How do brokers scam forex traders?
Brokers can freeze your forex account so that you miss the news that would result in a profitable trade for you. They may also freeze the account if you have a large loss or profit so you aren’t able to close the trade.
They may manipulate the software so your profit targets do not get met. Your trade which should be profitable will not be able to be closed.
‘Churning’ means that the broker is able to trade on behalf of the client and they can buy and sell on the account. The broker is therefore scamming the trader as the customer is not making these trades instead, it is the broker who is. This is not as common in the forex market but happens more in the stock market.
Contacting the trader
The broker may refer to themselves as an ‘account specialist’ and promise you high profits when starting as a new trader. They ask for card details and ask you to deposit funds to make trades. When this happens, they may take the money and ensure that you do not incur a profit or making you lose out.
Cloning a legitimate broker
A ‘broker’ may pretend that they are a legitimate broker. Their caller ID or emails may appear to be the same as the legitimate broker and therefore a customer believes that they are being contacted by the real broker.
Giving false advice
The broker may offer advice that will lead to the customer losing from a trade. They are likely to advise the customer that they will receive profit from a trade but ultimately it will lead to a loss.
They might request documents to prove your identity when you request to withdraw funds to extend the process of giving you your funds, or not giving them to you at all. They may lie by saying that the service that they use to transfer funds is not working and so they cannot release the funds.
A forex broker which is a scammer may avoid your questions. They may refer to the contract that you signed and say that they are performing within regulation. If you have any concerns, contact the Financial Conduct Authority to gain confirmation that a broker is legitimate.
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