Forex trading scams written by forex lawyers  (2024)

What is Forex?

The foreign currency exchange market, known as the Forex market (FX) is the world’s largest trading market, dwarfing theStock Exchange in size with nearly $5 trillion US dollars traded daily. The market is open 24 hours a day, when trading closes in New York it opens again in Tokyo and Hong Kong. Currencies are always traded in pairs, for example, the US$ with the UK£ or the US$ with the EURO. With constant price fluctuations, this tumultuous market can make Institutions, companies and some individuals a great deal of money.

Most of Forex trading happens in the spot FX market, which is different from the futures market, in that currencies are physically exchanged in real-time when a transaction is made. Whereas in the futures market, the date the trading price is determined and the date the currency is exchanged are different. When a holiday-maker goes to their bank to exchange foreign currencies they are participating in the spot FX market.

Giambrone & Partners'banking and financial lawyers point to the following features of the Forex market that make it susceptible to Forex trading scams and Forex frauds:

  • There is no regulated centralised exchange.
  • Currencies are traded via computer networks between one trader and the next, often referred to as over-the-counter (OTC).
  • The Forex market is a high-leverage market. This is basically a loan by the broker to the trader allowing the trader to trade at a margin. A typical margin ratio will be around 50:1, 100:1 or 200:1 depending on the amount of currency being traded. At 100:1 the trader only needs to put up £1000 to cover a £100,000 trade. The reason brokers provide such high leverage is because currency fluctuations in the Forex market are not usually more than 1% during anytrading. However, even with small fluctuations, high leverage attracts inexperienced traders who may think the Forex market is a get rich quick market.

Is Forex a scam?

The Forex market is a legitimate trading market where the world’s currencies are traded. It is not a scam in itself. Without the Forex market it would be difficult to trade the currencies needed to buy imports, sell exports, to go on holiday or carry outcross-border business. However, with high leverage positions which, in theory, have the potential to generate significant money fortradersand because there is no centralised/regulated exchange, scammers take advantage of the lack of regulation to target the inexperienced traders who desire to enter the market.

The Forex market is a ‘zero-sum’ market, which means that for onetrader to make a profit, another trader will need to make a loss, the Forex market does not itself add value to the market. Because most of the currency movements are directed by large well-financed corporate institutions and banks, that have a complete understanding of the financialmarkets, the undercapitalised trader is always likely to suchInstitutions and large banks that trade in Forex on a daily basis. In order to make a significant profit in themarket takes a considerable experience and is a steep learning curve.

Giambronerecognisesthat scammers take advantage of the complexities around the Forex market, maliciously withholding important information about market realities from their unsuspecting novice victims, claiming their scheme, information or software robot will bring them financial success.

Forex scams

The following outlines Forex scams and the types of scam that havebeen involved in Forex frauds at present and in the past.

Signal sellers

The signal seller scam is a scam that works by a person or a company selling information on which trades to make and claiming that this information is based on professional forecasts which are guaranteed to make money for the inexperienced trader. They usually charge either a daily/weekly or monthly fee for this service but do not offer any information that helps the trader make money. They will usually have a slew of testimonials from allegedly legitimate sources in order to gain the trader’s confidence yet in reality do nothing to forecast profitable trades.

High yield investment programmes

High yield investment programmes (HYIP) are frequently justa form of Ponzi scheme in which a high level of return is promised for a small initial investment into what is in fact aForex fund. However, in reality, the initial investors are being paid back from the money generated by the current investors and a constant flow of new investors is required to keep the funds flowing, once there are no more investors in the scheme the owners usually close it down and take all the remaining money.

Manipulation of bid/ask spreads

These types of scams have decreased over the years yet they are still around. This is why it is important to choose a Forex broker who is registered with a regulatory agency. These type of scams would normally involve having spreads of around 7-8 pips instead of between 2-3 pips which is the norm.

Scams through software

Forex robot scammers lure novices with the promise of big gains from little effort or knowledge. They may use of fake or misleading figures to convince customers to buy their product. Their promises are flawed as no robot can adapt and thrive in all environments and markets. Software is generally used by professionals only to analyse past performance and to identify trends. All software should be formally and independently tested but caution is required when trusting the reviews themselves as these can be paid for. If their product did exactly what they claimed then they would not be selling it but instead using it exclusively themselves.

Managed accounts

These accounts can be a type of Forex scam and there are many examples of managed accounts. These scams often involve a trader taking your money and instead of investing it, they use it to buy all sorts of luxury items for themselves. When the victim eventually asks for their money back there is not enough money left to repay.

Ponzi andpyramid schemes

These arevery common forms of affinity fraud. They promise high returns from a small initial investment up front. The early investors usually do gain some sort of return on their money and motivated by their perceivedsuccess they then recruit their friends and family into the scheme. However, the truth is that the ‘investment opportunity’ does not actually exist and their initial return is being funded by money paid in by other members of the scheme. When the investor numbers start to drop the scammers close the scheme and take the money.

Boiler room scams

This type of scam involves the scammers usually getting people to buy shares in a worthless private company on the promise that when the company goes public their shares will increase substantially. They depend on using"urgency" - suggesting that an opportunity will be lost if they do not act quickly which prevents the target from being able to research the opportunity properly. However, oftenthe company doesn’t really exist and may have a fake telephone number, office and website. Once the scammers have made all the money they can, they will disappear with everyone’s investments.

How do I spotForex scams?

The single most important thing an individual can do to avoid being scammed is to actually learn to trade on the Forex market properly. The difficulty in this however is finding trustworthy brokers/teachers of Forex that can be trusted. The amateur must know that the broker has actually made the money he/she says they have, due diligence is the key here. The Forex market is not a casino but a very serious market where trillions of currency units are traded daily. Use demo accounts and learn to make long term profits first before trading for real. Be aware that like any professional skill, it can take years to master the Forex trade properly. Any claim that says ‘you can make money quickly’ should be avoided.

Paul Belougour, managing director of a retail Forex trading company has gone as far as to say, “if this is money you have worked hard for – that you cannot afford to lose – never, never invest in foreign exchange."

Do not take at face value the claims that are made, take the time to make your own analysis. An inexperienced trader should be critical in their approach, analysing statistics and making their own functions that they have tested and had success with on a demo account first. This will take time to achieve but will serve the inexperienced trader better than trusting an automated computer program. Do not be rushed into a "too good to be true" investment.

Other things a personmight want to check is the authenticity of the company making the claims or selling the expertise/course. To do this check the location/jurisdiction where the business is registered, as a lot of Forex scammers will trade from a location where they believe the local law will make it hard for them to be prosecuted internationally.

What do I do if I have been scammed?

If you have been scammed report the scam to the appropriate authority. For the UK go to

As well as doing this it is also a good idea to tell your story to the Forex community so that other individualsdo not fall foul of the same scam.

How can Giambrone & Partners help me if I have been scammed?

Giambrone& Partners is a leading mid-size international law firmwith a team of experienced lawyers specialising in Forex fraud. Giambrone& Partnersassists victims of Forex fraud in civil and criminal actions against unregulated Forexcompanies, online internet fraudsters and pyramid schemes created on a Ponzi-style structure. Giambrone& Partners also specialises in legal actions againstBinary Options trading companies.

Giambrone & Partners' Forex lawyers have recently been involved in:

Retrieving more than £1.5 million from the Traders International Return Network (“TIRN”)

TIRN promised high yield returns of between 9% – 22% by using “professional money managers” investing in the Forex market. Yet in reality none of the trader’s money was invested in the market and TIRN’s operators misappropriated around US$15 million for their own personal benefit.

Giambrone& Partnersadvise investors caught in Finanzas Forex's scam

Giambrone& Partners'Forex lawyers have been advising investors from Italy, Spain, Portugal, Malta, Scandinavia, Latin America (Brazil, Argentina, Columbia, Equador and Mexico) who have been victims of Finanzas Forex and the related Evolution Marketing Group (“EMG”). Finanzas Forex is now in liquidation and Giambroneiscontinuing to help traders recover funds from theperpetrators of this scam.

Giambrone & Partners'Forex lawyers are also representing traders and investors in collective legal actions in relation to Telexfree, AGF Markets, LBinary, NRGbinary and others.

Giambrone& Partners makes the process of starting your claim straight forward

All that avictim of a Forex scam has to do to start a claim is to complete an online claim form and send it back to Giambrone.& Partners

To start your claim now click here

Giambrone& Partners continues to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

If you are a victim of online fraud / scamor have lost funds witha Forexbroker through no fault of your own, pleasecontact our Client ServicesTeamto arrange a discussion witha lawyer in the Forex Trading Litigation team. Our international lawyers are able to provide assistance in English, French, Italian, Spanish, German, Arabic and Chinese.

Alternatively, please clickhereto file an enquiry form online,

As a seasoned expert in the field of Forex trading and financial markets, I bring a wealth of knowledge and hands-on experience to shed light on the concepts discussed in the article. With an in-depth understanding of the Forex market, I aim to provide insights that will enhance your comprehension of the subject matter.

Firstly, the article outlines the basics of Forex trading, emphasizing its vast size and the daily turnover of nearly $5 trillion US dollars. It highlights the continuous nature of the market, open 24 hours a day, moving from one major financial center to another. The concept of trading currency pairs is introduced, such as the US dollar with the UK pound or the euro.

The piece rightly points out that most Forex trading occurs in the spot FX market, where currencies are physically exchanged in real-time during transactions. This is contrasted with the futures market, where the determination of trading prices and actual currency exchange occurs at different times.

Now, let's delve into the features of the Forex market that make it susceptible to scams, as pointed out by Giambrone & Partners:

  1. No Regulated Centralized Exchange: The absence of a centralized and regulated exchange is highlighted as a risk factor. In Forex, currencies are traded over-the-counter (OTC) via computer networks directly between traders.

  2. High Leverage: The article emphasizes the high-leverage nature of the Forex market, where traders can operate at ratios like 50:1, 100:1, or 200:1. This high leverage can attract inexperienced traders seeking quick profits.

  3. Zero-Sum Market: The Forex market is described as a 'zero-sum' market, implying that for one trader to profit, another must incur a loss. The competitive nature of the market is emphasized, and the article suggests that institutional players often have an advantage due to their understanding of financial markets.

Moving on to the critical question - Is Forex a scam? The article clarifies that the Forex market itself is legitimate and crucial for global trade. However, it points out that scammers exploit the lack of regulation, high leverage, and the desire for quick profits among inexperienced traders.

The article then delves into various Forex scams:

  1. Signal Sellers: Individuals or companies selling information on trades based on allegedly professional forecasts, often with misleading testimonials.

  2. High Yield Investment Programs (HYIP): Promising high returns but operating as Ponzi schemes, where new investments pay returns to earlier investors.

  3. Manipulation of Bid/Ask Spreads: Scams involving wider bid/ask spreads, emphasizing the importance of choosing a regulated Forex broker.

  4. Scams Through Software: Forex robot scams promising significant gains with little effort, exploiting the allure of automation.

  5. Managed Accounts: Accounts managed by individuals who misuse funds for personal gain instead of investing them as promised.

  6. Ponzi and Pyramid Schemes: Common affinity frauds promising high returns but relying on new investors to sustain payouts.

  7. Boiler Room Scams: Scammers persuading individuals to invest in worthless private companies, often using urgency tactics.

The article concludes with advice on spotting Forex scams, including the importance of education, cautious analysis, and due diligence. It also suggests reporting scams to relevant authorities and sharing experiences with the Forex community to prevent others from falling victim. Giambrone & Partners is highlighted as a legal firm specializing in Forex fraud, providing assistance to victims and actively pursuing legal actions against fraudulent entities.

In summary, the article provides a comprehensive overview of the Forex market, its vulnerabilities, and the various scams that individuals should be wary of, while also offering guidance on prevention and recourse.

Forex trading scams written by forex lawyers  (2024)
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