Forex and CFD: Everything a trader must know before getting started
What are Forex and CFD trades?
Forex and CFD (contract for differences) trading are quite similar to each other though they are two distinct forms of trading. Both are conducted on the same spreads in the same procedure. While the CFD trade includes a variety of contracts like indices, energy, and metals, Forex offers pure currency trading. Both the forms of trade are very susceptible to scams; more specifically online scams. And the scams associated with these forms of trading are also very similar to each other.
How the scams are carried out?
Most initial steps include creating a credible-looking site and setting up social media accounts. Targeting a younger inexperienced population with pictures of models holding huge wads of cash and claiming to use that platform is a very effective way of trapping new victims. The scammers don’t just stick to a single age group. They create commercials in such a way that everyone can identify with them and the desire to earn a lot of money quickly and easily.
Once the victims start trading via such phony online sites and so called brokers, they can be conned in several ways. A few major ones have been listed below.
A robot is usually a proprietary trading software that uses algorithms and codes to enter and exit trades. Typically, Forex robots are built using expert’s advice and data on popular trading platforms. The scammers can sell users unregistered robots which project huge unrealistic profit scenarios liable to failure.
In some cases, the faulty robots might trade in small amounts and win significant profits boosting the online traders’ confidence. However, in larger markets it fails to function causing a huge loss for the customer.
Signal Seller Scammers
Signal sellers are usually experienced individuals who give trade advice to customers. Their information includes currency pair, direction, entry price, stop loss, and target levels. Scammers usually use this position to exploit inexperienced traders. They may charge high subscription fees without showing any verification for the high profits marketed.
The perpetrators may refer the user to unregistered brokers who in turn can control the trade assets and con traders off their funds. The scamming signal sellers might ask the customers to trade on particular stocks for high returns without themselves trading on the same.
Phony Trading Investment scams
Many advertisements across several platforms promote investment funds. Most of these investment funds are usually unregulated and have no affiliations with the government and are controlled by scammers.
With good marketing, they gain the trust of traders and make them invest their funds into the firm. The companies ensure high returns on the money invested. For a particular duration, they may even pay the customers a certain interest to gain their trust. Even this payment is done by Ponzi scheming where the money is taken from active investors to pay old investors.
After a while when the customers have invested a greater sum of money, the company either goes out of existence or in some cases claims that all the investment is lost due to severe losses in the market. In this way, scammers make a lot of money from multiple traders at the same time.
How to identify and avoid? What to do if scammed?
With proper caution and care, such scams can be identified and avoided. The scammers though come up with new scams every day, a few common tells remain. Firstly, most of such schemes and policies are unregistered. Secondly, the scammers provide unrealistic data without any kind of verification. With proper research, even the inexperienced traders can foil the scammers.
Still, around the world, millions of online traders get scammed every year. To recover the funds the whole process of the law is very time consuming and complicated. In such cases, the victim can take help of asset recovery companies. These firms employ trained individuals to recover the lost money quickly and with ease. Funds Recovery is one such online recovery firm and also the best of its kind that specializes in dealing with Forex and CFD scams and can help the victims in similar ways.
Online trading is a very fast and lucrative way to earn money without any troubles. The only criteria to stay safe and away from the several online scams is to take every decision cautiously gauging all the outcomes. Maintaining this golden rule can earn the online trader huge profits and success.