How to Spot a CFD Trading Scam

The online world moves at a breakneck pace, and it is only becoming more so with the passage of time. Millions of people from all over the world are now actively trading on a variety of online trading platforms, and this number is growing every day. It’s possible that you’ve come across a few online trade advertisements yourself. People have the opportunity to make money from the comfort of their own homes through online trading.

It is important to note that the most advantageous aspect of this particular activity is that you can make money quickly if you are skilled in trading. Not to mention the fact that you will not be required to invest a large sum of money before you begin to see a return on your investment. However, the most serious problem with the internet trading market nowadays is that there are several CFD trading scams to be found.

With the vast variety of ways people are getting scammed by different tools through the internet and its different forms, it is important you learn about CFD trading, how to spot a scam and how to protect yourself from getting scammed. Continue reading this article to learn more!

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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

CFD Trading Scams and How to Spot Them?

What is CFD trading?

CFD trading is the most popular and easiest to use type of trading format available today. The ability to participate in many financial markets at the same time is available to people from any country. Previously, you could only trade in one market at a time, which was a constraint of the traditional trading method. 

Alternatively, when you register with an online CFD broker, you will have access to a wide variety of financial markets. Due to the fact that CFDs are contracts for difference (CFDs), which means they are derivative trading vehicles that allow you to trade the value of assets without actually trading the assets themselves, CFDs are particularly popular among investors.

forex chart

When you trade a CFD, you do not acquire ownership of the underlying asset. This means that you will be able to open orders in many marketplaces at the same time. Stocks, commodities, indices, and a variety of other financial instruments are among the most popular and well-known CFDs available today.

CFDs, which are genuine investments and trading instruments, are not the source of the difficulty. They operate on the assumption that you trade using leverage and that your profit and loss are determined by the difference between the opening and closing prices at which you trade. CFDs are a high-risk investment vehicle that allows investors to speculate on liquid assets such as currencies, indices, stocks, commodities, and interest rates. 

They have been around for decades but have only just begun to become more widely available due to increased demand. It was only available to clients with a net worth (excluding their principal residence) of at least £100,000 and substantial experience in high-risk investing.

Gold Coins

CFDs were made available to them. The fact is that CFDs were essentially self-regulated at the time. Because it took weeks to start an account, you had to fill out paper paperwork, mail-in identification, produce financial documents, and maintain a minimum account balance of £10,000 before you could be assigned an account number, all of which added up to a significant amount of time. However, anyone can now register an account and begin trading CFDs within a matter of minutes, if not seconds. 

When you want to withdraw money from a bank, AML checks are performed (leading to loads of complaints about clients claiming brokers are refusing to send their money back).

CFDs are available to everybody, which means that anyone can trade them. However, just because anyone can trade CFDs does not imply that everyone should do so.

How do CFD trading scams work?

investment on phone

In some circumstances, this is done in order to create a higher fee on each trade for them. In films such as Wolf of Wall Street and Boiler Room, these were the types of frauds that were perpetrated. In the worst circumstances, CFD scammers attempt to trick their victims into intentionally losing money. Scam CFD brokers make money by intentionally enticing their clients to deposit money and then losing money by failing to hedge their clients’ positions. This implies that the deals are fictitious and that they are functioning more like a bookie than a broker in this situation.

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!

1. Fake trading bots

When these online scammers approach you, one of the methods they use to gain your trust is to make a pitch about some online software that they have developed to assist you in earning money online. They talk about this great software, which is allegedly a trading bot, that can trade on your behalf and ensure that all of your trades are profitable, which they claim is available for purchase. A common starting point is that a software developer was instructed by corporate clients to create a software product that would make trading more convenient for them.

person with chart onhand

It is common for this developer to wind up developing an algorithm that permits his or her fictitious trading platform to be successful with more than 98 % of the trading forecasts made by the platform. As a result, when consumers learn about a trading bot that can make them money with a guarantee, they act quickly to take advantage of the opportunity. In actuality, there is no such thing as a possibility. The online trading world is a legitimate and unrigged market.

You can’t foresee moves in the stock market in this manner. As with the weather forecast, you can’t anticipate the outcome of online trades with 100% certainty, and neither can you predict the outcome of a stock market trade. Consequently, when you sign up with these trading bots, you are transferred to a conventional trading platform, where you must deposit fees in order to trade once more.

2. Huge leverages for the lure


One of the ways that bogus internet trading platforms trick you into falling into their traps is by informing you that you have huge leverage on your transactions, which is not true. As a result, when you look at the leverages, you will notice that they are enormous. To be honest with you, I have to tell you that a broker can only offer you so much in terms of leverage. It is safe to assume that you are not signing up with a registered and regulated firm if you see things going beyond 1:1000. This is extremely large and cannot be provided by any online forex broker in its current form.

Not to add that rookie traders are often unfamiliar with the notion of leverage in its entirety. If they start out with such high leverage, they run the risk of losing everything they have plus a little bit more in the process. Consequently, if you observe that an online broker is solely concerned with leverage and nothing else, you can be confident that you are about to be cheated.

3. Big signup bonuses

money bundle

Trading accounts with internet brokers are required if you are interested in engaging in the activity. You will need to deposit some dollars into your online trading account before you can begin trading. It’s at this point that you realize you have the potential to earn some significant bonuses. 

It is possible to find brokers who are eager to provide you with a 100 percent bonus on your initial deposits. As a result of the broker, you stand to receive a 100 percent rise on your initial deposit amount. As a result, if your initial deposit is $100, the broker will contribute another $100, resulting in a total of $200 in your account after the first deposit.

These are tempting strategies that are quite effective for traders who are just getting started in the game. The top brokers will not compel you to sign up with them just on the basis of their promotional offers. They have a slew of other accomplishments to talk about, all of which are far more valuable than a sign-up bonus.

4. Requotes

meet up

When you sign up with an online broker, you want to be certain that this is not the case at all times. In fact, when you sign up with the finest online brokers, you will see that they tell you that there are no requotes on their trading platform. 

This demonstrates that requotes are not a good thing, and you should avoid them wherever possible when dealing with an online broker. What happens in a transaction is that you are unable to enter a trade because the broker with whom you have registered does not allow you to do so.

You have entered a price that the broker does not agree with, and as a result, you will not be permitted to enter that particular trade. Fake brokers and scammers can use this tactic to prevent you from participating in a large number of beneficial and profitable trades. You get hit with a request as soon as the market makers understand you are going to make a profit off of your trades.

5. Cash deposits

girl holding amoney

If you are familiar with the world of online trading, you should be aware that cash deposits are no longer accepted in most cases. In fact, according to the most recent rules, internet brokers are not permitted to collect money from their traders in the form of cash. When you open an account with a broker, you must ensure that the funds in your trading account are transferred via a means that you can track down.

When you send cash, you have no way of proving that you made the money to the broker because there is no record of it. However, even if you have some evidence to support your allegation that you have given money to the broker, the broker can easily argue that it never got the money.

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

Tips To Protect Yourself Against CFD Scams

surfing online at dark

When it comes to frauds, common sense should always prevail, yet scammers are cunning and skilled at manipulating people through subtle or direct means. If something appears to be too good to be true, it probably is.

Never believe lifestyle advertisements – CFD brokers are not permitted to advertise their products as lifestyle products. These are most likely from affiliates who are attempting to persuade you to enroll in their trading course or send you to an offshore unregulated brokerage firm.

stolen cards

Cold calls are an indication of impending danger. You should immediately hang up if you receive a call from an aggressive salesperson and report them. It raises a red signal right away. Genuine brokers do phone new clients to welcome them into the program thus not all calls from CFD brokers are scams. However, there is a distinct difference between a welcome call and someone calling you on a crackly line and suggesting that you may “earn a second income through forex trading.”

There is no risk warning. If you find online advertisements that do not include a risk warning, avoid clicking on them and report them. We’ve discussed in the past how the requirement for danger warnings leads to risk warning fatigue, which means that individuals begin to ignore legitimate advertisements and become more susceptible to being lured by advertisements that do not include a risk warning.

Are You Set to Fight Against Scams?

You may have observed that a large number of review sites and comments on social media claim that someone has assisted them in recovering their money from a CFD fraud scheme. Also, exercise caution when dealing with these. Many companies include Gmail email addresses, invites to interact immediately through social network direct messaging, or requests for call-backs, among other things. If you come across a CFD scam, notify the Financial Conduct Authority (FCA).

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.

Please fill up the form. Rest assured that our support team will get in touch with you

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