The online trading market is one of the largest and fastest-growing financial markets in the world. However, like any other market on the internet, the online trading market is also wary of scams which call for caution. One of Deriv.com’s core values is integrity, and this involves educating all of our traders on how to identify trading scams and protect themselves from it.

Trading scams are more common than people think, so it is important to get familiar with different types of scams and how to avoid them.

Types of scams:

Unfortunately, scammers use many ways in the online trading market to steal money. Some of these ways include the following:

  1. The signal seller scam: This is one of the most common types of scams in the trading market. A signal seller would offer to sell you a system that could allegedly signal favourable trades and make you rich. Signal sellers promote their system by displaying their experience with binary options and trading platforms. They encourage the trader to pay them with a promise of a significant profit in return. However, real signal sellers do exist; they do not promise guaranteed returns and might have independently audited records that are not hard to track down.
  2. Pump & dump: This practice transpires when scammers begin to spread false news in the online market about the value of certain assets such as cryptocurrencies, stocks, etc. Rumours are mostly spread regarding the value of an asset increasing soon, and this leads to traders buying the asset, causing the value to shoot up. Once the value has increased, the scammers sell their assets and enjoy the profits while the traders are left to deal with the crash. This practice mostly takes place in cryptocurrency markets, but fortunately, it is extremely difficult to execute in the forex trading markets.
  3. Other forex scams: Other online trading scams are brought about by the famous High Yield Investment Programs, false bots for traders, and other Ponzi schemes that promise traders high returns.
Avoid Trading Scams
Beware of Trading Scams

With all the scammers on the online market, we need to take every precaution to avoid falling in their trap. So how to distinguish the genuine online trading platforms from the scammers? Here are Deriv.com’s recommendations:

  1. Regulation: Always make sure that the trading platform is regulated. Various regulatory bodies oversee online trading platforms. For example, Deriv.com is a part of Binary Group which is licensed and regulated by the Malta Financial Services Authority (MFSA), Vanuatu Financial Services Commission, British Virgin Islands Financial Services Commission and by Labuan Financial Services Authority.
  2. Verification: All regulated trading platforms make it compulsory for traders to verify their personal information. Traders undergo a very strict verification process where their documents and identities are thoroughly checked to authenticate them. For example, Deriv.com requires documents such as a passport or national ID as proof of identity and utility bills and bank statements for proof of address. The process of authentication varies from country to country.
  3. Too good to be true: If an advert or person encourages you to join an online trading platform, and the high returns being promised, seem too good to be true, trust your gut and avoid the trap! Trading platforms do not promise to double your money or bring you high profits.
  4. Privacy: Never give out personal information after verification! Once you are verified as a trader, the chances of the online trading platform asking for personal details that you have already submitted are very slim. If this happens, chances are that the details are being obtained under false pretences.
  5. Customer care: Genuine trading platforms will always be ready to answer your questions and resolve your issues. They will have listed multiple ways to contact them.
  6. Proven track record: Every trusted platform will have a history and a base from where they began. For example, Binary Group — the owners of Deriv.com was founded in October 1999 and has registered over 1 million accounts since then.
  7. Research: There are few things every trader, whether novice or experienced, should check before depositing any amount of money or trading. Research is essential in order to differentiate between an authentic trading platform and a scam. You must browse the web, read reviews, be active on different trading forums, and the like, before investing in any trading platforms.

Following the above recommendations will help you avoid scams, but there are no guarantees. Sometimes, traders do get trapped in these schemes. In such cases, their options might be limited, but here are some things that can be done:

  1. Read through any and all documents exchanged between the trading platform and you.
  2. Find all the red flags that point towards the scam. This information can be used as proof with banks, lawyers etc.
  3. Contact your bank, stop any further transfer of funds, and block the scammer’s access to your account.

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