Forex trading scams

Written by
Eszter Z.
Fact checked by
Adam N.
Apr 2023

Spotting forex trading scams is not an easy feat, as evidenced by the staggering number of scams and victims out there. There is a lot of information available to foreign currency traders and it is difficult to decipher what is fake and what is legit. Below, we outline some basic warning signs that can help you spot possible scammers and keep your investments safe

We also detail some tips on how to go about recovering your money, and we will show you a list of brokers we do not recommend. We keep updating our list of not recommended brokers, so check back regularly. We will also help you understand the most common forex terms to be better prepared to spot scam brokers and identify forex trading scams.

The essence

The forex market is complex, trading forex is complicated and entails risk, but forex trading is legit, with many legit forex online trading platforms on the market. However, you have to be prepared to be able to spot forex scams and scam brokers in order to avoid falling victim to fraud. Forex trading scams can cause real damage to your investments, and it is hard to recover your money once you fall prey to scammers.

Some basic tips to avoid forex broker scams:

  • Make sure the broker is regulated at least by one top-tier regulator, such as the UK's Financial Conduct Authority (FCA) or the US Securities and Exchange Commission (SEC)
  • If your forex broker is very pushy (keeps calling, emailing, etc.) - that's a red flag
  • Double check how you can withdraw your funds from the broker. Withdrawal restrictions or excessive extra costs are suspicious. Deposit and withdraw a small amount as a test
  • Cosmic high returns are never realistic


If you're looking for a forex broker, check the best forex brokers or read all forex broker reviews.

Is forex trading a scam?

Forex trading is not a scam if you use the right brokers and avoid the bad apples. Foreign currency trading in itself is a legitimate business. Why is this so important?

We receive dozens of emails each month from users about forex scams, sharing their experiences. Tina wrote recently to tell us that she started trading currency pairs at a seemingly legitimate trading platform. She was lured in with the promise of high returns. Tina was happy to have made USD 10,000 in a short period of time, securing enough funds for her education. The problem started when she wanted to withdraw her funds. The platform said she can only do so after they deduct a 25% commission from it. She was scammed. 

Be aware of the risk involved with any forex trade, as every trade involves some level of risk even if done with a trustworthy broker. However, some less reputable brokers have unfavorable execution conditions for forex trading, meaning that your returns could be less or your losses higher at these brokers than what you’d get at a trustworthy provider. In extreme cases, they might close your positions in volatile markets by triggering a stop-loss. The real shady brokers won’t let you withdraw your money or will try to stall payouts.

You can execute your own trades or try to follow what others are doing by riding their coattails. This is called copytrading (which is legal) and is offered by many forex brokers. It does not require letting anyone have access to your money.

To avoid these issues and a scam broker, we have a list of non-recommended brokers, which we update regularly. We also have an up-to-date list of the highest-rated forex brokersAll the brokers that you find on BrokerChooser are regulated by at least one top-tier authority. These include the UK’s FCA, the SEC/FINRA in the US, the ASIC in Australia, and Germany’s BaFin.

If you're looking for a forex broker, check our list of best forex brokers or read all forex broker reviews.

OK, let's look at some tips on how to avoid forex scams and recovery scams.

How to spot if a broker is a scam?

Here are some key red flags, which should make you suspicious if you are trying to spot common forex scams. Experienced traders and beginners alike should be aware of these risks, as scam brokers can get very sophisticated. Here are some tips to help you with your due diligence. 


  • You might be dealing with a forex scam if you are approached aggressively and in an unsolicited manner.  Especially if its's a company you've never done business with before. The first high-pressure call may come from a vague contact on Facebook or it could take the form of a phone call, email, or letter. They might offer investment seminars, gifts, or just simply, super high returns on your investments.
  • We have received multiple reports and questions about trading groups active on popular messaging apps like WhatsApp or Telegram. Some of these groups advertise themselves as traders who offer ‘custodial’ services – they promise massive gains in a short period of time if you deposit money into their account.
  • Scammers offer exaggerated high returns.
  • Fraudulent service providers impose withdrawal restrictions and/or charge a massive commission when you want to access your funds.
  • Scammers typically use complicated jargon, and the client agreement includes vague language. Scam brokers could try to play on the inexperience of retail traders.
  • At scam brokers, customer service is non-existent or it is difficult to get reach.
  • If a broker is featured on the warning list of a regulator, it is usually a scam broker.
  • Check the Client Agreement carefully, and make sure it does not include locking the account without notifying the user, or a ban on withdrawing funds without justification.

Not sure if a broker is legit or scam? Write to us at [email protected] and our broker experts will answer your questions. BrokerChooser is here to help people invest. 

How to avoid forex scams?

Our analyst Krisztián drew up a list of recommendations on how to avoid being scammed by forex brokers: 

  1. Always check the broker's background, whetherit is regulated, and by which regulator. You should be able to find a registration number with a regulator at the bottom of the broker's website. If a broker is not regulated, do not work with them. Be extra careful if it is regulated under a jurisdiction widely seen as an offshore haven (e.g. Vanuatu or St. Lucia). Make sure you sign up with a regulated broker.
  2. Check whether the broker is featured on the warning list of a top-tier regulator (e.g. the UK’s FCA, or the SEC in the US). Check reviews and forex forums on Facebook or Reddit, to see whether others had already complained about that broker.
  3. Don't allow yourself to be pressured into anything. Ask lots of questions about what the trading platform offers, and make sure all the jargon and all the financial obligations are clear. Make sure you understand what will be the relationship between you and your broker or financial professional.
  4. Use 2-factor authentication to log in to your trading account whenever possible.
  5. Choose a forex broker with a well-established background and top-tier regulation.
  6. Do your research! A scam broker uses pressure, complicated jargon, and exploits weaknesses, so make sure you are equipped with the necessary knowledge. Dig into regulators, which one is trustworthy, and how they secure your investments. Read our educational articles on forex trading to be better informed.
  7. Make sure the company has contacts, and it offers chat, email, and phone contact; check whether these channels actually work.
  8. Keep an eye on your statements to make sure the broker does not trick you into something you do not want to do. When you don't understand something, ask questions.
  9. If it sounds to good to be true, it is: do not believe promises of stellar returns. 

We recommend you thoroughly check the broker you start trading with before you deposit any money. Forex scams can be sophisticated and difficult to spot. In any case, document everything, make screenshots, and save emails and chats, so you have as much proof as possible in case you need to go to the authorities.

Eleni Toumbi, a lawyer with Cyprus-based Michael Chambers & Co. LLC Advocates & Legal Consultants explained that "a common tactic of scammers is to promise unusually large profits with little or no financial risk".

"If someone assures you huge earnings in return for your investments, then it is probably a red flag. They would usually advise investors in an aggressive manner and provide them with ambiguous or misleading information. This includes empty promises of forex bonuses, profits, or conditional gifts. Scammers will likely compose false urgent situations and pressure their victims to 'recover' after a loss, meaning to invest again. They would render it impossible for traders to withdraw their funds after an investment. It is also common to have dysfunctional platforms or irregular execution of orders," Toumbi told us.

Toumbi also warned that "investing money on foreign exchange platforms always bears a financial risk, there is no guarantee that you will receive profits". 

How to recover your funds when scammed?

Retail traders who have been scammed can report the forex scam to the appropriate authority, which is the financial regulatory body in their country that supervises forex companies, Toumbi told us. "It is also helpful to share your experience with the forex trading community to prevent scammers from taking more victims," the legal consultant added.

Taking legal action and/or issuing a so-called Mareva (or freezing) injunction against a company involved in forex scams can have a major effect on a company's activities. "This type of freezing order has global force and the primary function of the injunction is to maintain the integrity of the court process by preventing the defendant from dissipating assets and becoming judgement-proof," Toumbi explained. "In general, if a forex company is a regulated entity by a financial regulatory body, there is a good chance of success," Toumbi said.

The Traders Union is an association of international forex traders that aims to create a space for traders to find information on the forex market, and to protect traders’ rights. The Traders Union pointed out that there are only a few options available to scammed traders. 

"The first one is complaining to the regulatory authorities. If you are working with a company that has a license but does not pay money, you can lodge a complaint with a financial regulator. You can also file a claim to the law enforcement agencies and court," Trader Union said.

"Chargeback is the second option. Chargeback is a feature offered by banks and payment systems for the protection of their clients. In case of a chargeback, the issuer bank or acquirer writes off the funds from the account of the seller of the service if the service was not provided. This mechanism helps protect clients against broker scams," the Traders Union explained.

The Traders Union told us that recovery of funds from the brokers is a very complex procedure, and the chances of success are "rather small".

"Success depends on how well you are prepared. In order to convince the court or a back (if you apply for a chargeback) that you’ve been scammed, you will need to provide as much evidence as possible, including:

  • Screenshots of deposits being made to the account and requests for withdrawal.
  • Screenshots of correspondence with customer support.
  • Recordings of the conversations with the broker’s customer support.
  • Account statements proving that the money was not credited within the specified period."

"The Terms and Conditions and Client Agreement of the broker are often one of the key issues preventing the clients from recovering their money. As a rule, they contain provisions that allow the broker not to pay, and the court takes the broker’s side. Therefore, make sure that you always read the Client Agreement, the Terms and Conditions, and other documents before agreeing to them," the Traders Union warned. 

The Traders Union has also put together a useful list of possible red flags for traders: 

  • No information about the broker’s details on the website. The broker must provide information about the name of the company, date of registration, place of registration, and legal address.
  • No license or an offshore license. It is recommended that you only work with brokers that are registered in reliable jurisdictions. The best option is for the company to be registered in your country.
  • There are questionable provisions in the Terms and Conditions (Client Agreement), for example, that the broker reserves the right to deny a trade or a payout without providing a reason for doing so.
  • There are no reviews or many negative reviews. Check the reviews only on independent platforms, like BrokerChooser, not on the broker’s website.
  • Few methods of contacting customer support, slow response. Before registering, contact customer support and ask several questions. Check how promptly the support responds.
  • Low quality of trading platform’s operation. You can check it by opening a demo account with the broker. Before trading with real money, work on the demo account for several weeks. 
  • Some additional red flags: the broker’s representatives are obtrusive, frequently write and call, asking you to deposit money to your account; the company offers investment programs with unreasonably high profitability. Most importantly, guaranteed profit does not exist; there are always risks. If a broker promises “guaranteed profit”, it is definitely a scam. 

In short, if you fall prey to a forex scam, you have a few options you can try to get your money back:

  • You can turn to your bank and file a chargeback request.
  • You can take legal action and issue a Mareva (or freezing) injunction against the company.
  • If the broker has a financial regulatory body, you can also report the scam to them.

How to avoid a recovery scam?

Be aware that scammers are also focusing on promising to recover the money you lost to a scammer.

The Commodity Futures Trading Commission, a US regulator, has put together a useful list on how to spot a scammer when you try to get help recovering the money you lost to a forex scam. Here are some of the warning signs:

  • You’re asked for an email address or phone number before seeing fee disclosures or a list of services.
  • You’re asked to pay, make small deposits or small fees, before receiving any service. Be alert to deposits or other seemingly small fees.
  • The website of the business does not include a physical address, or it is a non-existent place.
  • No phone numbers are provided, or you’re asked to communicate through Telegram, WhatsApp, or other messaging platforms, and they use web-based email addresses such as @gmail or @yahoo. 
  • You’re asked to give bank account details so the “recovered” funds can be deposited directly into your account.
  • The person or organization knows a lot about the money you lost. 

One of the ways scammers get unsuspecting traders to fall prey is by using complicated jargon. We put together a forex trading glossary so you will be familiar with the most common terms when it comes to trading foreign currencies.


Is forex a pyramid scheme?

On its own, forex trading is not a pyramid scheme. Multi-level marketing strategies occur in plenty of industries, however, so keep an eye out for the signs below. See more on this in our article about whether forex trading is a pyramid scheme.

Can you trust forex trading?

Trading forex and the foreign exchange market is a legitimate market and business, where you buy and sell the world's currencies. It is not a scam in itself if you are dealing with a regulated broker. Trading involves risks, and you need to make sure you understand the market, and your attitude toward risk before you start trading. New traders can be impatient, seek more money, and hope for huge profits, but fall prey to forex scammers. To avoid being scammed, make sure you educate yourself about the market, learn the warning signs, and trade forex with a trusted broker, which is regulated by a top-tier regulator.

Can a forex broker steal your money?

A forex broker cannot steal your money legally, but sometimes scam brokers do steal. You could be lose your money rapidly once that happens. Before choosing a broker to start forex trading, make sure you go through the checklist in this article, and if there are warning signs, choose a different broker. There are plenty of legitimate forex brokers, and we have reviewed many of them for you. We have also put together a list for beginner traders of the best forex brokers. 


Feeling confused? Check out our educational articles on forex trading

You can also dive into our broader glossary explaining all the exotic terms of the financial world.  If you want to try forex trading, here is our list of best forex brokers!

Still unsure? Use our broker finder to pick the best broker for you.


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Further reading

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology.

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Eszter Zalán
Author of this article
Eszter is a former Editor and Financial Journalist for BrokerChooser. She wrote and edited BrokerChooser's content from 2021 onwards, bringing her more than a decade-long experience in journalism to the team. She has covered world affairs and several financial crises, and dove deep into SEO and coding to make BrokerChooser's content more accessible to users.
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