Forex trading scams

Is forex trading a scam? The answer is no, if you use the right brokers and avoid the bad apples. Why is this so important?

Some less reputable brokers have unfavorable execution conditions for forex trading, meaning that your winnings could be less or your losses higher at these brokers than what you’d get at a more trustworthy provider. In extreme cases, they might close your positions in volatile markets by triggering a stop-loss. The real shady brokers won’t let you withdraw your money or will try to stall payouts.

To avoid the above problems, we have an up-to-date list of the highest-rated forex brokers. Fees are also taken into account, so you don’t have to compromise on quality.

Don’t forget that all the brokers that you find on BrokerChooser are regulated by at least one top-tier authority. These include the UK’s FCA, the SEC/FINRA in the US, the ASIC in Australia, and Germany’s BaFin.

How to best avoid scams? 

We asked several experts to tell us how to best avoid scammers, and what are the options for a trader who’s been scammed. Here is what they told us: 

Eleni Toumbi, a lawyer with the Cyprus-based Michael Chambers & Co. LLC Advocates & Legal Consultants firm explained that “a common tactic of scammers is to promise unusually large profits with little or no financial risk”.

“If someone assures you huge earnings in return for your investments, then it is probably a red flag. They would usually advise investors in an aggressive manner and provide them with ambiguous or misleading information. This includes empty promises of forex bonuses, profits, or conditional gifts. Scammers will likely compose false urgent situations and pressure their victims to ‘recover’ after a loss, meaning to invest again. They would render it impossible for traders to withdraw their funds after an investment. It is also common to have dysfunctional platforms or irregular execution of orders,” Toumbi told us.

Toumbi also warned that “investing money on foreign exchange platforms always bears a financial risk, there is no guarantee that you will receive profits”. 

The Traders Union, an association of international forex traders that aims to create a space for traders to find information on the forex market, and to protect traders’ rights, has put together a useful list of possible red flags for traders

  • No information about the broker’s details on the website. The broker must provide information about the name of the company, date of registration, place of registration, and legal address.
  • No license or an offshore license. It is recommended that you only work with brokers that are registered in reliable jurisdictions. The best option is for the company to be registered in your country.
  • There are questionable provisions in the Terms and Conditions (Client Agreement), for example, that the broker reserves the right to deny a trade or a payout without providing a reason for doing so.
  • There are no reviews or many negative reviews. Check the reviews only on independent platforms, not on the broker’s website.
  • Few methods of contacting customer support, slow response. Before registering, contact customer support and ask several questions. Check how promptly the support responds.
  • Low quality of trading platform’s operation. You can check it by opening a demo account with the broker. Before trading with real money, work on the demo account for several weeks. 
  • Some additional red flags: the broker’s representatives are obtrusive, frequently write and call, asking you to deposit money to your account; the company offers investment programs with unreasonably high profitability. Most importantly, guaranteed profit does not exist; there are always risks. If a broker promises “guaranteed profit”, it is definitely a scam. 

What to do when scammed?

Traders who have been scammed can initially report the scam to the appropriate authority which is the financial regulatory body in each country and supervises forex companies, Toumbi told us. “It is also helpful to share your experience with the Forex trade community to prevent scammers from taking more victims,” the legal consultant added.

Taking legal action and/or issuing a Mareva (or freezing) injunction against a company can have a major effect on a company’s activities. “This type of freezing order has global force and the primary function of the injunction is to maintain the integrity of the court process by preventing the defendant from dissipating assets and becoming judgement-proof,” Toumbi explained. 

“In general, if a forex company is a regulated entity by a financial regulatory body, there is a good chance of success,” Toumbi said. 

The Traders Union pointed out that there are only a few options available for traders. 

“The first one is complaining to the regulatory authorities. If you are working with a company that has a license but does not pay money, you can lodge a complaint with a financial regulator. You can also file a claim to the law enforcement agencies and court,” Trader Union said.

Chargeback is the second option. Chargeback is a feature offered by banks and payment systems for the protection of their clients. In case of a chargeback, the issuer bank or acquirer writes off the funds from the account of the seller of the service if the service was not provided. This mechanism helps protect clients against broker scams,” the Traders Union explained.


The Traders Union told us that recovery of funds from the brokers is a very complex procedure, and the chances of success are “rather small”.

“Success depends on how well you are prepared. In order to convince the court or a back (if you apply for a chargeback) that you’ve been scammed, you will need to provide as much evidence as possible, including:

  • Screenshots of deposits being made to the account and requests for withdrawal.
  • Screenshots of correspondence with customer support.
  • Recordings of the conversations with the broker’s customer support.
  • Account statements proving that the money was not credited within the specified period.”

“The Terms and Conditions and Client Agreement of the broker are often one of the key issues preventing the clients from recovering their money. As a rule, they contain provisions that allow the broker not to pay, and the court takes the broker’s side. Therefore, make sure that you always read the Client Agreement, the Terms and Conditions, and other documents before agreeing to them,” the Traders Union warned. 

Other tips to avoid forex scams

Always use 2-factor authentication to log in to your trading account.

If you get an offer from someone out of the blue, be very suspicious. We have received multiple reports and questions about trading groups active on popular messaging apps like WhatsApp or Telegram. Some of these groups advertise themselves as traders who offer ‘custodial’ services – they promise massive gains in a short period of time if you deposit money to their account. The best is not to engage with such groups and choose a forex broker instead with a well-established background and regulation.

You can execute your own trades or try to follow what others are doing by riding their coattails. This is called copytrading (which is legal) and is offered by many forex brokers. It does not require letting anyone have access to your money.

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