As in most other kinds of businesses, there are plenty of scams and frauds being committed in the forex market. Most law enforcement agencies, as well as regulatory agencies, know all about these frauds and their origin. But remember only by making contact with all the persons connected with the scam or fraud will you be able to obtain results.
A steep rise in forex scams and frauds has been seen in the last few years. Forex market traders would always beware of the investment frauds or scams by people in the organizations that sell foreign currencies, as well as brokers dealing in commodities who make tall claims that clients can literally earn cool amount without taking much risk. If that sounds like a false promise -- that's probably what it is.
In America, United States Commodity Futures Trading Commission (CFTC) is the federal agency which regulates trading in commodity futures, forex currency, as well as options contracts. It acts against companies it suspects to be selling forex currency in a fraudulent or illegal manner.
Ways in which you can be defrauded:
Stop Hunting/Running That's Immoral: Forex brokers always advice on proof-less fact that you will hardly face any stop running in this market. This fabrication is the boldest and biggest claim of them. In fact the truth of the matter is that there exists much more forex stop running than there is in futures. The stop running in this market is possibly the same as in the equity markets.
Suspicious spike: Sometimes, on the chart of a broker, there's very fast increase in candlestick when there's nothing taking place on another's chart. Indicator like stop-loss is prompted mainly to give indication of that dubious spike.
You'll be banned for winning too much: You must have heard that winning frequently in forex can cause you to be banned. Win too much and be barred in Forex, you may ask yourself. But it's true.
Leaning: Brokers claim they charge you a three-pip layout when trading the well-known pair of currencies. But the pips they are making may run into double digit figures, for example 10 or even more. He skews the price to do this. As you are not conducting your trading at an exchange, your broker can proffer you any price he wishes to.
Skewing quotation of prices: Commonly, brokers in the forex market lean prices. The broker is capable of just giving you the currency price as quoted by the bank he uses to trade. Different banks have different currency pricing structures. You will never get to know what the true real price is, in the absence of a central exchange where all prices flow through.