Forex Trading Scams And Frauds In 2024: How To Avoid It?

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Research shows that in 2021, almost 90,00 Americans were victims of investment fraud, with losses totaling almost $1.6 billion. Scams are especially rampant in the forex market, considering it’s the largest financial market in the world and thus draws many people hoping for easy, quick profits. Unfortunately, this makes them prime targets for fraudulent activities. On the bright side, there are steps you can take to avoid forex scams and ensure your trading experience is a safe one. So, how to avoid forex trading scams?

Read More: Best Forex Trading Apps 2024

What Is Forex Trading?

Forex trading, also known as currency trading, is the buying and selling of foreign currencies to make a profit. You can trade the world’s currencies in the hopes of making a profit from changing foreign exchange rates.

Central banks, governments, and large financial institutions are the main participants in the forex market. However individual traders can also take part with the help of a broker or trading platform.

What Are Forex Trading Scams?

A forex trading scam is any attempt by a scammer to defraud a forex trader of their hard-earned forex fund. This can take many forms, from fake forex robots that claim to make you millions overnight to scam brokers who offer unrealistic returns and manipulate the market in their favor.

How To Identify Forex Scams?

There are telltale signs when you’re being targeted for a scam. Remember these red flags so you can better avoid forex trading scams:

Guaranteed Profits

No one can guarantee profits in forex, so anyone who tells you otherwise is likely trying to scam you.

High-pressure Tactics

Forex scammers will often try to pressure you into making a quick decision or investing more than you’re comfortable with by using high-pressure tactics like deadlines and threats. Don’t fall for it.

Unregulated Brokers

Be wary of brokers that are not regulated by any governing body or don’t provide sufficient information about their regulation. This may be a sign of a potential scammer and should be avoided at all costs.

Fake Reviews

If you’re researching a broker, thoroughly check if they have a legitimate business background. Watch out for fake reviews designed to lure unsuspecting traders in with false promises and guarantees of success.

Most Popular Forex Scams In The Forex Market

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To help you avoid forex scams, you’ll need to know what to look out for. The most common forex scams include the following:

Signal Seller Scams

A signal seller scam is a very common forex scam. It involves signal sellers promising to provide reliable signals for certain trades in exchange for a fee. However, these trading signals are usually inaccurate or outdated and can lead to significant losses.

Forex Broker Scams

This type of scam occurs when a scam broker offers an unrealistic return on investment or promises you vast wealth without any risk. It is often done through high-pressure sales tactics and can be difficult to detect. 

Forex Robot Scams

These scams involve bots that employ trading systems for automatic trades and promise to make you money without any effort or knowledge on your part. However, a forex robot is often unreliable and can actually lead to more losses than gains.

Managed Account Scams

This forex scam refers to when a third party or “expert” offers to manage your trading account for you. They will then take your funds and invest them in high-risk trades without informing you or giving you any control over the decision-making process. 

Ponzi & Pyramid Schemes

A Ponzi scheme, or pyramid scheme, is a fraudulent investment operation where investors are promised high returns with little to no risk. The operators of the scheme will use money from new investors to pay existing ones, creating an illusion of success and stability while actually providing no real profits.

On the other hand, in a pyramid scheme, operators will recruit new investors and ask them to pay for a certain product or service, then use that money to pay existing investors.

The operator will continue to take more funds and make more money from initial investors until there are no more people willing to invest, leaving all but the top few at a significant financial loss.

Tips to Spot Forex Scams

New traders can prepare themselves to avoid fraudulent activities and other scams by doing the following:

  • Do your research. Before you start trading, do some research on the company offering it and make sure they are legitimate. Check out its performance history and reviews from other traders and look for signs of a scam, such as promises of huge profits.
  • Read the fine print. When signing up for an account, be sure to read all terms and conditions carefully. Pay close attention to details such as fees, commissions, leverage ratios, and withdrawal policies, so you understand what you’re getting into.
  • Learn the basics. Before trading forex, it’s important to have a good understanding of the market and how it works. Learn key terms like pips and leverage, and get trade ideas from experienced investors. If available, you can use a demo account to get the hang of things.
  • Use a regulated broker. It’s best to stick with a regulated broker or one that’s backed by a legitimate financial authority such as CySEC or FCA. These organizations protect investors by ensuring that their funds are safe and secure.
  • Monitor your trades. When you trade forex, be sure to monitor your positions regularly so that you can catch any suspicious activity. If something doesn’t seem right, contact your forex broker immediately and ask for an explanation.
  • Skip OTC markets. If you’re a new investor, avoid trading in the OTC (over-the-counter) market. These markets are more susceptible to fraud and manipulative tactics, so it’s best to stay away from them until you have more experience.
  • Don’t be fooled by promises. Beware of any brokers who promise profits that are- too good to be true or guarantee that you won’t lose money. As with any type of investment, there is always a chance that you could lose your capital so never invest more than you can afford to lose. 

What Should You Do If You Have Been Scammed?

If you think you may have been scammed, act quickly and contact your forex broker to investigate. If they are unable or unwilling to help, then it’s time to take further steps yourself.

You should report any suspected fraudulent activity to the local state attorney general’s office and also notify the Federal Trade Commission (FTC). You may also want to consider filing a complaint with FINRA (Financial Industry Regulatory Authority) if your broker was registered in their system.

It’s important for all traders who have suffered losses to make reports so that the authorities can take the necessary steps to protect other potential victims.

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It offers high levels of security and user protection, provides access to a wide range of assets and markets, allows for easy deposits and withdrawals, and has an intuitive platform with educational resources. It is regulated by multiple regulatory bodies, namely FCA, CySEC, and ASIC. 

Additionally, eToro’s CopyTrader feature allows traders to copy successful trades from other experienced traders on the platform, making it ideal for both beginner and advanced traders alike.

CMC Markets

CMC Markets provides investors with tight spreads, no dealing desk intervention, and access to forex, CFD trading, indices, bonds, and more. 

Moreover, CMC Markets is backed by ASIC, IIROC, MAS, FMA, and FCA, which is why it has a high trust score among experts. The broker offers some of the lowest fees in the market, making it one of the most cost-effective platforms available.

Final Thoughts

In conclusion, Forex trading scams are unfortunately all too common, but the good news is that they can be easily avoided if you know the warning signs. Doing your due diligence and double-checking any broker you’re considering is the best way to ensure your money is safe. And if you think you may have been scammed, don’t hesitate to contact the authorities and get help.

Frequently Asked Questions (FAQs)

How to identify false claims in forex trading?

Fake claims are very easy to spot to avoid scams. If someone is promising you unrealistic returns or guaranteeing that you’ll never lose money, these should be huge red flags. In the real world of forex, there is no such thing as a free lunch, and no one can guarantee the success of any trade.

Is forex a zero-sum game?

No, forex is not a zero-sum game. While it’s true that there will always be winners and losers in the market, profits or losses are never guaranteed.

How to spot a scam broker?

The easiest way to spot scam brokers is by researching the company you are considering and looking for red flags. Check reviews, read terms and conditions carefully, look out for hidden fees or charges, and ensure that the company is registered with FINRA.



Noah Edis
Noah Edis, BA
Business & Binary Advisor
Noah Edis is a writer and entrepreneur with a wealth of experience in online businesses and marketing. When he's not working on his latest project, you can find him playing competitive dodgeball or pursuing his personal interest in business process automation.


Kristina Knight-1
Kristina Knight, Journalist , BA
Content Writer & Editor
Kristina Knight is a freelance writer with more than 15 years of experience writing on varied topics. Kristina’s focus for the past 10 years has been the small business, online marketing, and banking sectors, however, she keeps things interesting by writing about her experiences as an adoptive mom, parenting, and education issues. Kristina’s work has appeared with, NBC News,, DisasterNewsNetwork, and many more publications.

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  1. Foreign currency exchange (forex) | Accessed March 16, 2023.
  2. International Trade Administration. Foreign Exchange Risk | International Trade Administration. Accessed March 16, 2023.
  3. Fraud Advisory: Foreign Currency (Forex) Fraud | CFTC. Accessed March 16, 2023.
  4. Cyprus Securities and Exchange Commission |. Published 2023. Accessed March 16, 2023.
  5. Report International Scams at Federal Trade Commission. Accessed March 16, 2023.

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