10 Scam Forex Brokers in Botswana

What are the most common Forex Scams that Botswanans must know?

👉 Scammers prey on inexperienced traders by promising them easy money with a failproof strategy, piece of information, or automated trading program, all while taking advantage of the Forex market’s inherent difficulties.

👉 Below we have detailed the most common forex scams that Botswanans might encounter while they trade forex.

Broker Scams

👉 To purchase and sell foreign currencies, you need the services of a forex broker. Trading foreign exchange via a broker is required. Unfortunately, not all brokers are dependable; some might scam you out of money or overcharge you in other ways.

👉 Since they are unregulated, some do not answer to any authority. Subsequently, there is little room for legal action if fraud occurs.

👉 Learning as much as possible about the broker you are considering working with is recommended. You can learn more about a broker by reading reviews on review websites that do not have any financial interest in the brokers they recommend.

Pump-and-Dump Scams

👉 Before recruiting investors, fraudsters acquire stock in an illiquid firm. The fraudster, masquerading as a broker, then persuades other investors to purchase shares, driving up the price.

👉 After the value of the shares rises, the “broker” sells them for a great profit, and the price falls dramatically. Larger investors combine to purchase shares in large quantities, pushing up the price and generating a buzz around the company before dumping it.

Investment Seminar Scams

👉 There are plenty of respectable investing education seminars available. However, scammers are increasingly marketing bogus or useless education packages that claim to educate victims on how to trade/get rich/invest in real estate/start an internet company, etc.

👉 These seminars and education courses can cost victims hundreds of pounds and accomplish nothing except empty their purses.

Forex Advertisement Scams

👉 Website or social media ads, such as those on Facebook or Instagram, often use this tactic to defraud unsuspecting users of their money.

👉 Famous people in business and show business are often shown with these items, even though they seldom permit their pictures to be used. These pictures are utilized because they subconsciously make people curious and encourage them to click to learn more.

👉 The “rags to riches” story is another common theme in these scams when the target audience is shown images of a person who went from poor to affluent via Forex trading.

Be Cautious of “Market Bubbles”

👉 When the value of a commodity or item, like gold, real estate, or bitcoin, suddenly and dramatically increases, it is called a bubble. There is a rapid increase in price followed by an equally rapid decrease.

👉 However, price increases in a bubble are not justified by actual consumer demand for the commodity.

👉 Although asset bubbles and investment frenzies are not technically a kind of fraud, it is important to include them here because they drive many normally sane investors to make poor choices at the height of the frenzy, including buying in what may be perfectly legal assets for the wrong reasons.

👉 Scammers have it easier during bubbles because rational investors seeking to profit from the increase in value of an asset could be more receptive to such schemes.

High-Yield Investment Programmes

👉 When a high rate of return is offered for a little initial investment into a Forex fund, the investment program is often merely a Ponzi scam.

👉 However, the current investors are paying back the original investors out of the money generated by the current investors, and a steady stream of new investors is required to keep the funds flowing.

👉 In addition, once there are no more investors in the scheme, the owners typically shut it down and take all the remaining money.

Signal Sellers

👉 A “signal seller” is an individual or business that offers advice on which trades to undertake, claiming that their recommendations are supported by expert predictions that would ensure financial success for the unwary investor.

👉 They demand a fee daily, week, or month but provide no actionable insights to improve trading performance. To win over the trader’s trust, they will often include several testimonials from reliable sources, even if they are useless for predicting trade outcomes in the trader’s favour.

Robot Trading Scams

👉 The allure of a business model that claims to generate revenue while you snooze is understandable. But we might all benefit from generating passive income.

👉 For example, fraudsters in the foreign exchange market may offer “trading systems” (sometimes known as “robots”) that perform all the work for you.

👉 Computers make an automated purchase and sell decisions based on predetermined criteria. These forex robots do not go through any third-party testing or vetting to ensure their reliability.

👉 Still, putting all your trust in a single method to manage your savings and assets is a bad idea. Despite popular belief, computers may make errors.

👉 In addition, no one (not even a computer) can foresee how economic signals from across the globe would affect the market. So, although it might be tempting to have a robot make trades on your behalf, you should be wary of falling for one of the many scams that use trading robots.

Bid/Ask Spread Manipulation

👉 Although the frequency of such frauds has diminished over time, they are still not absent. Therefore, to avoid problems, it is best to work with a Forex broker licensed by the appropriate authorities.

👉 These cons often entail wider-than-usual spreads (five to seven pips) rather than the standard two to three.

“Boiler Room” Scams

👉 Shares in a worthless private firm are sold to unsuspecting investors because their value will skyrocket when the company becomes public.

👉 They rely on a sense of “urgency,” convincing the target that they would miss out if they do not act immediately, preventing them from thoroughly studying the offer.

👉 However, in many cases, the business in question does not exist. Instead, it uses a fictitious phone number, address, or website. Scammers will take as much money as they can from victims, then vanish.

Multi-Level Marketing Scams

👉 Multi-level marketing (MLM) companies focusing on forex trading have contributed to the industry’s continued growth in popularity. However, these industries naturally attract criticism, and the foreign exchange market is no exception.

👉 In return for daily trading signals and forex training resources, members of certain famous forex MLMs are charged a monthly fee.

👉 Then, members are encouraged to bring in recruits in exchange for higher commissions. Instead of focusing on making sales, some businesses try to bring in new customers.

Pyramid or “Ponzi” Schemes

👉 These schemes are typical examples of affinity fraud. They advertise substantial returns for modest outlays of capital. Early investors typically see a return on their first investments. This success motivates them to bring in other investors, including their friends and family.

👉 The first return, however, is being paid for with money contributed by other participants of the plan, and the ‘investment opportunity’ does not exist. Scammers stop taking money from investors when they see their number dropping.

Managed Account Scams

👉 There are several instances of managed accounts that are Forex scams. The victim of one of these scams can discover that the trader has spent their money on personal luxuries rather than investing it.

👉 There are insufficient funds to reimburse the victim when they finally get to ask for their money back.