You will always have protection if you work with regulated brokers and organizations in the forex industry.

One of the easiest ways to detect a Forex scam is to promise extremely high profits with no risk or shallow risk. However, in reality, there is no guarantee of making a profit. If it were possible, the traders would share this information with others. Many beginner Forex traders find these offers attractive and lose money. There is a lot of difference between what the scammers promise and the reality of Forex trading.

The scammers will not register with regulatory authorities, while genuine Forex brokers can provide their registration details. Suppose a Forex trader suspects a particular Forex broker. In that case, they can contact the relevant regulatory authority, which usually provides a list of regulated companies and the cases filed against them. This can help the trader avoid problematic Forex brokers. So, if the scammer is from the UK, you can ask FCA (UK Financial Conduct Authority) for help. For example, if you know of forex scams in Singapore, you can contact The Commercial Affairs Department (CAD) of the Singapore Police Force and the Monetary Authority of Singapore (MAS). These organizations will help you to report forex trading scams in Singapore.

Individuals involved in Forex and other scams always seek new methods to exploit gullible new traders. There are three main categories of forex scams in which people lose money. Understanding how they work is one step in avoiding them.

Still, the unscrupulous operators often make a luring scam for you so that you can easily get persuaded into it. But, no worries anymore! Please keep reading, and you will reveal a detailed overview of the standard forex scams and know how to spot them in the first place.

Forex scams types

1. Spread bid-ask manipulation or point-related forex scam

Forex scam, known as spread bid-ask manipulation, is manipulation where unregulated brokers offer several times bigger floating spread. They directly increase the chances of their client losing investment.

This is one of the oldest forex scams, based on the computer manipulation of bid-ask spreads. The spread varies between the currency pairs. Note that this scam can typically occur when the point spreads differ significantly among the brokers.

To be more precise, you may find some brokers who may not offer the standard two-point or three-point spread in USD/EUR. Instead, they may offer you spreads of seven pips or even more. Due to these additional pips, you may lose the potential gains from a winning trade.

Over the last ten years, the scam has quieted down a bit. Nevertheless, the possibility of a point-spread scam still exists, especially if you are dealing with offshore retail brokers that the NFA and CFTC do not regulate. Also, validate the nation of origin of these brokers before you deal with them.

Historically, it has been found that mostly United States-based companies have been the source for the point-related forex scam.

2. A false fund manager or a false single seller scam

This one can be categorized as a modern-day forex scam. It’s based on single sellers. Do you know about the single sellers? False fund managers or false single sellers are the pooled asset managers, retail firms, individual traders, and managed account companies that offer a system with a claim to offer favorable times to sell or buy a currency pair based on professional guidance and recommendations. These platforms boast of having long-standing experience and unique trading abilities.

If you are a novice trader, they will easily trap you and eventually disappear with your traded money. For example, they will claim to offer you some privileged trade recommendations and ask you to place your bets. After a while, they will disappear with all of your money. Unfortunately, the single-seller scam is becoming a broader and more serious problem nowadays.

There are indeed many honest single-seller systems available. However, most of them are scams that follow deceptive business practices. So, please, beware.

3. Robot forex scams or expert advisor manipulation

Expert advisors represent coding scripts to analyze trades and automatically initiate and execute trades according to preprogrammed instructions. Expert advisor sellers often use get-rich-quick scheme ads, unrealistic promotion of their product, and misleading potential customers.

The first on the list has scammed many.  A Forex robot acts as a trading program. It opens and closes trades by using algorithms or special computer codes. All Forex robots are not part of a scam. A Forex robot can be helpful if built with the assistance of an EA (Expert Advisor) on a regulated trading platform like MetaTrader.

You can avoid some of the Forex robot scams by looking for its list on the internet. Some other related scams may cross your path, like:

  • Unrealistic marketing messages. A Forex robot author may try to sell you an unrealistic dream. They lie if they try too hard without numbers to prove their claim. There is no way that an authentic broker will ever hide actual achievement.
  • A promise of exceptional growth returns. Some Forex robots often advertise that they can yield a return of over 4000% on your investment in a few years. This sounds like a dream but will become a nightmare if you believe it. This could be false advertising and just cumulative closed trades.
  • Many Forex robots are created to enforce a scalping system. This means that they will be trading for minimal profits. What this does is that it will add to the win rate. Such results are not entirely false but futile. Ultimately, they can inflate the actual results.
  • Some Forex robots will show you handsome results from unregulated brokers. The results shown by these robots will be promising for sure, but they won’t come with an asterisk explaining the risks involved in working with unregulated brokers. The results will be good because they are taken from their interbank spreads. When you open a trading account with them, you will get wider spreads and be charged more commission. These two things will eat into your profit, and you will be left with nothing.

Forex robots will not scam you if treated as a business, keeping emotions aside. Before using one, read about Forex robot scams and then make the final call.

So, a trading program that uses computer code/algorithms for opening and closing Forex trades is called a Forex robot. Some forex robots are legal and built using the expert advisers (EA) feature of the Meta-trader trading platform. Online research can provide a list of Forex robot-related scams.

Usually, well-optimized expert advisors show excellent past performance results because they are overfitted in some small-time range. In live trading, those robots show wrong results.

Robot scamming has been a persistent forex scam. It typically occurs in certain types of forex-developed trading systems. These systems talk about a robotic code that can generate automatic trades. Irrespective of whether you are sleeping or busy with other work, these systems will trigger its automatic code and help you earn your profits without hassle.

These claims may sound quite lucrative, but these are some fake claims. Most of these systems are not verified or formally reviewed. To be more precise, an independent source has not tested them.

Hence, before a system claims to trigger its automatic robot code to generate profits for you, please test whether its trading system’s parameters and optimization codes are thoroughly reviewed and verified. The system will generate random buy and sell signals if these optimization codes and parameters are invalid.

Please do not fall into the trap of these robot scamming systems. Please do some research before putting your money into these platforms.

4. Trading system subscription scam

When you’re subscribing to a trading system, check for its pricing. Many trading systems offer exorbitant pricing. For example, they can cost you $5,000 or even more. This can be a possible scam.

Trading system developers and quantitative traders develop new trading systems every day. Usually, successful companies do not sell forex signals – they trade and manage people’s money. Forex signals are not forex scams; false forex signal advertising and quick rich schemes promotion are scams.

Signal Seller Scams

Some individuals, known as Forex signal sellers, send trade ideas that include the direction of a currency pair, stop loss, target levels, and entry price. It is effortless to become prey to these types of scams. There are the things that you should keep in mind:

  • High Subscription Fees: some individuals offer successful results that can be achieved using their trade signals. Since they do not ask for any documents for verifications, for those who don’t have a target, the catch is that you have to pay a high subscription fee for these trade signals. If the signals are guarantees for guaranteed to bring, wouldn’t the owner wouldn’t?
  • Broker-Tied Signals: If you are sold signal sellers who will only work when you register with a specific broker, know that it is trouble. These signal sellers must be getting something in return from these specific brokers. You will get signals from these individuals, but no one can know their credibility. Some may even help you make profits if they get their kickbacks from the broker. But you will profit as long as the signal seller enjoys the kickbacks.
  • Unverified Results: It is not uncommon to fetch positive results using these signals, but is there a verified record to show such high percentages? If not, it is safe to assume these individuals are not using the trade signals themselves. It is a big red flag.

Again, the only way to avoid these kinds of scams is to look at them practically and not get fascinated by hollow promises. Also, do your research before signing up with any broker. Due diligence is imperative to avoid these scams.

Forex trading Instagram scams and Forex scams on Facebook.

Forex trading Instagram and Facebook scams represent ads and posts from scammers on social networks where unchecked traders use social media profiles to trick beginner traders so they can trade online and make a fortune quickly. Financial regulatory bodies regularly create warnings about unregulated FX brokers and scammers. False forex signals are the most common scam on the internet.

Another example of a common forex scam is the restriction on withdrawing money from investor accounts. Some brokers won’t allow you to withdraw money from your investor accounts. When you try to withdraw money during a volatile market situation, it may flash warning signs. Beware of these systems and avoid them permanently.

5. Forex Scams and phone calls

If you think Forex scammers are calling you to offer fake investment plans, you are wrong. This has been an age-old practice that is still alive and working in favor of these fraudulent individuals.

You will receive a marketing call or message from an unverified number in this scam. This call aims to sell you a phantom Forex investment scheme. They will promise that you only need to send them the funds to turn into massive profits without you having to lift a finger.

It is not hard to comprehend that most of those who do send the money never hear from these people again. Don’t waste your time if you plan to go to the supposed company where you received the call. That company will deny any claims made under their name. This is now a mdon’tscam. You will never see that money again.
A step forward would be to open an account under your name with a shady and unregulated broker by these individuals. They will show you a return on several trades to gain your confidence. Your account will be wiped clean when you fall into the trap and make a considerable investment. They will give you reasons like the market crashed or blame it on your luck while the truth is that you have been scammed. Since your broker is unregulated, it is nearly impossible to get the money back.

6. Forex scam pyramid scheme

The Forex Pyramid scheme is a scam based on multilevel forex marketing where fake affiliate programs get your money and then use you to recruit other suckers (ahem – promoters). However, regulated brokers do not create this affiliate program, and Forex Pyramid scheme multilevel marketing is a rare scam.

You can read our article about the Pyramid scheme to learn more about this concept.


7. Binary options trading scams

The exchange can regulate binary options. This type of contract allows investors to speculate on an outcome, so if it is correct, the binary options trader receives a payout; if not, traders do not. Binary options are not a scam, but the trading community often sees this trading way as gambling.

Forex trading scam risks mitigation

Forex trading scam risks include the possibility of losing some or all of the original investment because of a lack of information or because actual gains will differ significantly from an expected outcome or return.

Recognizing Signs of Forex Trading Investment Scams

There are three main types of investment scams in Forex trading:

1. No Proof Tradings Systems and Resources

Many Forex trading scammers will try to sell you trading systems and resources (for educational purposes). Ask them for proof of anything related to their trading history, and they will dodge it at all costs. Some traders don’t offer services or a trading room but provide a trading system. Individuals involved in these scams are not called ‘snake oil merchants.’ Genuine traders use the term to identify scammers who have no proof or trading history to prove their existence.

Usually, traders can see fake proof very often.

2. Asking for Personal Information via Email

Scammers will spam you with emails full of lucrative investment plans. They will ask you to revert to the same trail to make big money. They might also ask you for personal information like your full name, phone number, and residential address.

Never give your details to anyone who doesn’t seem genuine. A genuine broker will always provide you with a written risk disclosure statement. If they don’t, you can ask them, and they will happily assist you. The broker will not give you any risk disclosure statement. If you rarely get one, could you read it thoroughly? Always discuss doubts with your broker. A genuine one will always have the correct answer backed by a credible resource.

3. No Background

Genuine and regulated brokers are always happy to provide you with any information you need to check their credibility. However, someone who is fabricating the facts will always hesitate to give any details. Irrespective of whether you are talking to a broker, an educator, a trader, or a money manager, do a quick virtual check before moving ahead with them in any way.

News broke in the New York magazine claiming that a kid living in Queens, NY, made millions through stock trading during his lunch break. In reality, he gained nothing, all of which were in a paper trading account.

Avoiding Scams

Always move ahead with logic when it comes to trading. Everyone who is here hopes to benefit from it. Unquestioning optimism makes it easier for individuals to scam you. Don’t rush into anything, even if it seems genuine. Make a pros and cons list and thoroughly research before signing up with anyone. Finding a reliable and Dedicated broker may take some time, but it will be worth it.

Read reviews from their existing customers on reputable websites. If you don’t find any or come across the ones that seem fake, don’t pursue them. It is always good to check with the broker if they have any legal lawsuits against them. A broker must decdon’tit.

Forex and CFD trading require patience, and a lot of screening is required to create valid trading strategies. When someone says that they guarantee a 20% gain on your investment every month, it takes time, knowing that they are fake. Trading is business and not a miracle.

As we explained earlier, the Forex market is decentralized, and trading is over the counter. There is no centralized regulatory body, but several authorities regulate brokers in their respective countries. While you can proceed with a broker who is not regulated as it isn’t against the law, it is always the best practice to search for a broker regulated by an established authority. This adds a layer of protection to your investment.

Fisn’tscam recovery

Forex scam recovery can be made by reporting the scammer to the financial regulatory body based on the scammer’s country location. For example, if the scammer is from the UK, you can report the scammer to FCA. Then, you can try to charge back money from your credit card or payment service using cryptocurrency for payment; you can contact the Fraudulent Crypto Investment Platform and explain that you have been deceived.

Forex scams advertising

Many advertisements are promoting Forex trading investment and Forex investment funds, which may be fake. These slick ads promote results that cannot be verified. They falsely claim that the investor will get excellent profits without any work after making an initial investment. Many people who send their money get nothing since the company claims it has not received it. Another fraud is how these companies open an account with an unregulated broker. After a few trades, all the money is lost, and the company will blame the market conditions. Yet, the money goes to the unregulated forex broker, so the investor does not get his money.

Importance of Forex education

Since forex trading is risky, most traders will make some losses. The unskilled Forex trader is gambling his money. Retail traders are almost always undercapitalized and do not use leverage properly. Most forex traders’ losses are due to incorrect trading strategies, not because their brokers cheat them. Unskilled beginner forex traders should spend time formulating better trading traders to be aware of the risks involved and avoid losses.

– Forex Trading Systems Without Proof: Many scammers are marketing forex education and trading systems, yet they cannot prove the trading history and profits. Sometimes, the scammers offer systems without services or a trading room.

– Email spam requesting personal information: It is not advisable to provide personal information like name, phone number, or home address to someone you do not know. Brokers should provide a written statement for risk disclosure, and it should be read thoroughly

Avoiding investment and forex scams

The most effective way to avoid investment scams is by researching the advantages and disadvantages. A forex broker should search for more information using search engines and check review sites, especially scam sites. Legal records and forums should also be checked for complaints, and people complaining should be contacted. A thorough background check reduces the risk involved. It is also advisable to avoid schemes that offer massive profits without much work since, in reality, a lot of time is required for education and monitoring the forex market, and decisions must be taken quickly.

Additional steps for protection

The forex brokers’ website terms should be compared with the regulatory authority regulations to find inconsistencies. Those who do not have the time or are inexperienced should contact a financibrokers’or for help. Business registration details should be verified before choosing a broker. It is essential to read the fine print at the time of account opening since the terms may block fund withdrawal. To check the broker, it is advisable to withdraw money as soon as possible for a new account. A legitimate broker will usually offer a demo account. All terms and conditions should be specified in writing to avoid disputes at a later date.

Ask These Questions To Avoid Scams

As you would ask an expert before buying a gadget, you can do the same when selecting a broker. Feel free to ask as many questions as possible to ensure you deal with a trustworthy broker, not a scam artist. Get everything in writing.

Ask yourself these questions before making any decision:

  • Is the contract that you received binding?
  • Can you legally contest your case if the broker doesn’t hold their end?
  • Is their customer service adequate?
  • Is your broker reachable through phone, email, or Skype?
  • Do they have a physical office?
  • Are they registered?
  • Is there doesn’trmance history that you can verify?


Now, one tricky question:

Is day trading a scam?

Day trading is a type of trading, and it is not a scam. Many regulated companies and professional traders trade short-time trades such as intraday, scalping, and high-frequency automated trading. However, day trading increases trading commission and often causes overtrading, which can increase commission costs and bad trading performance. For beginner traders, the day trading style is not a recommendation.

Day trading is a legitimate strategy where positions are entered and exited within the same day. It’s designed to capture profits from short-term movements in securities prices. Here’s a breakdown of why it’s considered a legitimate form of trading, alongside its risks and why it may not be suitable for beginners:

Legitimacy of Day Trading

  • Regulated Activity: Day trading is conducted within the frameworks set by financial regulatory bodies. These regulations ensure that trading activities are transparent and fair, protecting both the traders and the market integrity.
  • Professional Practitioners: Many professional traders and institutions participate in day trading, employing intraday trading, scalping, and high-frequency trading (HFT). Their involvement is a testament to its validity as a trading strategy.
  • Strategic Approach: It involves sophisticated analysis and strategies to profit from short-term price movements. Traders use technical analysis, chart patterns, and various trading indicators to make informed decisions.

Risks and Challenges

  • Increased Commission Costs: Frequent trading increases the number of transactions, leading to higher commission costs. These costs can eat into the profits or exacerbate losses.
  • Overtrading Risk: The ease of entering and exiting trades can lead to overtrading. This behavior often results from pursuing lost profits or attempting to capitalize on every perceived opportunity, leading to poor decision-making and increased trading costs.
  • Market Volatility: Day trading often relies on market volatility to generate profits. However, this also increases the risk, as prices can move unpredictably within short periods, leading to potential losses.


You can easily avoid them if you are alert. Always be careful of offshore and unregulated brokers. Beware of automated robot trading and signal sellers. These systems are full of fake claims, are not fully verified, and do not yield profitable results.

If a forex broker limits customer withdrawal options or deals with commingling funds, it indicates a possible shady and fishy practice sign. Another shady practice is a point-spread scam that some forex brokers often create.

The scammers are always trying to find new ways to cheat Forex traders. Different investment scams, like the Ponzi scheme, have derived their name from their creator Charles Ponzi. Usually, uneducated traders and beginners are targeted by Forex scammers. Hence, the trader must understand the Forex market well before investing. The scammers understand that inexperienced traders do not have sufficient knowledge and are optimistic and fearful. These Forex scammers do not easily dupe experienced traders since they know the offers are unrealistic.

Beware of all these forex scams. Also, be wary of the new Forex scams. Before dealing with them, check if they are validated by the BASIC rule (Background Affiliation Status Information Center) created by NFA.

Everything from Forex trading to everyday purchases, there is no shortage of scam artists. Only you can save yourself from becoming their next target by being aware. Ensure your broker maintains 100% transparency regarding their fees, platform, and everything else involved. Don’t look for quick gains or fixes. Be patient and move ahead with caution.



Igor has been a trader since 2007. Currently, Igor works for several prop trading companies. He is an expert in financial niche, long-term trading, and weekly technical levels. The primary field of Igor's research is the application of machine learning in algorithmic trading. Education: Computer Engineering and Ph.D. in machine learning. Igor regularly publishes trading-related videos on the Fxigor Youtube channel. To contact Igor write on:

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