Although there are many legitimate ways to profit from the forex market, there are also pitfall (such as portfolio manager scam, pump-and-dump, and trading bots) one has to be wary of. As a general rule, it makes sense to avoid forex brokers that promise abnormally large returns, and make due diligence about their funding methods. It is advisable to avoid firms that have a limited history
With portfolio manager scam, an unregistered portfolio manager will contact potential investors via social media handles using an alias and promise unrealistic large profit margin. One must understand forex trading is a long term business adventures. These bad actors can be avoided by doing business exclusively with licensed financial advisors and analyst.
Scammers set up bots with an algorithm that promise large results such that you reach financial freedom in a jiffy. Their trading bots is programmed to execute trades on behalf of the trader. However, these bots rarely live up to their promises. It is advisable to trade with firms that have legitimate quantitative trading strategies
The more prevalent in cryptocurrency markets at the moment is the pump-and-dumps, it occurs in illiquid forex markets, where a chat room or social media group has been set up purposely to drive the price one direction and then unload their positions onto people who bought into the artificial price movement.