There are many different aspects of fraud that can happen in forex. For example, collusion trading is a form of fraud where people who work in the same company trade with each other to make money. Leveraging is another type of fraud where traders use their own money to buy or sell currencies without having the capital to do so. The amount of money lost due to these crimes is staggering and has led to the creation of multiple rules for regulation and oversight. Here are some ways that you can avoid being a victim of forex fraud.
Types of fraud
Collusion trading involves two or more parties trading with each other to make money in forex. It’s quite common among traders since they are used to dealing with one another. The way the scheme works is that one trader buys a currency at a lower price and sells it back at a higher price, making a profit. Some other traders will also join the collusion trade, but do not trade against one another to make money.
Leveraging fraud has nothing to do with collusion trading and is more specific to forex. Basically, it refers to a trader who buys or sells forex without having enough funds in his account. Usually, this is done by using borrowed money from a friend or family member. A percentage of the profit made during these trades goes back into the trader’s account so that he can continue trading for an extended period of time.
In either case, there are certain rules for conducting forex trading frauds on social media sites like Facebook and Twitter. When you post on these sites, you should be aware of certain requirements as well as rules pertaining to how much information you may share about your business and its products or services online. You should also be familiar with how people might react when they find out about your business
How to avoid being a victim
of forex fraud.
The first step to avoiding being a victim of forex fraud is by becoming familiar with the different types of fraud that will occur. There are four distinct types of forex fraud that you can avoid:
Collusion Trading – were traders who work in the same company trade with each other to make money.
Leverage Trading – where traders use their own money to buy or sell currencies without having the capital needed to do so.
Proper Identification – traders must have identification exactly matching the currency they are trading against, as well as identification showing they have enough funds to operate the account they use.
Scams – when you’re dealing with a scam, it’s important you choose an exchange that has a reputation for honesty and trustworthiness.
What is the difference between collusion trading and leveraging?
Collusion trading refers to collusion between traders. This is a form of fraud where people who work in the same company trade with each other. The reason this crime is so prevalent is that it’s very easy to do.
For example, you can easily arrange a meeting with someone who has access to your competitors’ computers and can remotely access data to manipulate prices and volumes. With collusion trading, you don’t need the help of anyone else—it’s all done on your end.
The second type of fraud that happens when traders use their own money is called leveraging or ‘margin.’ This refers to borrowing money from an existing trader, then using that borrowed money for currency purchases.
When you leveraged your money, what was lost? You personally lost $5,000–$10,000 in dollars over time by not getting as much return as you would have had through the normal course of trading.
These types of fraudulent activities are rampant because it’s relatively easy for traders to set up meetings with one another quickly and without having any substantial capital available for investments.
What are the different rules for regulatory oversight?
It’s important to remember that forex trading is a highly regulated industry. This means there are several rules for anyone who wants to participate in the forex market. The most common of these rules are the FX Futures Trading Requirements (“FTC Rules”) and the Foreign Exchange Market Practices and Procedures (“FED Rules”). These rules have been created in an effort to protect investors from potential fraud and market manipulation, as well as to ensure that you are dealing with reputable traders who are involved in legitimate businesses.
The following outlines some of the requirements that apply specifically to FX trading:
The client must be a US citizen or legally domiciled in another country.
Client authentication systems must be secure and follow all rules for client authentication (“CAS Rules”). Any system used for authenticating clients should meet this standard.
An “unregistered client” is someone who does not meet one of the following criteria: They do not live, work or maintain an office in the United States; they do not hold a license or certification issued by any agency of government; they do not reside within 50 miles of any financial institution, broker, fund administrator or dealer; they do not have an established relationship with any financial institution, broker, fund administrator.