Awful Forex Frauds and Scams Every Forex Trader Should Avoid

Pack of dollars on a mouse trap

Unfortunately, the Forex marketplace is chock full of scams and disreputable marketers trying to make money by selling people unreliable Forex trading systems, unprofitable robots and other bogus trading products.  It seems like there is not a week that goes by where some new Forex product enters the marketplace. Some are brilliantly profitable, while most others are dismal failures.

This is the world we live in as Forex traders, and we must deal with these unscrupulous marketers as we try to navigate through the sea of flashy products and instant-profit systems.  We, as ambitious traders, know that there are great systems and great products out there that can benefit our businesses, but it is a difficult task to find them.

I wrote this article because I wanted to alert you to some of the most popular forex scams that are out there so that you will not become a victim of the latest gimmick.  After all, it is so easy to look at a flashy sales page that shows outrageous numbers and to be sucked into the lie.  Again, I don’t mean to say that all forex marketers are dishonest, because this certainly isn’t the case.

There are a ton of good, honest forex product developers online these days.  The trouble is that the dishonest ones have spoiled it for a lot of the honest marketers, and more irritatingly, they continue to spoil the forex business for so many traders who pin their hopes and dreams on these dishonest products.

Important Note: I would like to make also a special distinction about the honest marketers who develop a product and list it for sale, but it does not perform well as they had expected.  This can happen to even the best of the traders out there (there is no holy grail, remember).

My first trading robot that I developed is a classic example of this. At first, it doubled the account that it was trading over the course of a year. But then in the second year it lost all of the gains that it had made in the first year.  This robot started out well but then ended very poorly.

This can happen to a number of other trading system designers, robot programmers and fund traders; they may do very well in the beginning but then struggle in the future.  Consistency is indeed a hard thing to find in the Forex market place.

I just wanted to be clear that just because a system does not perform well, that does not mean that the creator of this system is dishonest—it happens to even the best of us.

Some Of The Most Prevalent Forex Scams Online

I’d like to explore with you some of the most popular forex scams that I’ve noticed online in recent years.  This is not an all-inclusive list, but these are some of the more popular tricks you’ll see out there.  I’m not going to name any special names, companies or websites, but rather give you this as a guide that you can use to help filter the good systems from the bad.

Zig-Zag Repainting Indicators

There are ZigZag types of indicators that typically use “Moving Average” indicators to generate signals.  One of the most common indicators uses a cross of two different moving averages to produce a signal on the price bars.  Sometimes these signals appear are on price bars that were created in the past.  This makes the indicator give really good entries on the chart history, but in real time it just repaints.   This can cause a great amount of trouble with these ‘repainting indicators’.

What Is A Repainting Indicator?

Basically, a repainting indicator, if you are not familiar with them, is one that uses current/newer price data to ‘go back in history’ and put an indicator on the chart.  This makes the history look great, but you are often in big trouble if you try to trade these repainting indicators in real time.

Special Note: There are some repainting indicators that can be a little helpful, but most of them are simply trouble and will make you feel foolish for missing the best signals (that weren’t there when you looked the first time.)  Below is an example: the first image shows the non-repainting version of an indicator (the squiggly line that follows the price bars) and in the second image you will see the repainting version of the same indicator.  Both of these images are taken of the same chart.

non-repainting indicator on mt4 repainting indicator on mt4

You can see on the charts that the red arrow circled appears on the same bar in each chart, which helps you to visualize what I am talking about here.  You can see that the 2nd image appears almost ‘perfect’ with its movements of the squiggly line, while the 1st image seems to be a bit slow.  This is because the 2nd image is the repainting indicator version of the same indicator used on the 1st chart.  It takes into account the current price action and then ‘repaints’ itself, so it looks better than what it actually was during real-time observation.

Do you see how badly you can be fooled by repainting indicators?  A lot of sales pages would feature the 2nd image and claim that the squiggly line has an amazing ability to pick tops and bottoms.  But it is far from the truth if you’re working with indicators that do a lot of repainting.  (In this visual example, the indicator that repaints only repaints 4 bars.  There are some that repaint much more than this.)

Another Special Note:  I can share this lesson from personal experience… there are many customers who have asked me to create EA’s/robots for them using these types of repainting indicators. Usually, I cannot even take these jobs because of the issue that you now know of.  I explaine to people that they have been scammed with these types of indicators and that they are simply not as good as they seem at first glance.  I, too, wish they were, but they simply are not.

Robots With Dubious Performance, Long Testing Periods And Money-Back Guarantees

new tag picture

When people buy another “crappy” EA, usually most of them ask for a refund in 60 days or less.  This is after gauging the initial performance and seeing that it is not very good. Of course, there are some people who do not ever ask for a refund. Unscrupulous vendors are usually expecting these kind of customers to help keep them in profit.

Who are the people who do not ask for a refund when the robot/EA is losing money?  Well, some people are just lazy and never setup the EA in the first place.  They might be busy with other work and just forget to use the bot and also fail to use their right for a refund. They buy because of an impulse, scarcity and other tricks that marketers use, but later they just do not find time to setup and use the robot. It happens perhaps more than you might think.  Maybe you, or someone you know, has been among this group at one point or another.

Some other people will set up the robot and even test it for a couple of weeks, noticing that it has lost money, but perhaps not enough to justify a refund.  The right thing to do in many cases is to keep testing the robot to see if the performance may increase.  After all, proper testing cannot be accomplished in just 60 days.

Also there will be people who will be testing the robot for more than 60 days and then the refund period is over.  Ideally, it is best to test a robot for 6 months or more to see if it works.  If people see bad performance right out of the gate, the primary tendency is to ask for a refund.  Again, many people may receive a refund initially, but then there is a large group of people who do not ask for a refund or are otherwise denied from getting a refund by the vendor.

Some Robots/Indicators Only Change Names

Another common scam is to take a free indicator, rename it and then sell it online with a fancy sales page.  Once I saw a website selling a free indicator with the file name changed—that was the only difference, the file name!

The vendors who are a bit more shrewd might change the app code a bit to not look like the original free robot/indicator. And after all, only programmers who want to do an investigation can spot these differences. These are not visible to public usually, nor will non-programmers investigate for such things.  But this is a scam that also happens quite often with vendors ‘creating new products’ from that which was always available, or were once sold under different names.

Promoting With Fake Fancy Cars And Houses

sports car showoff

In my opinion, everyone who is bragging with their fancy cars and houses online usually are promoting a scam.  If anyone knows a honest vendor selling a good product that way (which has really made others money and there is proof), please post a comment below this article.  I hardly think there are any.  And even if those braggers have those fancy things, they usually make money to buy them from the sales of the product, not from using their own product. Anyone with a higher budget can rent a Lamborghini and shoot a fancy sales video.

Note: With the fast and growing expansion of the Forex market, the number of scammers in this field has increased rapidly.  These scammers prey on novice traders who have big hopes and dreams of lightning-fast profits and doubling their accounts every month.  Unfortunately, these scammers also have various forms of scam brokers that have a very legal profile that would trick any trader. Below is a list of some more of the common scams in the Forex market.

False Signal Seller

Every minute a new company appears from nowhere offering trading signals that will supposedly make you 200% on your investment by just following their trades. These companies try to convince you to buy their information on the promise that their magic signals will make you rich in no time.  They also sell the idea of not having to gain knowledge about Forex trading in order to copy trades and make money.  This is a dangerous trap.

Opening a trade position without deep analysis of the market and of the pair you are trading is useless and will cause you potential losses unless you are so lucky and can trade with your eyes closed. Even professional, institutional Forex traders work hard on determining the trend of a currency and then they make decisions depending on their trading rules.  No one can trade profitably 100% of the time.  It is a simple truth and you cannot look to some ‘perfect trader’ to give you all the right trading signals so you will never lose.  It just doesn’t work this way.  Yes, there are good systems, but there are no perfect systems.

Fake Investment Funds

In just the past few years. high yield investment programs (HYIP) have appeared online that promise investors steady returns on their money—without the need for trading themselves. Typically, most, if not all, of these companies are scammers and they do not invest your money in Forex or any other way. They just pay you from the investment capital of future applicants in the form of a ponzi-like scheme. Eventually, when the time arrives that investors stop registering with them, the scammers simply shutdown and leave the new investors with no profit and/or no return of what they have already paid, and most often time with no capital left at all.  Beware of these type of private ‘investments’ at all time; work only with registered and government regulated companies that have excellent reviews on independent/impartial review sites.

Super Software

There is no such software or autopilot that can make a deep, intelligent analysis of the market and then open successful positions based on this. Sadly, a simple search on the internet will return millions of results on such autopilots and software that promises you will make money while you sleep. Moreover, these types of trading tools can sell for thousands of dollars but in reality offer you software programmed for a pre-determined market condition which will most likely not work in the real world of Forex trading.

If such programs exist, the world would be overloaded with millionaires.  Only with both fundamental and technical analysis of conditions can a trader (or robot) open successful positions.  I don’t mean to say that there are no profitable robots, because indeed this is not true.

What I mean to say is that most successful Forex robots are a combination of math, chart patterns and statistical averages.  Trades do not win all of the time, but even if you are able to program (or buy) a robot with a 55% win rate, you can make lots of money with it if you simply exercise proper risk and money management.

Cherry-Picking Robots From Past Performance For Quick Sale

Here is a strategy employed by some unscrupulous marketers/traders.  They create a dozen or so EA’s with different strategies and settings. Then they set them to run on different demo accounts and just wait about 3 months to see if there will be any profit.  (When creating EA’s you aim to use strategies that are tailored to the market conditions of the last few years. This gives you profitable back testing in the MT4 SrategyTester, but is no guarantee of future profitability.)

Now after 3 months you eliminate all accounts that lost money and run new tests on fresh accounts. You do this until you get one of a few of those EA’s to make profit for the 3 months test. Then you put this winning robot for sale on a website that is already waiting for “the product”. Then they just enter the ‘numbers’/profit the EA made, product name, etc.

Now they sell it hard and aim to profit from sales, and do not care if the EA will lose money in the next few months or even in the years to come.  The sales are the only thing that matters for people running such scams.  If you just search around a bit I’m sure you will run into such ‘rackets’ – if you haven’t already encountered these in the past. Usually their website and product presentation starts with a video that will scare anyone by giving the fact how world is gone bad and economics are crashing. Then they will present to you their super magic solution – the super training robot.

Wrapping Up

You do need to know that forex scams are plentiful and you must always be on guard for them.  They are dangerous and can/will cost you hard earned money.  These are not all of the scams that are out there, but it is a good starting point for your knowledge.  Again, I didn’t want to mention any specific companies, brokers, robot-programmers, or signal-providers in this article, but just to educate you in general about the different types of scams that are out there.  You can use Forex scam watch websites like ForexPeaceArmy to help protect yourself from bad products and systems.

Please share with myself and the other readers here if you have run into any types of scams like these or if you have some that are not on this list that you can share to help others to avoid.  Just list your notes below or ask any questions that you may have too.  I’d love to hear about your experiences, too, so that we can all learn and grow together.

About the author

Rimantas Petrauskas

First I am a father, a husband and then the author of the book “How to Start Your Own Forex Signals Service”. I am also a Forex trader, a programmer, an entrepreneur, and the founder of ea-coder.com Forex blog. I have created two of the most popular trade copiers and other trading tools for MT4 that are already used world wide by hundreds of currency traders.

20 Comments

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  • HI RImantas,
    Well said! Alas most would-be Forex millionaires don’t know about the scams until they have been sucked in and their money sucked out. My advice is always run from someone who is pursuing you. There is a reason why they are after you, and that reason is your money.

    I have always trusted your advice and found your customer service puts a lot of the bigger companies to shame.

    Well done Rimantas…keep it up!

    Kind regards,

    Mike

  • Rimantas
    A good article and something perhaps that needs to be regularly updated as you are right not one day goes by that I don’t receive some scam emails reporting on rubbish forex and binary systems. I think you have missed putting up some graphics on which your words are about. especially on the first repainting article?

    • Garry, thank you for letting me know about this. I have fixed this now and added both pictures with repaining and non-repainting indicators.

      Regards,
      Rimantas

  • I fully agree. EAs are only tools and require people that know how to utilize them properly to profit. There is no overnight income system and what may make you profit now, might not in 6 months or so. I use EAs and have friends that develop them for use but they are all manually intervened and watched over. There is never such thing as a system that does not lose. Take for example the Wall Street EA. People made a big fuss over the safety of this EA and it has profited nicely but had over a 12% drawdown in a single day the first week of march. Some people
    I know that used this EA that over-allocated lot sizes had their accounts margin out on them due to the thought of how “safe” the EA is.

    • Hi, thank you for sharing this with us. I totally agree with you that EAs should be monitored manually. However, in my opinion, the human intervention should not interfere the actual EA trading style/strategy. If there is something wrong going on like errors from the EA then human intervention is necessary.

  • dear sir THIS IS THE BEST ADVISE FOR TRADERS ,,THANK YOU For A VERY INFOMATIVE ARTICLE,, STAY BLESSED ,,REGARDS george

  • I read this paragraph fullƴ cοncerning the resemblance
    of most uρ-to-datе ɑnd preceding technologies, іt’s amzing article.

  • Hmm, Actually you are right. I see lots of paid and free indicators and EAs and signal services that can draw attention at first and just show drawdown at last. Repainting indicators is why I gave up on such indicators and EAs.

    Sometime it doesn’t matter if the indicator is lagging or not, but depends on the trader. Thousand EA or indicators cannot make someone earn if his mindset is lagging and repainting. You get the picture.

    But, You should’ve included forex scams about BROKERS too. You don’t earn a dime even if your EA earns 200000% and your broker doesn’t pay.

    Btw , I’m not using my real name and email. I don’t want publicity or bad comments against me in this world of criticism. I’ll use them wheneven I feel safe.

    Thanks.

    • Repainting mindset is a great comparison for sure. Never heard this idea before. There are broker scams too, but those are hard to find. They usually have fancy websites so you won’t spot them like this. I guess best help here is Forex Peace Army.

    • Luis, Forex broker scams are another story. I have never been a victim of these so do not have much experience.
      But in the future I will see if I can write something about it. Need to find really bad broker to cheat me, then I will have a story to write about LOL 🙂

  • i think we should highlight about these brokers and their scam activity, i just got scam by one of them so call regulated Asic Australia, unbelieveable …

  • I totally agree. EAs are only tools and need those who know how to utilize them properly to profit. here isn’t such issue as a system that does not lose. However, in my opinion, the human intervention mustn’t interfere the particular Ea trading strategy. here isn’t such issue as a system that doesn’t lose. Last 5 years i am trading online i love my own strategy.

    • Thomas it’d be nice mate if you shared your strategy with us like how are you successful unlike the most of us man? Always appreciate people that are willing to lend a helping hand to those that have fallen through the cracks so to speak…I am losing unlike you so what tips advise have you got for traders like me that are struggling??

      feel free to share why you love your won strategy like what, and why is it so good??

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