Avoiding Forex Broker Scams

Category: Broker Guides | Author: Trading Brokers | Date: November 18, 2022

With online forex trading becoming more and more popular as modern technology evolves, there are unfortunately forex scam brokers coming and going all of the time. Not only do they give the industry a bad name, they can also make the safest forex brokers look bad. I have seen scam brokers copy websites and steal license numbers to try and pass off as another regulated broker. If you are considering a particular broker, this guide can help you to try and avoid getting caught out by a forex broker scam.

What is a forex broker scam?

A forex broker scam can come in many shapes and forms but always has bad intentions. Anyone who is running a forex scam is trying to either steal your identity, money or both.

There are levels to scam brokers, some will just outright keep your money and disappear. Then there are the others who may provide a subpar forex service with the intention of making it extremely difficult for you to trade successfully.

The typical forex broker scam involves a criminal setting up a website and pretending to offer forex trading services to unexpecting customers who sign-up and make deposits. The forex scammer will then keep the funds and ignore the person who they have just ripped off. This is an outright robbery.

Some forex scammers will take things a step further and actually setup a forex brokerage company and provide you with a whole host of forex products and services including a trading platform where you can buy and sell currency pairs.

They may look good on the service, but these scam brokers can do a whole host of things to give you a hard time, including increasing spreads and slippage. This can cause a potential winning trade to turn into a losing trade.

Once you get fed-up of the inconsistencies and try to withdraw your funds, they will stall you with all sorts of poor excuses until you either give up or take further action. When enough clients do that, the scam broker can just close shop and vanish from the face of the earth.

What are fake forex brokers?

Fake forex brokers are those who pretend to provide honest forex trading services but only have one thing in mind, to rip off clients. Some of them may seem transparent on the surface, but if you do enough dig you might find that you are in danger of becoming another victim.

I like to use my gut instinct and having conducted so many broker reviews over the years, there are some clear and obvious signs to look for to spot a fake forex broker. The problem is that the older generation or those who may not be as computer savvy, can often fall prey to forex scammers.

How to avoid forex broker scams

In order to try and avoid broker scams, there are a few things that you can look out for to see if a forex broker is legitimate. Whilst this is not an extensive list, it can help to narrow down your choice to forex brokers that can be trusted.


This is the most important thing on the list. In order to provide forex trading products and services, most brokerage firms will need to be regulated. Yes, there are unregulated forex brokers who have been in business for a while and do provide a genuine service.

However, trading with a regulated forex broker can give you protection should something go wrong. It also means that the broker must comply with strict rules and regulations that have been put in place to protect investors.

It can also cost a lot of money for a forex broker to get a license, depending on the jurisdiction. Offshore forex brokers can get a license for a few thousand, but a broker looking for top-tier regulation may need upwards of 6 figures. If a broker is willing to fund having a license, this can be a sign they are serious and have some financial power backing them.

Broker Reviews

There are plenty of broker review websites, including this one. You should read up about a broker as much as possible from various different sources to confirm what the general consensus is.

If there are numerous people stating that they had problems with the trading conditions or withdrawing funds, this may not be a coincidence. On the other hand, thousands of positive reviews from genuine users can be a good indication they are an honest broker.

Just keep in mind that it is possible for brokers to share false information to try and boost their reputation or harm competitors.


You can check to see if the broker is working with any other related companies and the sponsorships they have. Whilst this is by no means any guarantee that a forex broker is not a scam, it can help to build some trust if they have deals in place with big players in the financial industry.

If they have managed to negotiate deals that would have gone through an extensive due diligence process, they are either very crafty or just running a good business.


This is something you might not expect to be a warning sign, but if a broker only accepts cryptocurrency payment, there could be a reason for this. Maybe they want to remain anonymous or cannot negotiate a deal to accept other forms of payment. If the broker was to take down their website and close shop tomorrow, it may be extremely difficult to trace the funds back.

Broker Type

The type of broker is a tricky one because there are brokers who use a dealing desk such as market makers that are regulated and provide a top-class brokering service. However, if the broker is unregulated and is not using no-dealing desk execution, they could interfere with your trades by delaying them and giving you unfavourable bid/ask prices.

This can have a huge impact on your trading strategies, especially if you are scalping where you only make a few pips per trade. I wouldn’t personally want my broker taking the opposite side of my position but this is a possibility with dealing desk forex brokers.

Some trading brokers might even “stop hunt”, which basically means they will look to trigger your stop loss by creating artificial price movement. I have checked different broker charts at same time and seen price reach different levels. Whilst this can be down to the liquidity providers that they are using, it may also be a sign of a broker taking out client stop losses.


You will come across forex brokers that nobody has heard of and there are brokers that are household names. If a broker has been around for more than 10 years and is considered one of the top brokers by professionals, I would probably have much more confidence trading forex with them than I would with a broker that was established last month and has no history whatsoever.

Being a newcomer does not automatically make a forex broker a scam, but I have seen so many come and go over the years. I don’t see why I would use a brand-new broker when there are plenty of other options to choose from.


Poor customer support can be a sign that a broker is not to be trusted. Many brokers provide 24/5 support, but if you send them a question and do not hear back, that may be your first warning sign that they are not a company you want to deal with.

If you do get a response and it feels overly pushy or contains lots of poor English, you might want to look elsewhere. Even if a broker is not a scam but come across as rude or unhelpful, I would still avoid them.

One thing that infuriates me is if you provide a broker your phone number and they keep pursuing you to make a deposit. This is a huge red flag from my experience and I have followed up on such brokers after months to see that they were indeed running scam brokerage firms.

How do I know if I have been scammed?

If you think you have been scammed by a forex broker it should be pretty obvious. If you find that all of your trades are incurring high spreads and slippage, that could be a warning sign. The big giveaway is if you try to make a withdrawal and do not receive your funds. If that was to happen and you are using an unregulated broker, you could be out of pocket.

What can I do if I am a victim of a forex scam?

If you have been an unfortunate victim of a dodgy forex broker, you might have to chalk up the loss and take it as an experience. It sounds harsh, but if there is no regulation and the broker is located in a different jurisdiction, recovering funds could prove to be a long and expensive process without any success.

There are companies who specialise in recovering funds from forex broker scams. You will need to pay them a fee which may not be worthwhile depending on how much you have lost to the scam. Ironically, I have even seen scammers posing as recovery companies to try and take further advantage of those who have already suffered at the hands of a scammer.

What are the other forex scams?

Unfortunately, it is not just forex broker scams that you need to be on the look out for. There are other types of scam including forex robots that are poorly developed and forex signal providers who post a fake forex lifestyle on social media to attract wannabe traders.

Whilst not all of these are forex scams, it is an area in which scammers operate by claiming you can make a specific amount of money over a specific amount of time. Ask yourself this basic question, if someone is making millions trading forex, why would they be selling you a service.

How to avoid forex trading scams

I would personally avoid any forex service that makes any sort of claims or guarantee about how much you can earn. One thing I have learned over many years in the forex industry is that nobody can predict with absolute certainty what will happen in the forex market so watch out if someone claims they can.

I don’t think anything can beat learning how to trade forex by yourself. That way you just need to worry about finding a good forex broker that is regulated, well established and has client’s best interests in mind. You can always trade on a forex demo account to begin with so you don’t need to take any risk until you feel confident enough to do so.

Who are the most trusted forex brokers?

Now that you have an idea of how forex scam brokers operate and what to look for, you will see a list of our most trusted forex brokers based on our years of experience. We have considered regulation, trading conditions, year of foundation, support and more.

Min. Deposit
Max. Leverage
AvaTrade Review





Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
IG Review





71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Pepperstone Review





Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
IC Markets Review





Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
XM Group Review





Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
City Index Review





69% of retail investor accounts lose money when trading CFDs with this provider.
Markets.com Review





79.90% of retail investor accounts lose money when trading CFDs with this provider.
Forex.com Review





69% of retail investor accounts lose money when trading CFDs with this provider.
Plus500 Review





80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Admirals Review





Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

Conclusion: are forex brokers safe?

Yes, there are lots of safe forex brokers out there but you should stay alert and try to avoid any company that is showing the obvious signs of being a scam forex broker. It is not fair to say that all brokers are scammers because this is not the case. Even if a broker takes the opposite side of your position and you keep winning, they should still have enough losing traders to compensate.

If you follow the steps contained within this guide, I think you can reduce your chances of being on the wrong end of a forex scam. Just keep in mind that even the best forex brokers in the industry could run into problem just like any business can. As the old saying goes, never risk more than you can afford to lose.

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