Top Four Ways a Person Can Fall For a CFD Trading Scam

Are you someone who loves investing in CFDs or thinking of hiring a broker to help you with everything? Well, in that case, you may want to be careful as CFD trading scams have increased over the years. CFD trading is something that’s great for earning good cash, however, it does come with a lot of risks. You need experience when it comes to CFD trading and also need the help of a professional CFD trader to help you out with everything. As we are all aware, the world is literally full of fake people, including scammers who run away with all your money. This is why many people end up losing all their investments in CFDs.

Now, if you’re someone who is interested in bitcoin CFD, forex CFD, and others, then you are at the right place. In this article, we are going to have a look at what CFD scams are, the different risks associated with CFD, and how a person can fall prey to CFD scams in different ways.  Sounds interesting? Keep on reading and learn to be careful in the future. It’s better to be safe than sorry!

In Chile, a surge in interest in CFDs triggered a series of alleged Ponzi schemes and a congressional investigation. Some individual investors made big losses

If you are someone who’s interested in Trading CFDs, then you’re definitely at the right place. We can give you the best practices in identifying red flags as well as help you in recovering your stolen money from scammers!

Table of Contents

What Is A CFD Trading Scam?

The world is moving quite fast, and people are always looking for amazing ways to make money. They use different platforms for trading. You must have come across an online trading ad as well.

Online trading is one of the best ways through which people can earn a good amount of money from their homes. The thing is that you can make money quite fast if you have good trading skills. Moreover, you will also have to invest a good amount of money before you start. However, one of the biggest issues people face in the world of trading is scams. CFD trading scams are happening all the time and people end up losing all their investments.

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Now, if you do not know how CFD works, let me explain it to you. Basically, CFD is one of the easiest ways to trade today and is quite famous as well. It can include different forms such as forex CFD, bitcoin CFD, indices CFD and others. The issue with older trading systems was that you could only trade in one market at a time, however, that has changed over the years. You can hire CFD brokers and trade in different markets at the same time. There is a reason behind this. CFD contracts are different from others and only allow one to trade the value of assets, not the assets actually.

Moreover, you don’t own the asset when you are trading a CFD. This way, you get to open your asset in different CFD trading platforms during the same time. People also compare CFD trading with future trading. CFDs are known to be commonly traded directly with brokers while on the other hand. Futures are traded on the stock exchange. However, people believe CFD trading is much more beneficial than futures as they are easily completed and do not have many entry barriers compared to futures contracts.

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CFD trading comes with its good share of pros and cons. For example, if you invest in CFD stocks and know how to trade, you can make good money. However, if you come across a scammer, all your money and hard work go down the drain. The catch with CFD trading is that you will need to be extra careful regarding everything. 

There are many different ways you can face a scam such as fake trading bots or a fake broker. The most common scams people face is through brokers who don’t do anything for them and run away with their money.

This is why when it comes to CFD investments and investing in stocks CFD, then they must do thorough research and be extra-careful regarding each and everything. Many people are safe from these scams as CFDs are illegal in some parts of the world. Also, another scam is that there might be some hidden CFD charges if you have a look at your financials in detail. There are scams during CFD auctions as well.

Some Major Risks of CFDs

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CFDs, known as contracts for differences are known to be arrangements that are made in the futures contracts, and the differences in settlement are actually made through cash payment instead of the physical good itself.  These are known as leverage products. This actually means that there is a huge possibility that one should actually make good money through a small initial investment in the beginning.

Sure, CFDs do seem quite beneficial. However, there are many risks associated with them as well. For example, counterparty risk is one of the most common ones. The counterparty is known as the company that provides the asset in financial transactions. When you are buying or selling a CFD, the asset being traded in the contract that is issued. This way, the trader is exposed to the provider’s other counterparties that include different clients. The risk associated with this is that what if the counterparty fails to fulfill all required financial obligations?

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If the provider does not meet the financial obligations, then things go out of hand. The value of the asset is no longer relevant in such a situation. It must be highlighted that the CFD industry is not highly regulated and when it comes to the broker’s credibility, it is actually based on reputation as well as the financial position. Moreover, there are amazing brokers out there. You just need to do your research.

Another risk is the market risk. CFDs are derivative assets that are used by traders, just like stocks. If one is sure that the value of the underlying assets will increase, the investor chooses a long position. On the other hand, if they believe the value will decrease, they will go for the short position. You can only wish and hope that the value moves in the position you hoped for. The decision you made cannot always be right as the most experienced investors can also be wrong at times.


Now, there are different risks associated with this. For example, changes in the market conditions, government policies, quick changes in the law, or any sort of unexpected information can end up having a huge impact on the decision you made. If the condition affects the asset, then the provider may demand a second margin payment. If you cannot do that, your position is sold by the provider, or you might have to end up selling at a loss.

Moving on, there are also client money risks associated with CFDs. In countries where CFDs are legal, the client money protection laws make sure to protect the investors from any harmful practices by the CFD providers. If things do not go right, the person who didn’t play by the books has to suffer the most. Other risks also include liquidity risks and gapping. 

Market conditions change from time to time and end up increasing the risk of losses. When there aren’t a lot of trades being made in the market, one’s contract can actually end up becoming liquid.  In such situations, the CFD provider has the right to ask for more payment or close contracts at a lower price. Remember, everything has its own share of pros and cons and CFDs do come with a lot of risks. You just need to be smart, play by the books, and try your luck!

If your money was stolen from an investment scam then contact us to help you get your money back!

Do you suspect that someone had scammed you?

If you have any suspicion of a scam or phishing attack, then you can rely on EZChargeback to help you with protection, mitigation, and fund recovery

You will feel safe knowing that experts with years of experience will be guiding you!

Top 4 Ways A Person Can Fall Prey to CFD Trading Scams

Some of the ways people fall prey to CFD trading scams include:

1. Fake Trading Bots


This is one of the most common ways people fall prey to a scam in the CFD industry. The scammers will explain an online software to you that is designed to help you make money. They will ensure you that the software is simply amazing, comes packed with the best features, and ensures safety features as well. They tell you that the software is a trading bot that will trade on your behalf making you free from any hard work. They tell you that the trading bot is absolutely amazing and ensures to make the right trades.

They also say that the software is made with the input of professional traders and at the request of clients so that trading could become easier than ever. Now, in reality, there is no such thing at all. It is not possible for trading to work like this. So, when you sign up, the fees you pay actually go to the fake broker and you end up losing your money again and again.

2. Brokers Value Commissions Instead of Spreads

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Now, one of the best scams out there is when brokers value commissions overspreads. So, the concept is that when it comes to spreads, these are actually known to be the differences you see in the buying and selling prices of the assets when you purchase them from the broker. When you are purchasing an asset from a broker for $2, you won’t be able to sell it back for the same price. When you’re selling it back the broker will pay you around $1.09 or something, and that is how brokers make money from the trades you make.

When a broker prioritizes commission instead of spreads, this is when you will pay more money on trades than you should actually. The entire profit you make is lost on spreads or commissions if your broker isn’t going the right way. You find out later that the money you were paying was a huge one and wasn’t really required in the first place.

3. Regulations on Withdrawals

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When you are signing up with a broker, you need to open up an account. Now, when adding funds in the account, you will not have to provide a lot of information regarding yourself, but scammers make sure you give them extra information to withdraw funds that weren’t really necessary in the first place. The money actually belongs to you so there shouldn’t really be any issues. What brokers do is that they make it impossible for one to withdraw money from their account with policies that make no sense at all!

These brokers ask you to add so much information regarding yourself and then, later on, make an issue when you are withdrawing your own money. Remember, the fake ones will do anything in their power to ensure you do not get the money you are owed. These brokers know how to play it smart.

4. Cash Deposits

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We live in an advanced world where everything around us is digital. No one makes cash deposits nowadays. Moreover, the latest regulations do not allow brokers to get money through cash deposits. Now, a scammer will convince you to cash them when making your first deposit in order to make a trade. They also try to persuade you to send the money through methods that cannot be traced. Moreover, even if you have some sort of proof that you sent the money, the broker can always make the excuse that there was no money received at all. This is why you need to make sure not to make a cash deposit ever in your life when it comes to CFD trading.

Stay Safe from CFD Scams!

Here comes an end to our article regarding CFDs. By now, you must’ve known what CFD scams are, the different risks associated with CFD and so much more. We also had a look at different ways you can fall victim to these scams. Remember, you need to be careful when involved with CFDs. The investment isn’t that small, and you need to be alert at all times. Choose a broker that seems like a trustworthy one and do your research thoroughly. You never know who might be scamming you and might get away with your money. Be careful and play smart!

do you need help?

A lot of those who contact us have questions and concerns about their personal and business data being compromised. We aim to arm you with the legal and technical know-how in the fight against scams. Also, we will be able to refer you to top scam recovery agencies.

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