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Warning! Forex Trading Scams and Challenge Passing Scams

A Forex trading scam can range from fake trading bots and expert advisors to selling “holy grail” strategies. Use this guide to spot and avoid common Forex trading scams. We’ll also share tips for trading safely.

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Forex simulated trading has become a very popular niche over the years because of its high profitability—its turnover is around $7.5 trillion daily. You can make massive virtual profits if you understand how simulated trading works and follow solid trading strategies. However, this also makes the industry prone to scams. A Forex simulated trading scam can range from fake simulated trading bots and expert advisors to selling “holy grail” strategies.

Use this guide to spot and avoid common Forex simulated trading scams. We’ll also share tips for simulated trading safely.

Forex simulated Trading Scams and Challenge Passing Scams
Photographer: Faizal Ramli | Source: Shutterstock

Challenge Passing Service Scam

The challenge passing scam is exactly as it sounds—an agency or individual offers to take the challenge on your behalf. They aren’t selling you a strategy. Instead, they use your login credentials to access the simulated trading terminal and start executing trades.

These scammers ride on luck with a strategy of over-leveraging, taking multiple trades, and hoping a few will bring profit. If you visit their websites, you’ll notice they claim exaggeratedly high pass rates.

Some might say this isn’t a scam; rather, it gives you access to a large financial capital over time after investing a small amount upfront. However, it’s only meant to pique your interest and get you to fund the scam. So, before you take on their services, ask yourself this: if their pass rate is so high, wouldn’t there be significantly more funded traders?

How To Spot a Challenge Passing Service Scam

Here are five red flags to look for before enrolling in a challenge passing service:

  • They ask for money upfront.
  • It has poor reviews on Trustpilot.
  • They use a suspicious email address and domain.
  • It uses an over-leverage strategy.
  • If it sounds too good to be true, it’s probably a scam.

Remember, if the service loses the challenge, they have nothing to lose. You, however, stand to lose challenge fees as well as the service fees paid to them.

Forex Expert Advisor (EA) Scam

Another Forex simulated trading scam to look out for is the expert advisor (EA) scam. Scammers will try to sell you simulated trading bots or software that claim to generate consistent virtual profit.. However, the EA can’t deliver the promised results.

The keyword to watch for is “consistent.” Here’s why—the Forex market is dynamic. The average win rate is typically 30%. This means even the most successful traders win only about 30% of the time. EAs simply can’t be programmed to work in every market phase and environment.

Scammers will show forged results to impress you and get you to take the bait. They use persuasive marketing language, psychological tactics, and backtesting results to trick unsuspecting investors into purchasing the bot. So, before you blindly trust them, read their user reviews.

How To Spot an EA Scam

Knowing how to identify an EA scam will help you avoid it. Here’s what to look for:

  • Unrealistic Gains: EAs claim to generate unrealistic gains over a short period of time. So, watch for gains that regularly increase in position size. Given the dynamism of the Forex simulated trading market, no one can guarantee consistent results.
  • Trading Strategies: Be wary of EAs that have an overly complex simulated trading strategy. There are some good EAs out there, but those bots mainly use real, multiple signals. If an EA only uses one signal, or if its signals are less than a year old, they may be trying to scam you out of your money and time.
  • Action-Provoking Words: Watch out for claims of “insider knowledge” or “trading secrets.” Scammers use these words to build hype and create a sense of FOMO.
  • Too Much simulated Trading in a Short Time: Fraud EAs often use bots to trade rapidly, especially with the grid strategy. This strategy exposes the account to several risks, which can lead to major losses. What’s more, if these EAs aren’t using the Stop-Loss Order, they can’t protect you from losses and are likely scammers.
  • Opening and Closing Trades: EAs who close trades after seconds (scalping) or keep trades open for a long time generate impressive equity curves, but they aren’t applicable in the real world.

How To Safeguard Yourself From EA Scams

When analyzing an EA, look for their drawdown figures and avoid bots with high drawdown rates. You can also identify an EA fraud by asking them about their strategy. Many scammers will use technical terms to impress their targets and portray industry knowledge.

So, if you find an EA using risk-loving, money-making strategies like martingale, grid, or hedging, think twice before associating with them. These strategies are purely mathematical. And if there’s one thing an experienced trader will tell you, it’s that Forex simulated trading is never strictly mathematical.

In addition, when you see a strategy with a high lot size, run the other way. These scammers are slick. They’ll begin with a small lot size, such as 0.44 lot sizes, then shift to 8. Once the first successful trade is in, they again shift the lot size to a small number, only to raise it again to a high number. Using this system, they increase the lot sizes to thousands. A good EA will never expose its traders to such high lot sizes.

These bots use large lot sizes to pass the strategy tests. This makes them look like they’re coming from a big fund. It also makes their strategies look good on screen.

Challenge Passing Scams
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Forex Trading “Strategy” / “Holy Grail” Course Scam

You’ll see a lot of YouTubers and websites claiming they’ve found the “holy grail” Forex simulated trading strategy. They then sell it as an alleged foolproof strategy or system that promises to generate consistent virtual profit..

Here’s the thing—there’s no holy grail in trading. A strategy that works for someone may not work for you. Seasoned traders test and fine-tune their system for years. Even they will never claim to have found a “holy grail.”

No trader can predict the future, and no trader can guarantee a specific strategy will deliver results every time. Traders often fall for this scam for two reasons: they’re eager for a quick profit, or they’re feeling despondent because they’ve shown more losses than wins.

If you’re not seeing the simulated trading success you’d hoped for, the problem isn’t necessarily your strategy—it could be your mindset. Practice trading in the zone to develop a winning attitude.

How To Spot a Strategy Course Scam

Be skeptical of anything you see that seems too good to be true. Here are some other red flags to watch for:

  • Promises Guaranteed Virtual Profit.: When you see “Guaranteed Returns” on a social media page or receive a direct message from a successful trader promising results, don’t fall for it. Again, no one can deliver 100% results every time.
  • Big Cars and Luxury Lifestyle: Scammers also dupe people out of money by giving them hope of a better life. They post fake pictures of a glamorous lifestyle on their Instagram and Facebook accounts. But remember, you can’t always trust what you see online.
  • Zero Background Information: When you see someone making videos about cracking the code to trade secrets, check their background information. Unless they’ve found a pink unicorn, they’re likely not an experienced trader. Even the most experienced traders don’t make such claims, so don’t trust a new trader just because their YouTube videos look and sound official.

However, on the bright side, if you’re buying multiple courses, it means you’re in the “know more to win more” stage. You’re learning, analyzing data, and fine-tuning your methodology, and you likely have enough knowledge to succeed. So, focus on your trading psychology rather than strategy at this stage. Practice discipline and mindfulness to understand what kind of strategy will suit you.

How To Safeguard Yourself From Course Scams

Understanding the different types of scams out there is half the battle. As you learn more, you’ll be better equipped to separate the valuable strategies from the phonies.

Beginners and undereducated traders are scammers’ number one target group. So, the best move is to educate yourself. Learn enough about simulated trading so you can figure out when someone is trying to scam you.

Also, never share your personal information. The more scammers know about you, the more ways they can scam you. They may also steal your identity to scam others.

Forex Investment Fund Scams

The Percentage Allocation Management Module (PAMM) scam takes its inspiration from hedge funds. Because hedge funds are considered solid investment tools, investors rush to stake their money for higher returns.

These scams run on the authority and respect enjoyed by hedge funds. Simply put, scammers usually inflate the returns of the hedge fund. However, they’re offering nothing but false promises.

How to Spot PAMM Scams

PAMM (Percentage Allocation Management Module) scams are run by people with extensive market knowledge. They formulate scamming strategies that can easily dupe people out of their money. But there are ways to identify these scams:

  • Too Good to Be True: PAMM account managers are scam artists who know how to manipulate their customers. They make you believe you can achieve amazing returns that are basically unachievable. Keep an eye out for such promises. These scam artists will use your desire to make money against you.
  • Zero-Risk Trading: When you see someone offering a zero-risk investment, there’s no doubt it’s a Forex simulated trading scam. Every type of Forex market has some sort of risk, so don’t believe the zero-risk traders.
  • Governed by Regulators: Legitimate Forex traders and their organizations are regulated by dedicated organizations. When you come across a PAMM, check their website for this information. In addition, check the regulatory website for the name of their organization.
  • Valid Licenses: Check for the licenses they hold and their validity. A Forex simulated trading firm that has the required regulatory approvals will always display them prominently.
  • Ratings and Reviews: We’ll say it again: you can’t trust everything you see on the web—even ratings and reviews. Forex simulated trading scam artists can easily buy false positive ratings and reviews about their software. To combat this, check the ratings on authentic platforms and look for patterns. If some reviewers are using similar words or talking about generating large returns, they might be fake. Remember, no Forex simulated trading solution is foolproof, and not everyone will benefit from a single strategy.

How To Safeguard Yourself From PAMM Forex simulated Trading Scams

Protecting yourself from this scam requires an understanding of the scam itself and its operations. First, you must know the market. It’s easier to protect yourself if you understand the market and know how to read charts. You’ll then be able to call out a scam when you see one.

Next, check the management fees page. Specifically, look for their fees and internal costs. High costs probably mean you won’t get the results you want but will end up spending money nonetheless.

In the majority of these scams, you’ll deal with offshore brokers. These brokers put a lot of effort into making themselves look like experts in Forex trading. So, verify their credentials and information on legitimate websites. This will help you determine whether the brokers and traders are actual experts in this field.

Trading Signal Scam

Signals are indicators or recommendations that help you place better trades. Some traders may ask you to join a Telegram group to receive exclusive simulated trading signals. In exchange, they’ll charge you a weekly or monthly fee.

They’ll start by offering “free” signals to get unsuspecting traders hooked. Then, they’ll persuade you to buy their premium signal service. You’ll start receiving emails or notifications about a signal setup. However, these notifications will slowly fizzle out, and you’ll have no way to recover your money.

How To Spot a simulated Trading Signal Scam

If you’ve been approached with signal offers, watch for these warning signs:

  • Pressure Tactics: Scammers frequently employ FOMO tactics and push hard to sell their products. They’ll urge you to act quickly and will use manipulative techniques to exploit your desire to earn quick money.
  • Unrealistic Promises: Some signal sellers claim to generate 98% accurate results. That’s simply not possible. Anyone that guarantees extraordinary virtual profits is scamming you.
  • Lack of Transparency: Before buying a signal, see if the seller has peer reviews on third-party sites such as Trustpilot or Facebook. It’s easy to fake testimonials or give cherry-picked examples on personal websites, but third-party sites will have neutral reviews.
  • Lack of Credentials or Regulation: Do they have a license? If not, then they’re not professionals—just individuals looking to make a quick buck.

How To Safeguard Yourself From simulated Trading Signal Scams

This scam exploits greed. Scammers target inexperienced traders who are looking to make instant virtual profit..

And while not all signals are scams, they’re unreliable. You may get lucky and make some small virtual profits here and there. But anyone who says you can make consistent passive income with signals is scamming you.

If you want to become a self-sufficient trader, then avoid signals altogether. After all, if someone waits for a signal to tell them when to trade, it means they don’t have a strategy of their own. Test your strategies instead.

How To Shield Yourself From Forex simulated Trading Scams

You can protect yourself from this Forex simulated trading scam by being vigilant:

  • Don’t Believe Everything on Social Media: Don’t use social media to make simulated trading decisions. FOMO simulated trading is risky, so stick with your strategy. You’ll be tempted to invest, but look at the posts with an objective mindset.
  • Look for Red Flags: For instance, is the creator giving any sort of disclosure before, after, or within the content? Content with zero disclosure is the most suspicious, and you should stay away from it.
  • Know About Prices and Volume: Follow all the price movements of the currency or trade you wish to invest in. Its history will tell you a lot about the performance and help you extrapolate future trends.
  • Conduct Research: Never rush in to buy a trade or currency when you see people on the internet promoting the same. Instead, conduct research to see whether it’s a Forex simulated trading scam.
  • Set Stop-Loss Orders: Always set stop-loss orders to manage your losses. This will limit the activity of the trade, and you’ll be able to better manage risk.

Trade Safely With The Funded Trader

There are several reasons people fall for Forex simulated trading scams. They could be driven by greed or FOMO, or they may just be looking for shortcuts. But simulated trading is a long-term game. It requires hard work, discipline, and patience. Anyone who says you can generate virtual profit without any effort is likely scamming you.

To avoid getting scammed, believe in yourself and your strategy. You’re probably already a better trader than you give yourself credit for. Many traders give up if they feel their win rate is too low. However, real wealth is built with small, consistent virtual profit.. So, stay vigilant of scammers who promise windfall gains and keep focusing on your strategy.

To pass The Funded Trader Challenge, you’ll need a simulated trading plan you’ve tested multiple times. Kick fear and greed to the curb, adopt a winning mindset, and put your strategy to work. You have what it takes to pass our challenge on your own. Get started today.


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