Online Trading Scams

Retail trading is one of the biggest investment products out there. The internet was a defining invention of our time and it brought a host of opportunities to people to start investing without establishing close ties with brokerage service providers. Over the last three decades, the idea of retail trading became so ingrained in our collective perception of the world of finances that we don’t see it as something potentially dangerous.

While many people who start investing consider themselves financially educated, there are many hidden traps in online trading. Scammers have been proliferating in this domain just as well as respectable businesses.

Let’s talk about several commonly encountered online trading scams that you may come across when looking for investment opportunities on the internet.

Robot trading

While using automation in trading is a long-standing tradition, automation usually boils down to creating a series of relatively simple instructions that are based on careful technical analysis of the market. Automation is also used for some highly reliable strategies for value-accruing assets.

For example, Bitcoin holders employ DCA buying which is a way to reduce the overall cost of investment by splitting the sum of the purchase into small parts separated across a descending market.

However, you may come across an ad on social media or be approached by someone from an investment group on Facebook. They will advertise a robot that will make you money even when you sleep. You won’t need to do any research or put any effort into buying a monthly subscription or paying some money upfront.

In the vast majority of cases, these robots are nothing but a scam that will do nothing. The unfortunate thing is that some robots may work for a short period due to extremely favorable market conditions and “survivors” will tell a story of how they made money with a robot further bolstering the legend that scammers are trying to sell to their users.

Fake crypto exchanges

Many older markets are now tightly regulated. For example, the Forex industry is being closely monitored by many governments and does not have the same level of freedom it had just a decade ago. However, their place was quickly occupied by crypto exchanges. Many of them are reliable businesses that work with speculative assets and do not try to intentionally confuse their users. However, some are simply scams.

A criminal may give you a link to a new “hot” CEX platform where prices are too good to be true. Then, they will convince you to join the platform and use a promo code that will give you even more free stuff. Needless to say, you won’t be able to withdraw any money that you deposit.

Be careful when looking for an exchange. Read trustworthy reviews, talk with real users on various forums, and never register on platforms where conditions are just way too good.

Signal-sellers on social media

Some finance influencers are making living by selling signals and financial advice. While there is nothing wrong with selling your expertise, you should remember that these people are rarely educated or understand how the market works. They only brag about the money they have and tell you to follow their tips and pay for their advice.

These are the worst because you won’t be able to cancel payments made to individuals from card to card and proving that you were scammed is a tall task.

What can you do?

First and foremost, avoid any financial advisers and influencers if they approach you out of blue. Do not trust unverified sources and always do your research before investing.

If you were scammed, a good idea is to check with your bank whether you can cancel payments to scammers. It should be the first thing to do. Another option you have is to go to specialized companies that offer money recovery services. These companies can track down scammers and try to get your money back.