They’re seductive, well crafted and, in many cases, believable. Forex scams are the very lies that play on our greed by promising easy money, fast. And guess what. You don’t have to go far to find one…forex scams are everywhere!
You may have even fallen for a forex scam. Face it, many people have and will continue to do so. But after reading this article, you will arm yourself with the knowledge needed to spot a forex scam easily so that you will never again be conned into giving away your hard earned money to those unscrupulous forex scam artists.
Many people who come to me for my help are naturally cynical. Why wouldn’t they be? They’ve already spent thousands on some so-called trader training course but only to have their hopes and dreams smashed to pieces!
What was sold to them elsewhere by some sharp suited salesman as the dream of quick and easy money has, in reality, turned out to no more than a nightmare of countless losing trades and hours wasted in front of a screen.
So what is some website selling trader training courses at a fraction of the price going to offer that they don’t already know? Now here’s an answer may surprise you…
What many of my clients they come to realise when they become a Lazy Trader is that a rigorous course in trader training with tried and tested strategies does not to be expensive in order to be profitable. Nor does trading have to be complicated to work well. But more importantly, we want to offer truth. Even though it may be an inconvenient or little known truth.
Whether you do end up joining our rapidly expanding community of Lazy Traders – or not – I wish you every success in using this article to your advantage in being able to spot a Forex Scam.
Trading results are the very cornerstone to the success of both the strategy and the trader’s ability to trade it and many forex scams give results for you to chew over before being duped.
Beware. Just because the forex scam can provide trading results of its EA or system, it does not mean that they are real or representative of the strategy’s true success over time. If you’re someone who demands to see the results before you hit the buy button, treat them with caution. Not only do forex scams have no mercy in producing outright forgeries as their trading statements, the numbers can also be easily massaged to paint a very misleading picture.
Certainly, it takes a very unscrupulous forex scam to completely fabricate their system’s results by cobbling together something that looks “plausible” in Photoshop. You know, the types of grainy graphic where, on closer inspection, the numbers just don’t make sense! But this does happen!
The forex scam relies on people who can’t be bothered to do their due diligence and misguidedly think that “it’s online – it must be real!” By this point, many of the victims are all ready so indoctrinated by the seductive sales pitch that they want to believe it’s true. They ultimately don’t want their dreams of untold wealth shattered. Even if it means burying their head in the sand with their brain with it.
Many simply buy into the forex scam on impulse – only bothering to tick the box by having cited the results as a passing thought rather than rigerously inspecting them. Simply seeing an “official” looking graphic with an astronomically high figure representing a “net gain” is enough for them to buy, unquestioningly.
Even if the strategy was really profitable…consider this: Just because a trading system or style made a 43% gain on the trader’s account last week, it doesn’t mean it will do the same tomorrow. I’ll say it again, because it’s really very important: Just because a trading system or style made a 43% gain on the trader’s account last week, it doesn’t mean it will do the same tomorrow.
Be warned that past performance is no guarantee of future gain no matter how profitable the forex scam claims to be.
If a system was really that profitable and consistent over the long term, why would the product’s creators really want to sell their edge in the forex market to every Tom, Dick and Harry grasping for their share of forex profits? I don’t think so!
Demand to see broker statements or trading results which have been verified by a reputable accountancy firm…and I mean an accountancy firm that really exists in the form of a proper company with real, names directors and a real address! Any reputable accountant worth their salt would not knowingly endorse a forex scam. Why would they put their whole reputation on the line for some rogue client?
Failing that, ask to speak to existing clients who will be all too happy to tell prospective clients if the system works like a miracle. Conversely, if it is a forex scam then you can be rest assured that client will be as vocal.
Ask if the trading results were also on a live, funded account rather than a demo account and get evidence of this. If the results from this extraordinarily profitably strategy were provided in the form of a screenshot off a demo account then alarm bells should ring! After all, if it was really that profitable, then why would the forex scam not have the faith to use it on a real account? There’s something fishy going on here…and it stinks!
Also, ask just how representative these trading results really are. Do they represent a positive gain over a year or two years worth of trading or do they simply reflect a day’s trading where the system or trader simply “got lucky”?
A lot of forex scams will be selective in what results they give you. Beware. They will give you the results from the good times, but will conveniently omit them from when the strategy is losing. Beware! It’s very much like when politicians decide to release bad news when the public are too distracted to notice… the forex scam will rely on the fact that many of their victims firstly do not know what to look out for and, secondly, how to look out for it.
They may provide you with fantastic results from last month or last week, telling you “we made this much in 1 week!!” But how much did they make or rather, lose the month before? How much did they make or lose yesterday?
Remember a good measure of any strategy or trader’s performance is over a longer period of time. You can’t get the measure of how successful any strategy or trading style is.
Ask to see how the system or strategy fared over the long term!
Forex scams shamelessly promote their products by offering fake, creatively written and highly polished video testimonials which feature good looking paid actors who happen to be great at public speaking.
This is done to build up social proof in the hope that potential clients will be more likely to buy after they have seen “evidence” from people – just like them- that the product can also work for them in the same way.
Bogus testimonials are rife within the industry. Just because “John D from California” says: “it’s an awesome course which made me $10,000 last week and has completely changed my life” does it really mean it’s true? The forex scam would love you to think so!
Of course, it could have really happened…and great if it did. But do you really think the same will happen to you? And besides, who is this elusive “John D from California?”
You have nothing to lose from an exercise in due diligence when it comes testimonials in deciphering what’s real and what’s not.
Beware of bias. There is no such thing as a bad testimonial – especially if it’s on the vendor’s website! They will be flattering, focusing on only the upbeat. They’re not exactly going to publish letters of complaint, are they? However, we can find ways to wade through the whitewash!
As a rule of thumb, the more details that are provided about the person who is giving the testimonial, the more valid and real it’s likely to be. Testimonials with a vague attribution are likely to be fake.
Only accept the testimonials with full attributions as truth as these are far more likely to be genuine:
Likely to be fake:
First name (Joe D), Canada (Origin)
Full name (John Smith), Profession (Engineer), Origin (Manchester, United Kingdom)
Anything less is questionable!
If you contact the vendor for verification and they can’t or won’t give it to you further information then it’s likely they have something to hide. Alarm bells should ring.
However, the better way to really find evidence to help you in your buying decision is to shop around. Don’t just rely on the cherry-picked testimonials on the forex scam’s website that show nothing but the upbeat source third party, impartial websites to see what people are saying.
People who feel like they’ve been conned and have an axe to grind will vent their grievances to such websites where their letters of complaint will certainly not feature on the vendor’s website! Conversely, those who feel like they’ve had the deal of a lifetime will be equally as vociferous on such websites.
Check out: Forex Peace Army and Review Centre which both offer the facility for people to write feedback from their experience with any forex related product – for better or for worse – and you can be rest assured it’s impartial.
Yes, they have filters in place to flush out the forex scams that spam these with false, positive testimonials to try and con their victims in this manner.
A huge number of forex scams will try and cajole their victims into buying by painting a very false picture in what can be reasonably achieved from trading their ninety nine dollar expert advisor or strategy. There is therefore often a gigantic disparity between people’s expectations and what they can realistically achieve.
You may have seen the images of the man smoking in a cigar leaning back in an easy chair counting his wads of cash which are being printed by his home printer in his new five bedroom house that you too could get. The caveat? All you have to do is buy that darn ninety nine dollar system…and let it run on auto-pilot!
However, this type of imagery the industry is awash with really does perpetuate the popular misconception that if people automatically trade then they are suddenly making heaps and heaps of dosh.
But here’s the reality. Firstly, you need to be consistently profitable by trading a proven, battle-tested strategy according to its rules. Secondly, you need a far bigger account so that when you do make your consistent percentage gains on your capital, you can spend your profits on life changing items…and thirdly, you need to have your expectations managed!
Do you honestly think trading a $1000 account will turn you into a millionaire anytime soon? With an account that size, you could be cruisin’ in Miami in the Lamborghini similar to the one you saw on the forex scam’s sales page with a bottle of Champagne in one hand and the hand of a hot babe in the other…but not anytime soon!
It’s an inconvenient truth for many who are hell bent on a quick buck. But it’s the truth. A forex scam is very unlikely to give you even this much.
Consider this. Many people start off with anything between $100 – $10,000 in their trading account. Even if they make a fantastic percentage return on the year thanks to employing effective risk management and targeting only trades with a high profit potential. Their percentage gain is still only relative to the amount in their trading account.
A strategy may be advertised by the forex scam as: “made 5000 pips in one week”, or “$100,000 over night”. What the scammers won’t tell you though is how many pips or how much money was risked on this trade. You could find that far more was risked on the trade than what it gained in reward. Furthermore, it could have been an isolated win amongst numerous losses. Again, another example of selective reporting!
Remember the fable of the tortoise and the hare? The tortoise who took the “long route” completely trounces the hare.
The seasoned professionals who have traded for years tend to have one thing in common – they opted to take the long route in from transforming their fortunes from rookie amateur into a profitable, professional trader. Yes, many will admit to making numerous mistakes along the way and, yes, am sure a few have got duped in their earlier years by such forex scams.
If it’s too good to be true – it probably is. Avoid buying into strategies, expert advisers, systems and companies that promote their gains from the market in pips or in monetary terms. It doesn’t mean anything!
Be realistic. How many forex scams tell you that to become a profitable trader, all you need it to make consistent percentage returns on your trading account? I can’t think of any. But pretty much all forex scams will tell you to become a millionaire, all you have to do is to buy their “magic-bullet” piece of software.
Again, be realistic. You will have (presumably) followed your strategy rigidly, risk managed and made a slow but steady appreciation on your capital. The ability to do that over a decent amount of time is a skill set that many people most people don’t achieve – yet alone appreciate in the learning process. This is partly down to the forex scam perpetuating one of the most widely spread forex trading myths of all time: of anyone being able to make fast, easy and abundant money from forex trading.
Even if it means making 1-2% return a month, consistently over a 12 – 18 month period on a $100 account – you will have achieved your objective as a profitable trader. The monetary gain you make from trading is dependent on your account size, while the best objective measure of any gain or loss is in percentage terms.
Remember, a 2% gain trading a strategy the same way on a $1000 account means that you’re as good a trader as if you make 2% on a $1,000,000 account – but in percentage terms. Therefore measuring your performance in percentage terms is the best reflection of your trading ability.
If you wanted to live the lifestyle of what the advertising of the forex scam said “was possible – anyone can do it”. Then think again, unless you were profitably trading a $1000+ trading account. But even still, if you were making 2% a month, which is considered as a “good return” (roughly 25% a year), then let’s translate that into the $25,000 gain. Not quite enough to buy a Lamborghini or a holiday home in St. Lucia. You will need up to a $1million trading account to do it.
How would you feel if you were offered, for free, the “Holy Grail” of signal systems/expert advisers which promised to find you dozens of tradable opportunities a day, with no effort or expense spared on your part? Pretty good, I imagine…
All you would have to do to get “VIP access to this groundbreaking, never seen before system,” would be for you to open broker account. But not just any broker account with the company you want. No! In order to take advantage, you will have to open a broker account with the vendor’s broker choice…and fund it too!
Now, why do you suppose this could be? So that the vendor can cash in on the rebates which are generated for them for every trade you place! This will be because you are a referral and this is how brokers tend to reward the party who makes the referral; by giving a percentage of the spread (the stealth tax which you will pay to the broker) for trades that are placed by clients which are referred by the vendor. While there is absolutely nothing scam-like about having this sort of arrangement between vendor and broker, there are those forex scams who like to take advantage.
After all, they will have a vested interest in you trading off the back of their system – the more trades you place, whether they win, lose or merely break even, they make more money in the form of rebates, regardless of how well you do or don’t do with your trading.
So with that in mind, systems, signal services or so-called expert advisers run by the forex scam will churn out numerous signals and tradable opportunities for their unquestioning clients to trade. They will, of course, will be raking in the money for the product vendor in commission. Even if these opportunities are of low quality or ultimately losing trades (which, face it, many will be!), it won’t matter to the forex scam.
They will only be interested on the rebates it gains for them. The more trades their clients take, the more money it gets them. It’s that simple.
Whether the system makes an overall loss over the year, or indeed breakeven…it won’t matter to the forex scam. As long as the client’s placed hundreds of trades trading their system with the broker whey made the referral to, they will be happy. They will have covered themselves by providing terms and conditions) which clients would not have bothered to read and will turn around to the client and say “told you so”!
This will leave their victims mentally exhausted, endlessly chasing losing trades and their account eroded by spread charges and broker commissions.
While I would like to stress there is absolutely nothing scam like or illegal about recommending clients or referrals to a “preferred broker,” it is thoroughly irresponsible to get them trading for trade’s sake in order to line their own pockets with rebates.
The offering of a free system, expert adviser or strategy which promises to have made stupidly good returns on the past, which you can have for free in exchange for opening and funding a brokerage account with their preferred broker. This will immediately reflect the ulterior motive of getting their money from rebates. While there is nothing scam-like about this, take a closer look at a sample of their trading results…
From citing just a typical day or week of their trading results, you will be able to see the time/date of the trades and see for yourself how frequent the trade alerts are. If the number of tradable opportunities per day runs into double digits, you can be almost certain they want you to churn your account to maximise their return on rebates.
Also question their trading results if they are abnormally good. Are they selective? If they are, treat them with caution. Are they representative of a sufficient length of time? If they’re not, again, treat them with suspicion. This will give you enough grounds on which to steer clear of this type of forex scam.
The essence of a scam is to obtain money through deception, regardless of the industry. To deceive the general public is one thing, but to expose themselves are the people behind it is something the forex scammers will look to avoid at all costs. They will be happy to remain in the shadows and have their forex scam represented by a front man or paid actor in order to give it the personality of a friendly face. People buy people.
They will also like to keep their clients at arms’ length. Not only to protect their own identity from any potential legal repercussions, they could also simply be doing this for their own convenience.
Once their victim has been baited, reeled in and ripped off by the forex scam in a one-time purchase heist…what further use if the victim to them? Think about it. If they have nothing else to sell then the victim will, most likely, be nothing more than a nuisance with emails of complaint and technical questions.
This is why the contact details for such forex scams are usually confined to a “contact us” box. Seldom are email addresses given out, yet alone telephone numbers. As for a physical address (excluding mail forwarding addresses), you can forget it! Why would forex scammers want to spend more than they have to on overheads for a short-term wheeze like the forex scam they have running?
How contactable are client services or the product’s creators if things go wrong? What rights do you have if you buy and immediately realise it’s not for you? This will play a major part in showing the world how much they care after they made the sale and how legitimate they are likely to be!
Are the product’s creators contactable by telephone, Skype and/or email? Do they have a grievance procedure? Do they list a physical address? Are they a registered company? Are the directors listed by name? If the answer’s no, no, no and no then alarm bells should ring!
After all, this will demonstrate they their ulterior motive it to take the money and keep onto it, no matter what. It reflects the notion that if the client is out of sight, then they are out of mind!
Ultimately, any vendor will offer a money back guarantee if they are confident what they are selling works and they are simply not out to get your money. Look out for them! They will be happy to give you a refund if you feel it’s not for you or you change your mind. Many however, don’t. After all, they would far rather hold onto your money especially if they’re in for the shirt-term wheeze and therefore, the quick buck.
If you’ve made it this far, then you have armed yourself with the tools to avoid being suckered into the five most frequent type of forex scam. Remember, anything promising outlandish returns is probably designed as a ploy to rip you off.
A cynic is never disappointed! If the offer looks too good to be true – it generally is. Be demanding, conduct due diligence even if it means not getting a response from the forex scam. If you don’t get one, consider it as money well saved!