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How To Identify Forex Scams? 8 Main Warning Signs of Forex Scams

|Updated July 6, 2022 10:07

There is tons of money to make in the forex market. It is by far the biggest market in the world. But this brings another problem, a host of people want to reap where they didn't sow. Yes, we are talking about forex scammers. 


Remember forex trading usually happens on the MT4 or MT5 ( Metatrader) platforms. Therefore, it becomes an easy target for scammers. The most common way to defraud investors is posing as a broker offering trading services on the Metatrader platform. 

This article we will go around everything you should know about forex trading scams and protecting your money. Before we explore the MT5 scam games and how to identify them, let me bring you up to speed with MT4 and MT5.

What is MT4 and MT5?

Despite forex being the biggest market, it has no centralized exchange. Investors place trades through brokers. The brokerage firms provide MT4 and MT5 that enables traders open and close margin positions.

Essentially, MT5 means MetaTrader 5. MetaTrader is a Russian company that provides trading information. The computer ordering software or a mobile app enables you to place a foreign exchange order. You only need to find your broker name on the MT5, input your password, and log in.

While there are myriad MetaTrader5 scams, the trading software is safe and almost incorruptible. Therefore, it is unscrupulous forex brokers that you should be wary of. 

But how do you identify forex trading scams? 

As mentioned, fraudulent brokers scam traders through MT5 and MT4 trading platforms. So how do you identify shoddy brokers? 

Continue reading.

8 Main Warning Signs of Forex Scams

1. Promise Unrealistic High Returns 

Forex trading is not a cakewalk. It has its inherent risks. The only way you can deal with this risk is through risk management. A broker who promises risk-free trading with high returns is probably a fraud. In fact, regulators prohibit brokers from luring customers with exaggerated high returns. Besides the returns, these snake oil merchants also lure traders with low spreads. But don't get this twisted; Forex trading is profitable with a good trading strategy and risk management.

2. Aggressively Wooing Traders Through Dating Sites

Dating sites are platforms where people go to look for love. So, if a broker or their attendant contacts you through these sites, you should take caution. Legit forex brokers have official email and phone contacts. If they insist on communicating through social media, that's probably a scammer after your hard-earned money. 

The same case applies to social media friends who try to convince you of great trading deals. We are not advocating that you be cynical. However, some friends are wooed into a mess and misled into recruiting other friends. 

3. Lack of Trading Licenses 

Various regulatory bodies keep companies in check to ensure they serve the customer's mood, and forex firms are no exemptions. You can only differentiate legit firms from others through licensing and regulations. Every country and region has its regulatory institutions. It is imperative that you ensure you are trading with regulated brokers. The regulatory authority supervises the brokers to ensure your trading fund is safe. 

Abandon the mission if a broker gives dubious information about their licensing or gives non-existent or fishy sites. That’s a fraudulent broker. 

4. Asking for Personal Information

Legit brokers will not ask you to disclose your personal information in most cases. You only enter such information for verification purposes. Note that there are procedures to access and use clients' personal data. Therefore, you should only submit personal information on a completely trusted platform.

It is imperative that you ask for a nondisclosure agreement and goes through it keenly. Otherwise, if the information lands in the hands of a conman, you risk losing personal data that can be used to access your financial records and can lead to defrauding.

5. Fake Copy Cats 

I remember back in the days when I was shopping for a Tecno phone, and someone was trying to sell me a Techno? The difference is not easy to discern, right? The same case in brokerages.

You might get a fake brokerage from a fake firm impersonating a popular trading broker. In other words, this platform pretends to be another legitimate broker. The frauds copy everything, including logos and names. Gullible users download the apps and software from unknown sources packaged as the official apps. 

Other scammers take their craft a notch higher by posing like MetaTrader. Remember. MetaTrader deals directly with brokerage firms which, in turn, offer the services to their customers. MT doesn’t have a communication line with retail investors. If you get a call or any communication from Metatrader, that is probably a scammer after your sweat. Only enquire about MT problems from your forex broker through their communication channels.

6. Valet Trading 

Rookie traders always have this fantasy of depositing money and harvesting profits. It is no wonder that they fall for a fraudster who promised them an easy ride. The scammers 

Convince you to make deposits and leave everything else to them, including trading activities. And that becomes the last time you will ever hear from them. Another red flag is if the broker asks you to make a secondary deposit before withdrawing. This is a telltale sign that you're throwing your money into a bottomless pit. 

7. Unclear Explanations 

 If you notice the broker gives you a vague explanation after rescheduling your withdrawal, you should be worried. They might even throw in jargon to confuse the traders. Common terms used to avoid liabilities include terms of use, risk disclosures, guaranteed profits, insider information, and automated program trading. 

8. Deposit a second deposit for withdrawal

Another common term is ‘deposit required for fund freezing” which means the management has frozen your account, and you have to make deposits to withdraw your money. If you come across these terms and proceed to make deposits, you might as well kiss your money goodbye.

You now understand characteristics that set apart scam MT5 brokers. But you should take the next step to determine whether a broker is a scam or legit. Below are the top methods to identify and verify legitimate forex brokers.

4 Leading Ways of Identifying fraudulent MT5 Platforms

Are you suspicious about a trading platform? If any attributes seem off, you should not proceed to make a deposit. Your money will be hanging on the line. First, ascertain the legitimacy of the site. Here is how to go about verifying the brokerage firm site.

1. Checking Website Domain Information 

After choosing to trade with a certain broker, the first stop before you sign up and make deposits is to query the information of the website domain name. Luckily there are a plethora of sites that check WHOIS data which verifies domain registration by checking basic contact information such as Email address, name, phone number, and technical and administrative contacts. Some of these sites include 



One of the telltale signs of a fraudulent site is a short registration period. In addition, you should check the registration location. For instance, FX margin trading is prohibited in mainland China. What does that tell you about a mainland registered forex trading website? Yes, you said it right. That’s a scam!

For instance, when we check Mitrade, we found a website that counterfeited it, and most people can't tell the difference. we all know Mitrade was founded in 2011. Therefore a “” site is definitely a den of con artists. You shouldn’t even touch it with a ten meters pole. 


The above pictures put into perspective how the imposters go about their business. The first pictures show a scamming website that impersonates Mitrade. But a closer look at the date of origin and country of registration will show you which is the correct website.

In addition, scams have privately owned phone numbers and email. A personified platform could have a subtle alteration that is not easy to identify. Next time you are looking for, do not consume with 

Download Mitrade forex app to practice your trading skills!

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2. Verifying Legal License on Regulatory Authority 

The last thing you want is to trade using an unregulated broker. It means you don't have a place to run to if unfortunate things happen. Say, if a broker refuses to process a withdrawal. Every country has a regulatory authority that monitors forex exchange. Some of the top regulatory authorities include: 

  1. Financial Conduct Authority (FCA) - United Kingdom 

  2. Australian Securities and Investment Commission (ASIC) - Australia

  3. Financial Service Agency (FSA) - Japan 

  4. National Future Association  (NFA) - United States  

  5. Swiss Financial Market Supervisory Authority (FINMA) - Swiss

3. Verifying the Firm Information 

Legit brokers' sites show important contact information, including email address, phone number, and address. But how do you confirm and prove its legitimacy? 

First, you might want to engage customer support. Do the responses show professionalism? The chat replies should portray high communication skills. You can also try to engage customer support via email. Reputable foreign exchange platform responses will be quite rigorous.

How are their Facebook posts and tweets? Ideally, legit will have consistent posts with active comments and normal frequency and engagement. You will want to avoid brokers with inefficient and unprofessional customer service. 

4. A Clear Description of Commission and Fees

The commission's charges should be clearly visible on the site. If the fees are confusing, you should take a step back and do the verification. Such brokers have hidden fees where they trap users. These charges eat away your profits.

Examples of Fraudulent MT5 Brokers' Sites

The following websites are all forex scam platforms notified by the public. Most of them use Internet (FB, IG) posts to commit fraud by adding LINE/Skype contact. 

Website name URL
Coinbase Pro
Financial IGM

Common MT4 and MT5 Forex Scams

Broker Scams 

MT4 and MT5 scam all boil down to broker scams. These involve unregulated brokers or those regulated brokers in some peculiar jurisdiction. This means that financial market regulators do not recognize them and hence can’t be held accountable. 

Below are other forex-related scams you should avoid. 

Investment Pyramid Schemes 

Again, these schemes bank on unrealistic returns. They entice investors with get-rich-quick investments based on forex. Essentially, you are told to make a deposit and receive up to 50% returns weekly. While forex is highly profitable, the returns are not guaranteed. Any person who promises fixed returns is probably a scam.

Pyramid schemes might ask you to bring new recruits to earn a commission. The more recruits, the higher the commission. They then close the pyramid when membership drops and vanish with your capital. The worst part is that pyramid can make you lose money and friends. 

Robot Scams 

Another scam involves trading with robots. Who doesn’t love free money? It is said that the wealthy make money while they sleep. This is one line that most scammers use. So they sell robots promising that they will make an exaggerated return on investment while you sleep. Some of these robots don’t live up to expectations and lead to massive losses in most cases.

Signal and Managed Accounts

Bordering robots scams is the managed account and trade signals. The scammer advises when to buy and sell, giving signals using manual or automatic messages. You are required to pay a subscription fee to get the signals. It is not uncommon to get wrong advice which leads to massive losses.

All said and done, the buck stops with you. You should exercise patience to avoid forex scams. 

Tips To Avoid Forex Trading Scams

Here are free tips to help you avoid falling into the pit of con artists in the forex market. 

1. Familiarize Yourself With The Industry 

You need to understand the nitty-gritty of the market and how the industry works, this involves learning the basics, which include fundamental and technical analysis and the role of regulators and brokers. Better still, you should understand how experienced traders trade and the best approach for trading.

2. Do Due Diligence 

Before you open an account, do a site domain search, its contact information, and adherence to the regulations. Read reviews to get experiences of the previous clients. In addition, you will want to compare the fees, spreads, and commissions. You shouldn’t necessarily go for the lowest feeds but the most realistic.

The scammers might offer low fees, but they might be luring you. The whole idea is to avoid hidden fees.

4. Trade With Regulated Brokers 

Strictly only trade with regulated brokers. There are various regulatory institutions, including CySEC, ASIC, and FSA. a broker that multiple institutions regulate is better. Check the broker in your region and ensure their policies protect your account. 

5. Try Out with a Demo Account 

Legit brokers like Mitrade have demo accounts that give you a sneak peek of the platform's trading experience. If a broker does not offer a demo account, they are probably a fraud. . Ensure there is no discrepancy between demo and real account.

6. Avoid Too Good to Be True Deals 

Forex trading has no shortcuts. You need tons of experience and knowledge. This means trying out various strategies year in and year out. Don't trust anyone who promises you to make massive, exaggerated profits. This industry is awash with scammers with too good to be true promises. 

7. Practice Risk Management 

Successful traders employ risk management strategies like using a stop loss. Without proper risk management, you risk heavy drawdowns. Choose a broker with negative balance protection. Otherwise, scammers could wipe your account clean and shift the blame to the market.

What Should I Do After Being Cheated By The Forex Platform?

1. Report to regulating institution.

For instance, Mitrade is registered in Australia. Here is how to make a complaint to ASIC about organization misconduct.

2. Warn your loved ones and the general public about the scam 

3. Contact your financial institution to cancel the transaction or close the account temporarily

4. Report to the authorities and find assistance from local agencies

5. Change online passwords to recover your identity 

6. Seek counseling and support from reputable experts 


From the techniques introduced in this article, you can find that as long as you avoid online dating, avoid talking about investments with strangers, do not download the software passed by others, and do not remit money,  you can avoid these potential forex frauds.

Most scams are actually very crude and suspicious at first glance, but people still fall for them. The reason is that our greed or fear overrides suspicions and is therefore exploited by scams.

The most important thing is to know yourself, don't expect a free lunch, be alert when you get greedy, and learn more about the right investment information, which is the right way to accumulate wealth in the long run.


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* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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