Investing > Forex Broker Scams

Forex Broker Scams

Forex broker scams are all too common. With the right knowledge, you'll be able to know what to look out for — and ultimately protect yourself.

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Updated January 12, 2024

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.

Late last year, FBI raids netted their biggest catch yet – 47 illegal Forex operators who had already cost traders losses into the millions of dollars. Calling the raids their most “sweeping infiltration” to date, the FBI reported that “the 47” came from big banks, small banks, boiler rooms and even – wait for it – the Federal Reserve Bank itself.

The FBI also released a statement indicating this same type of fraud is ongoing in the Forex marketplace and likely has been for decades. What does this mean for you, the eager aspiring or active Forex trader? Is there any foolproof way to avoid being scammed?

Victims from this most recent widespread series of FBI sting raids included financial institutions of all sizes as well as individual investors. And sure, “millions of dollars” sounds like a fat haul even when split 47 ways. But consider this: the global Forex marketplace sees a reported $5.1 trillion in transactions daily. That is not millions, not billions – but trillions of dollars of transactions every single day.

With that many transactions crossing multiple international borders every which way every single day, it is easy to see why U.S. Attorney General James Comey told reporters that the waters are full of what he called “a lot of sharks.” Sharks, indeed. And very well-heeled sharks at that.

In this article, we are going to do our level best to equip you to spot and sidestep Forex scams. But it is vital to remember that for every new Forex trading safeguard put in place, somewhere out there is a crafty criminal who has nothing but time and is already hard at work calculating how to circumvent it.

With all of this scary stuff, you might be thinking — is forex a con? The answer is no, so long as you avoid the scams and con artists that are indeed out there. Here, we’ll give you the basic tools you need to do your own homework and verify the legitimacy of different Forex brokers. But it will be up to you to check each Forex broker up, down, end to end and all around before choosing who to work with.

Ready? Let’s dive in.

What Are Forex Scams? 🤔

So what are Forex scams? Forex, or the foreign exchange currency marketplace, is such an inherently risky and volatile type of investment that trading Forex itself has at times been called a scam. The least unkind thing investors say about Forex is that it is more closely related to gambling than to “true” investing. The most unkind thing is…well….unprintable here.

The Forex marketplace itself is characterized by each of the following:

  • Always open somewhere (at least five full 24-hour days per week)
  • Decentralized
  • Loosely regulated (at best)
  • Highly fluid and volatile

You can also think about the Forex trading marketplace this way: in the world of investing, if a savings account is a glacier, a Forex trading account is a towering active spewing volcano.

So what you absolutely have to know going in is that trading Forex is risky, risky, risky business. The marketplace itself could erupt and shower lava all over your finances at any moment. You also need to recognize that anytime you encounter an investment with high risks, you are also going to be coming face to face with the potential for high rewards.

Why do so many scam artists and fraudsters operate in the Forex marketplace? Because of this potential for high rewards, of course. And why do the criminally-minded seem to gravitate towards operating in the crazy-busy-volatile Forex marketplace, as opposed to other more stable and staid investing and trading platforms?

The best way to answer this question is with an analogy.

Imagine for a second that there is a high-value gemstone out on display in the middle of Grand Central Station in Manhattan, NY. There are guards stationed nearby to the gemstone at all times and every security camera in the place is pointed directly at it. And you are planning to steal it.

Would you rather walk up to the pedestal in the middle of the depot and swipe it:

a. When there are only a handful of commuters waiting around, or

b. When the depot is packed with crazed commuters running every which way?

If you chose option b, you already understand why the Forex marketplace attracts criminals like spilled sugar attracts sugar ants. It is a lot easier to make your getaway undetected when it is too crowded and fast-moving for lurking law enforcement or even security cameras tell who is doing what!

Speaking of sugar ants, remember the 47 scammers from our introduction here? Several of the individuals arrested told the FBI they had felt completely unafraid of being caught. They said they truly believed the cover of the hectic marketplace itself meant that law enforcement would never be able to track down their activities.

This tells you that Forex scammers tend to be very, very confident – in the case of the 47, clearly overly so. But we also want you to know is that this very confidence can work in your favor….if you know what to look for to tell the real Forex brokers from the fakes, scammers and fraudulent operators. Having said that, let’s take a much closer look at what Forex scams are as well as what they are not.

Some ask: Is Forex a pyramid scheme? Some would argue the connection isn’t too far off. But if properly regulated, Forex trading is not a pyramid scheme. A number of criminal activities are associated with Forex scams, however.

The FBI reported that many of the Forex scammers they picked up were being charged for a variety of crimes related to Forex scams and fraud, including these crimes:

  • Bank fraud
  • Mail fraud
  • Wire fraud
  • Securities fraud
  • Money laundering

Where Do Forex Scammers Operate? 🌐

The 47 individuals arrested by those undercover FBI agents worked at every level of the forex marketplace, including in all the following places:

  • Banks
  • The Federal Reserve bank
  • Other financial institutions
  • Intermediary brokerages
  • Fraudulent brokerages (“boiler rooms”)

Many Forex scammers netted in the big FBI raid were working inside banks and financial institutions as employees and using their protective internal position to conduct illegal Forex scams on the side.

What you need to learn from this is that often there are whole networks of criminals working together through whole networks of entities and institutions. For example, a deceptive Forex broker may be working with well-placed criminal partners in such places as traditional and online banks, other brokerages and the third-party transactional services used by each.

📚 New to forex? See our complete guide on forex trading.

How Forex Brokers Scam You 🛠️

Now that you are starting to get a clearer picture of the who and where of forex scams, let’s talk about the what and how. What are the different kinds of forex scams? How do forex brokers scam you?

There are two major kinds of forex scams: “traditional” scams and evolving scams. A helpful analogy here may be found in the field of data security. Back in the day, criminals really only had one choice if they wanted to steal sensitive data – break into the building where it was kept and nick the hard copy files!

Today, data breaches are announced nearly daily and nearly all of them are conducted online. Cybercriminals can steal sensitive data located half a world away without leaving their comfy couch. Traditional forex scams are the ones the FBI and many traders are more likely to be already aware of and on alert for. Evolving scams are scams that, well, evolve in response to changing technology and FBI raids. We will look at each type of forex scam in turn here.

Traditional Forex Scams ⚠️

Traditional forex scams come in a variety of shapes and sizes. It would be great if we just had a fake forex brokers list — or if we could tell you the worst forex brokers outright. Unfortunately, scammy Forex brokers are constantly changing their name, identity, and virtual location. The best bet is to watch out for scams — and here’s a list of the best known traditional Forex scams.

Stop Hunting Forex Scam 🏹

Stop hunting makes use of a common investment risk management tool, the stop-loss order. A stop-loss order isn’t just used with forex transactions. It is very common across a variety of asset classes.

In forex trading, a stop-loss order tells the broker when to sell a currency pair in order to avoid further losses. Stop hunting is a practice where unethical forex brokers will manipulate the price of the currency pair to trigger stop-loss orders into action. When a large volume of stop-loss orders are triggered at once, this creates an unnatural volatility in a currency pair.

The shady forex broker can then benefit from this manipulated movement of the currency pair while everyone else scrambles to regroup. Sometimes the stop hunting forex scam is also called the “market manipulator” scam.

Point-Spread Forex Scam ↔️

Like stop hunting, the point-spread scam is one of those “classics” that is found across many types of investment trading, including but not limited to forex.

The point-spread scam works like this: the brokers use the forex platform to artificially manipulate the point-spread between the bid and ask prices. This inflates the broker commission and eats up any profits realized by the unsuspecting forex trader. While the point-spread forex scam is no longer so prevalent as it once was, it is certainly not gone.

Signal-Seller Forex Scam 📡

The signal-seller Forex scam is another absolute classic and it certainly goes on outside of Forex circles as well. The concept of this scam is that there are “Forex experts,” whether human or automated, that know things about currency pairs, Forex trends and market movements (the “signal”) that everyone else doesn’t.

Why does this work well? In the past, the Forex seller was always a person. But when computers and then online Forex trading emerged, the seller evolved in kind. Today, the seller can be digital as well – a smart algorithm that is able to take historical and emerging data and synthesize it into buy/sell indicators to boost profitability.

So in some ways, the signal-seller scam is also a robotic forex scam (see the next section here for more on this). The scam comes into play when the naïve forex trader happens across one of these scam brokerages and believes they have found something unique – something that will help them beat the forex trading odds and make bank. This something is commonly referred to as a “signal” in the world of forex trading.

To this end, the scam brokerage website in question will usually provide “proof” in the form of trend charts, testimonials and/or forecasting “case studies” highlighting past tips with supposed excellent and profitable trading results. The forex trader will then be invited to sign up for the scammer’s signal service, with a corresponding fee.

Churning Forex Scam 💰

Churning is the practice of buying and selling large volumes of currency pairs on behalf of clients for the purpose of generating large brokerage commissions. SEC Rule 15c1-7 of the Securities and Exchange Commission (SEC) specifically makes churning illegal.

A big part of the reason scammers are not very intimidated by SEC Rule 15c1-7 is because it is very hard to prove there is churning going on. To that point, there is no set volume which separates high-volume forex trading from churning. Often it comes down to gathering evidence of persistent, consistent high-volume trading over a period of time.

Even worse, a forex broker will only gain entrée for churning-type behavior if a client authorizes that broker (such as by signing a discretionary agreement) to conduct trading on the client’s behalf. When this is the case, it is easy enough for the forex broker to claim they were simply doing their job and blame the always-volatile forex marketplace itself for the client’s losses.

Your takeaway here is that churning is hard to catch and even harder to prove. But if by some miracle it can be caught and proven, the scammer will face heavy fines and SEC sanctions. In the meantime, it will be up to you to find any means you can to cope with the losses churning has inflicted on your finances.

🪙 Note sure how commissions work? See our forex commissions and spread guide.

Evolving Forex Scams 🐒

As forex itself evolves, forex scammers evolve accordingly. Certainly the advent of online forex brokerages, automated digital algorithms and computer technology has created plentiful new opportunities for forex scammers. But you may be surprised to notice that only some and not all of the new and evolving forex scams revolve around manipulating technology.

Robotic (EA) Forex Scam 🤖

The robotic forex scam does piggyback off of the trend towards robo advising (investing through sophisticated online automated algorithms that are authorized to make portfolio changes on the client’s behalf). The robotic forex scam has a couple of different nicknames, including but not limited to the “automatic robot” and the “expert advisor.”

The robotic forex scam brokerage presents its own proprietary digital algorithm, complete with historical trends, market research studies, happy trader testimonials, flow charts, et al – all designed to convince the hapless forex trader that the algorithm knows something – in advance – that even the forex marketplace itself doesn’t know.

By the time the forex trader figures out that robot isn’t any better at predicting forex profits than anyone or anything else, those inventors will be long gone with the trader’s capital.

”Honeypot” (Guaranteed Returns) Forex Scam 🍯

The so-named “honeypot” Forex scam gets its name from the Winnie the Pooh children’s classic – the lovable bear who cannot resist honey. The honeypot can vary but most commonly it is a promise (often in the form of a guarantee) of high returns from trading Forex. By high returns here, we mean in the neighborhood of 20 percent or greater.

Of course, no one of sound mind who has read about, let alone traded, Forex for more than 60 seconds would believe this claim sight-unseen. The Forex fraudsters anticipate this, however, and often the honeypot scheme will come all neatly wrapped up in a set of very official-seeming charts, graphs and spreadsheets that supposedly “prove” these results are attainable and even predictable.

So the unsuspecting Forex trader signs up with the scam brokerage, opens a Forex trading account and starts trading, at which time all the “honey” disappears along with all the trader’s capital.

Forex Mutual Fund (PAMM) Scam 🖥️

PAMM stands for Percent Allocation Management Module. This forex scam takes its inspiration from the traditional managed fund model where a financial expert manages an aggregate of carefully risk-balanced investments.

In this spirit, the PAMM model introduces the unsuspecting forex trader to what appears to be a revolutionary new “sure thing” investing strategy. The trader’s own account is wrapped in with one or more additional accounts (which explains the nickname of forex mutual fund), giving all traders access to much higher potential profits.

Here, “much higher” usually means returns of 30 percent or greater. And here again, often the website showcases very convincing looking graphs, charts and spreadsheets “proving” these types of returns are possible.

The forex mutual fund also has its own expert fund manager, of course. And while the traders are awaiting their profits, the manager will be expertly making off with all of their combined capital, not to mention the extra gravy of imposed fees for so-called “fund management services.”

Deposit Bonus (or Double Bonus) Forex Scam 💵

As its name implies, the deposit or double bonus forex scam involves offering financial incentives for opening a forex trading account, placing a minimum number of forex trades, depositing a minimum amount of capital, opening a forex margin account or some other action.

This is technically another type of “honeypot” forex scam. The deposit bonus or double bonus is simply the jar of honey. The forex trader is the bee who is too far eager to get to the honey to bother to examine the integrity of the pot.

Ultimate Trading Tool (“Holy Grail”) Forex Scam 🎯

The “holy grail” forex scam gets its name from the Indiana Jones movie by the same name. The idea that you can search for and find the ultimate tool to ensure you will not fail at trading forex – forms the bedrock of the ultimate trading tool forex scam.

Here, forex scammers are targeting a) new forex traders, b) lazy forex traders, c) naïve forex traders.

New forex traders are often too inexperienced to realize there is no such “sure thing” system that can help them beat the odds and thrive in the most difficult and dangerous investing marketplace on Earth.

Lazy forex traders simply don’t want to do their due diligence to check the forex broker out, discover if there are any complaints from other traders, read the fine print – do what must be done to tell the real forex brokers from the frauds. Naïve forex traders are simply overly trusting.

🤔 Not exactly sure what a forex broker does? See our guide to forex brokers.

How do I Know if a Forex Broker is Real? 👍🏽

Now that you are conversant in the major categories of common Forex scams, it is time to turn our attention to ways to identify them…ideally before you get sucked in. Since the vast majority of Forex trading today takes place online, a good place to start learning to identify Forex scams is with the Forex brokerage platform (website).

Another great step to take is to do some digging to learn the history of the Forex brokerage itself and its current status in the greater global Forex marketplace. This list will give you the steps to take to analyze the Forex platform/website for red flags and do the same for the brokerage itself.

How to Know if a Forex Broker is Real ✔️

The very first thing to check for is accurate and useful contact information, company information and social media activity. First of all, you want to look for a physical address, email, phone number and active social media accounts.

But don’t just check that this information is there. Test it out. Verify that the physical address on the website belongs to the real brokerage. Call the phone number and send an email to see what happens next. Check the social media accounts to see if the company is active and responsive to questions and complaints.

You also want to check to see if the forex broker offers any data or information about its own inner workings – financial statements, historical data, disclosure statements, regulatory and oversight information can help you learn more about the company and establish that it is a legitimate firm.

You may not always find this type of information available, but if it is, you will then want to check it out and be sure it is legitimate.

Customer Service 📞

If there is one thing you can be sure of with a scam brokerage, it is that their customer support won’t be very supportive. A legitimate forex broker will want to cultivate and keep relationships with active traders and their customer service team should be accessible and responsive.

NOTE: Not all legitimate forex brokerages have excellent customer service and support, and some are much stronger in this area than others. But there should be at least some level of support offered and that support should be consistent and useful, rather than just giving you the runaround.

Registration and Licensure ⚖️

This is the number one thing to check for, especially if you are a United States forex trader. The United Sates maintains stricter standards for registration and licensure of the forex trading industry than anywhere else in the world.

Some forex traders think this makes U.S. traders unlucky, because there are much stricter limits for forex trading when you are a U.S. citizen and you want to trade on the forex marketplace. But other forex traders realize this is protective, because if you get taken for a ride by a scam forex brokerage that is licensed and registered in the U.S., you have some recourse to make your complaint and try to get your losses covered.

We have written about this in a great deal more detail here in another article. But for our purposes here, there are two major regulatory agencies in the United States as follows:

These two organizations maintain a centralized database of registered and licensed U.S. Forex brokerages called BASIC (Background Affiliation Status Information Center). You can visit the BASIC database using the link above here to verify that any Forex brokerage you are considering working with has been properly documented and registered to serve U.S. citizens who wish to trade Forex.

Commissions and Fees 🪙

When it comes to understanding how a forex brokerage makes its money, legitimate forex brokers want you to understand exactly where their income comes from. Scam forex brokers, on the other hand, want to keep the whole question shrouded in mystery. You should be able to easily find and understand exactly how the forex broker gets compensated for whatever services they are providing to you.

If you find yourself hunting for this information or getting redirected from one web page to another, or if you are talking with a human customer service representative or Forex broker and you are not able to understand what they are talking about, this is a good indication you may have happened across a scam Forex broker.

Account and Financial Transactions 💱

Another way that scam forex brokers will trap unwitting forex brokers is by refusing to release account funds or charging exorbitant transactions fees for the same.

Here is a common example: let’s say you are given an account bonus. You go to withdraw your bonus funds and suddenly discover there is no mechanism to do so. Or you are charged a fee that is nearly as much as your account balance to use the only withdrawal option that is given. Or you are told there is a “waiting period” before you are able to withdraw your funds. Or you encounter some variation on this same theme.

You want to know up front exactly how much (if anything) it will cost you to deposit funds, transfer funds, withdraw funds, invest funds, et al.

Communications, Confidentiality and Data Security 🔒

It nearly goes without saying and yet it is worth saying again: you should never ever trade with any forex broker that asks you to submit sensitive or confidential personal or financial information via email or online. Always check to see that the website is secure and protected (this information should be easy to locate as legitimate forex brokers want their customers to trust them).

Demo Account Option 💻

Legitimate forex brokers want new traders to understand how to invest on the forex marketplace with the lowest possible degree of risk. Toward this purpose, it has become common practice to offer traders what is called a “demo account.” You can think of this like a practice forex trading account. The account is typically populated with digital (fake) currency and operates exactly like the real platform would.

In most cases, you can use this free, no-fee demo account to practice trading forex for as long as you like, as often as you like, before you ever open up a real live funded forex account. In most cases, you can also keep your free demo account open and use it to practice-trade new strategies before you use those strategies with your live funded account.

If there is no demo account available with a forex brokerage, this is another warning sign you may have discovered a scammer instead.

Complaints (Active or Resolved) 🗣️

When it comes to evaluating whether a forex broker is legitimate or fraudulent, one of the best favors you can do for yourself is to take your question online. Do an internet search on the name of the brokerage and “complaints.” See what pops up. If other forex traders have been scammed or defrauded by a forex brokerage, you can be fairly certain they will post about it to warn other traders.

You can also check with the two organizations mentioned in an earlier section here, the Commodities Futures Trading Commission (CFTC) and the National Futures Association (NFA) to see if any complaints have been lodged against a forex broker.

Verifiable Claims ✅

Another excellent strategy to verify if a forex broker is the real deal or not is to check out any claims you see on the brokerage website. For example, let’s say that the forex broker’s website touts several awards they have won. Here, scam brokers are counting on new traders seeing those awards and assuming they are real and validating.

So what you want to do is check them out. Are the organizations that have bestowed these awards even real organizations? If yes, do they have any record of that brokerage on file? Some forex brokers truly are award-winning and with these, it should be relatively easy to verify in some way that the awards are legitimate.

But if you quickly reach a dead end while searching for verification, chances are good the only organization awarding honors on that forex broker is the forex broker themselves!

Incentives, Bonuses and Guarantees 👌

Remember earlier here when we were talking about how some forex brokers may offer you “honey” to lure you to open an account and start trading? This is not to say that a legitimate forex broker will never offer you incentives, bonuses or perks for choosing their platform. The forex broker industry is competitive and at times, it may make sense for the broker’s business model to do this.

But you should never work with a Forex broker that makes any type of guarantee. And if the bonuses or incentives the Forex broker is offering sound “too good to be true,” well you know what they say about that – if it sounds too good to be true, it probably is.

Unregulated Forex Brokers List ⚠️

Forex trading may be very risky, but it can also be very lucrative. But in order to have any shot at realizing the profits Forex trading can offer, you have got to slow down enough to do your due diligence and find an honest, reputable forex brokerage to trade with.

All that to say, you will not lack for options, even in the United States where Forex trading is more heavily regulated. In this section, we offer you the very latest information available as of time of publication regarding what we know about which Forex brokers to avoid.

NOTE: Compiling an unregulated Forex brokers list can be like trying to herd gerbils – a company may have multiple operating names or appear and disappear – and there may also be cases where a trader loses a lot of money and reports that they have been “scammed” when in fact they just lost funds. So when in doubt, always remember that working with a US regulated forex broker is always the safest way to go.

53option.comCrown ForexFerdinald HillFXGTradeMFM7 (MFM-Labs)OT CapitalTeraMusuTradePulse FX
AmegaFXCWM FXFixed Star Investment Inc.FXReturnsMt4InvestPaxForexTitanTradeTraders Trust Ltd. (Trading Forex)
AVA FXCyber Market GroupForex365OptionsGBCFXMultiplyMarketProFiForexTopStepFXUB4Trade (Finatex Ltd., Crypto Capitals)
BECFDDaxBaseForex MacroGCC InvestingMy Trade MMRealmarketsliveToptradesVantage FX
BFP MarketsEasy Trade FX (Easy Trade Global)Forex Pro BrokerHow to Pay (Macropay)Olympus Markets (Next Trade Ltd.)RefcoTorOptionVIP Brokers
BinomoECN CapitalFreshForexJoe Lewis TradingOptionCMRichmond InvestingTrade24Wise Banc (Orion Service EOOD)
BlueTradingEfexa-1000FX-PremiumKaya FX (GammaTech Services)OptionRallySchatz MarketsTradeBNPXtreamForex
CoperstoneEU CapitalFXCMMacropay (How to Pay)Osprey FXSigma ForexTradeFxPZurich Prime

If you’re not in the US, we recommend checking out the best forex brokers in Australia or the best UK forex trading platforms.

Do Your Homework – Trade with a Trusted Forex Broker 💯

Trading in the ever-fluid forex marketplace can be daunting enough without factoring in the danger of trading through a scam forex brokerage. So take your time. Join trusted online forums and ask experienced forex traders who have their ear to the ground what they may have heard about a forex broker you are considering working with.

If you do encounter scam forex brokers, be sure to file complaints and pass along what you have learned to help other forex brokers avoid losing money. When we all stick together and stay informed, we have a much better chance of giving our business to trusted, trustworthy forex brokers who deserve our business!

Which broker should you choose? Review our list of the best forex brokers.

Get Started with Trusted Forex Brokers

Average spread EUR/USD standard



All-in cost EUR/USD - active



Minimum initial deposit



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Demo account?
Social / copy trading?
Average spread EUR/USD standard



All-in cost EUR/USD - active



Minimum initial deposit



Total currency pairs



Demo account?
Social / copy trading?

Average spread EUR/USD standard




All-in cost EUR/USD - active




Minimum initial deposit





Total currency pairs




Demo account?

Social / copy trading?

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.