Forex TraderForeign exchange scams exist because the foreign exchange market is essentially an unregulated market. With millions of dollars usually floating around the market in Forex transactions daily and not being regulated as strictly as other markets, there is bound to be some enterprising con men aiming to get their share of the money through dubious means. The best way for traders in the market to avoid them is by being more aware of how they operate and how to distinguish them.

New Forex Scams

Throughout the years, many Forex scams have come and gone. There were old methods that have ceased because of effective policing among the Forex traders themselves. But then, there are also new Forex scams that have come up to replace the older methods in trying to scam people and investors in the Forex market.

One of the modern-day Forex scams involve signal sellers. They may be either be a retail firm, an asset manager, managed account company or even an individual trader. This scam involves so-called experienced Forex experts who promises to make people wealthy through their own professional recommendations. They are usually backed by other established people who may or may not know about the scam.

These scammers usually talk of their previous accomplishments and how much money they may have made for other clients previously. If some unsuspecting traders are duly convinced of their talk, they usually ask for money in exchange for the privilege of their professional Forex recommendations. Although some may offer trade tips now and then, most signal traders would usually just collect the money and then disappear.

Automated Forex Systems

There are also Forex scams that involve so-called automated systems. The scam involves convincing people to make use of an automated Forex trading system that allows traders to generate automated trades all day long. Most of these systems have yet to be tested for formal review. Although there are also legitimate Forex trading systems also available, most of what is being offered to the general trading public may simply be a system that might generate random buy and sell signals.

Warning Signs

It can sometimes be quite hard to determine a Forex scam since the methods being used intermingle with legitimate ones. But there are certain warning signs that may alert the Forex trader of such scams. First, and probably the most common sign would be outrageous claims of profits in Forex trading. People can easily be attracted to the money and be lured into the scam through this.

Other warning signs to look out for is Forex trading systems that require outrageous fees for its use. There are legitimate trading systems that can be used in exchange for a few hundred dollars. Some scams may offer the same system to unsuspecting traders for thousands more. A Forex trading firm that would not allow you to readily withdraw your own funds from your individual account should you decide to may also be considered as a warning signal of a scam. Be aware of certain Forex brokers and traders who may be getting into such scams and avoid getting victimized yourself.