Day trading has become an popular means for people to gain additional income and even full-on careers. Along with forex and binary options, many brokers also offer CFD trading. It is perfectly legal and it provides multiple benefits which is why so many investors practice it.
CFD (Contract for Difference) trading allows traders to speculate on price movements in a wide range of markets, including stocks, indices, commodities, and currencies, without actually owning the underlying assets. CFD traders enter into contracts with a broker, agreeing to exchange the difference in the price of an asset from the time the contract is entered into to the time it is closed. If the price of the asset moves in the trader’s favor, they can make a profit, and if it moves against them, they will incur a loss. CFD trading provides traders with access to a wide range of markets and the ability to trade with leverage, which can increase potential profits but also increases the risk of loss.
Though CFD trading is perfectly legitimate if done with a regulated broker, scammers exploit its popularity and use it as bait for their money-grabbing frauds.
How CFD Scams Function
Criminal organizations have the ability to easily and cheaply set up fake sites posing as trading platforms. They churn out fraudulent and unregulated brokers that copy the design and content from other reputable web pages. They often use misleading advertisements and fake endorsements to lure in unsuspecting victims.
CFD scams typically operate by promising investors high returns with little to no risk. They justify this by promoting unrealistic trading conditions, fantastic software, or insider knowledge. This is all fake and its purpose is to entice the victim to deposit their money.
In the beginning, the scammers maintain the charade that the target is generating profit. They achieve this by presenting a fake state of the market with fabricated numbers and graphs. Additionally, scammers employ high-pressure tactics, emotional manipulation, and FOMO to trick their depositors to give away greater sums of money.
The moment an unsuspecting victim tries to access their money they discover they can’t withdraw their investments because they are required to pay steep “ transaction fees”, or there seem to be technical difficulties. Eventually, the scammers will disappear with the victims’ money, leaving them with significant losses
CFD Trading Scam Warning Signs
Truth be told, there is a vast number of fraudulent brokers online. However, if you are interested in CFD trading, that shouldn’t discourage you. You need to practice extra caution when choosing your potential broker, and for that reason, we provide you with the most common red flags. If you notice several of them, chances are you have stumbled upon fraud and you should stay away from it.
- Unrealistic trading conditions
- Difficulty in making withdrawals
- Transaction/withdrawal fees
- No regulation or registration certificates
- Regulation in offshore island countries
- Consistent winning
- A private assistant directing trades
- Negative reviews on review platforms
- Risk-free binary options advertised on social media
- Promoting state-of-the-art trading programs
Don’t Let CFD Trade Scammers Win
Fraudulent organizations are constantly looking for new ways to deceive investors, and sadly even the most cautious investors can end up falling for a CFD trading scam. Many fraud victims are unaware of their rights so they lose hope and suffer silently. However, there is a way to alleviate your monetary loss.
For this reason, we have compiled a step-by-step guide which will empower you to go through the process of self-recovery. Our team of seasoned veterans in fighting scams has created an effective tool which will help scam victims achieve reimbursement of their stolen money.
