In essence, when it comes to dealing with forex brokers, or any other offers in life, always remember the golden rule: if it seems too good to be true, it probably is. In this article, WikiFX will unveil the commonly used tactics that sly forex brokers use to sugar-coat their main intentions:
(1) extravagant lifestyle
This could come from the founder of the brokerage firm or some of its members. They usually package themselves as some financial elite or master traders who can manipulate the markets with just one click. Some of them could even fake their credentials by claiming they work at Goldman Sachs, J.P. Morgan, or Wall Street and are fund managers who are looking to start their own firm to help the normal retail traders with a certain % of return every month passively. They tend to flaunt their seemingly affluent lifestyles on social media with exotic cars, and limited edition watches, alongside numerous screenshots of profits showcasing how they make money effortlessly and quickly. Some of them even pay for promotions to boost their credibility on finance-related websites such as Yahoo Finance and so on. They put in all these efforts and investments to stir up the curiosity and interests of traders, especially the ones that are not yet profitable themselves, so they can entrust them with their funds.
(2) showing off and promising big returns
Most of these marketers will provide convincing trade (track) records, that are unbelievably good. For example, 200% return in a month, only 1% of drawdown, merely 2 losing trades out of 200 trades, and so on.
When one faces such a situation, remember to ask yourself, “Why is this person showing me this？ What can he get from me？”
Chances are, these screenshots are fake. They were designed by graphic designers and the account that they showed could be a demo or fake account as well. Therefore, they could modify their trading results like a magician!
Simultaneously, beware of any claims that guarantee you profits with little to no losses. Trading is a zero-sum game, anyone who tells you they have some secret strategy or connection with the big financial institutions is most likely to be lying to you in order to rip you off.
(3) overcomplicating the essence of forex trading with fancy terms
Trading is simple but never easy. There are only a handful of ways to trade the currency markets, but there is certainly a myriad of marketing packages that were used to make trading complicated. This is to distract the attention of traders so they could easily fall prey to such marketing schemes. This could be done through selling an indicator or software that guarantees profits or joining an exclusive VIP group for insider news. Another tactic that is commonly used by scrupulous forex brokers is the Ponzi scheme. They make money by attracting more members (or rather, victims) into their organization and as the trading funds that were deposited by members started to grow, they could use the new source of funds to overwrite the trading losses, or the founders of the company could be withdrawing from the pool of funds secretly. Eventually, this scheme collapses, and victims would be left in shock as their funds disappear overnight.
WikiFX is a global forex broker regulatory query platform that holds information from over 36,000 forex brokers. We also work cohesively with 30 national regulators worldwide in verifying all this information. Whether you have doubts about your forex broker, or you are a victim of an untrustworthy forex broker, WikiFX is your one-stop solution!
Both our website and mobile applications are free to use. All you need to do is utilize our search bar, then you can have a full profile of verified and evaluated information about your forex brokers, such as their regulatory licenses, years in operation, field survey documentation, honest exposure pieces, and more.
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