Forex Market Manipulation Tactics: How to Identify & Avoid Them?

Forex Market Manipulation Tactics

The foreign exchange market is quite popular among investors. It offers many advantages that attract these investors to invest heavily in the market. Since it is highly volatile and highly liquid, it provides frequent opportunities to make substantial profits. The market practically never sleeps due to differences in the time zone; thus, an investor can enter the market at any time.

Scammers seek easy money, and what more can be lucrative by misleading and using deceptive tactics to fool their potential victims. As per the Federal Trade Commission report, 2024 saw a rise of 23% compared to 2023. The total amount of money lost is more than $12.5 billion in 2024 alone.

As more money is involved, it is quite easy for scammers to manipulate the Forex market and have the odds in their favor.

If you wish to enter the money market, you should know the signs of Forex market manipulation. Having such knowledge will help you avoid falling victim to such online scams.

Table of Contents

What is Forex Market Manipulation?

The Forex market has a daily trade volume of more than $7.5 trillion. Such a staggering amount of money is involved, and bad actors understand that manipulating the price of currency pairs can yield them more profit. Thus, even when they invest a little, a huge amount of profit is assured. And this is how scammers manipulate Forex markets.

How the Forex Market Gets Manipulated?

Understanding how the bad actors get involved and manipulate the Forex market can help you avoid falling victim to it. Although it acts as a necessary evil to sustain the economy, there are times when the market is intentionally manipulated for illegal gains.

Market makers artificially manipulate the price of the currency pair. Since these players possess the collective data of every investor who uses a "stop-loss" order, they can manipulate prices accordingly. The price is so manipulated that once the price of the collective “stop-loss” is crossed, triggering market orders, the price of the currency pair again surges.

Sometimes a currency pair experiences huge volatility. To control it, market makers usually manipulate the market by setting the bid-ask price. They do this at night when there are fewer market participants.

Market makers also use “pump-and-dump” tactics. They will artificially manipulate the price of a currency pair, creating strong “buying pressure” or “selling pressure. With such hype, many investors react to the market pressure, thinking that they can make a quick profit. However, when the currency pair reaches the price level expected by these market makers, they immediately “buy” or “sell” the currency pair, making a quick and substantial profit.

Who’s Really Behind Forex Market Manipulation?

You would be surprised who these bad actors are and how they successfully manipulate the Forex market.

Central Bank: The central bank plays a vital role in controlling the flow of money. They decide the amount of money to circulate in the economy. They also decide if the price of the currency should appreciate or fall.

As the Forex market involves the trading of currency pairs, the central bank directly or indirectly involves itself and manipulates the market as per its economic agendas.

Market Makers: These are large banks, huge financial institutions, and prominent retail brokers.

Signs of Forex Market Manipulation: How to Spot It

If you are interested in knowing how to avoid manipulated forex pairs, then look for these warning signs.

Manipulation Tactics

How to Spot It

Fake Moves

There are sudden, unexplainable price spikes or drops that are followed by quick reversals, especially when there is low liquidity.

Stop Loss Hunting

Price briefly hits stop-loss, then reverses in the original direction; this is common around key levels.

Manipulative Tricks

Consistent slippage, requotes, platform freezes, unexplained wide spreads, or withdrawal issues.

Real Examples

Historical cases like "Fix" rigging by banks or spoofing prosecutions reveal past schemes.

How to Avoid Manipulated Forex Pairs and Protect Your Trades?

If you are interested in trading in the Forex market, then you should choose a reputable and trusted Forex trading platform. Besides this, you must also check for these signs of market maker manipulation in Forex:

  • Check Spread Behavior During News: It would be advisable if you were to regularly check the price on the platform and the economic news on conventional and non-conventional media outlets. If the price fluctuation on the trading platform is not aligned with the news, then you can be sure the broker is manipulating the Forex market.
  • Stop-Loss Pattern: While trading, you feel that despite your research, the market always shoots up when it hits your “Stop-Loss.” You can be sure that the platform is rigged.
  • Using Leverage: Use leverage wisely, as it can magnify your profits and losses. If you suspect that the platform is rigged, then it can cause a huge amount of losses.
  • Trade Management: Avoid setting up your “Stop-Loss.” Make a habit of monitoring your trades, particularly during news events or illiquid hours when manipulation attempts are more likely.

Scammed in Forex? Steps to Take After Market Manipulation

If the above steps seem familiar, then you can be sure that you have fallen victim to a Forex manipulation scam. Take these steps immediately:

  • Collect all the evidence of the scam and write it down in a systematic manner. Do not forget to mention those details that might feel trivial to you.
  • Break all contact with the scammer and also avoid any further transactions with them.
  • Contact your bank and request a reversal of the latest transaction. Provide them with a report regarding the scam.
  • Contact your credit rating bureau and request a free annual report. Request an account freeze until the investigation concludes. Go through all the transactions and check for unauthorized entries.
  • Contact your district attorney and state general attorney and file a report against the scammer.

These are common steps for any investors who have fallen victim to a Forex manipulation scam.

Where to Report Forex Brokers for Fraud or Market Manipulation?

You need to contact the government of your country and report to a specific department that takes care of financial fraud.

  • For United States (US) Citizens: Contact the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the National Futures Association (NFA).
  • For United Kingdom (UK) Citizens: Contact Action Fraud and the Financial Conduct Authority (FCA).
  • For Canadian Citizens: Contact the Canadian Anti-Fraud Centre (CAFC) and Provincial Securities Regulators.

Alternatives to Recovering Your Money

Although it is not bad to rely on the government to help recover your stolen money, you need to know that there are several scammers and governmental departments that have their resources stretched.

You can alternatively contact a professional financial fraud recovery expert such as Financial Options Recovery. We are a dedicated team of experts with state-of-the-art technology that aids in financial forensics. This method helps us to track down your stolen money.

Another advantage is that we have a team dedicated personally to handling your case, allowing a quick resolution. We keep you informed of the latest developments, assuring you that we will recover your money.

Stay Safe and Protected

When it comes to investment, you should research, no matter how lucrative the market might seem to be. Everyone has their own goals and financial aspirations. It does not matter if you are old school or follow the latest trends; with the latest economic situations, it is wise to invest in both Bitcoin and Gold. You should at least have 5% to 10% of your wealth in both Bitcoin and gold. You should always invest the amount you are willing to let go of.

FAQs (Frequently Asked Questions)

The decentralized nature of the market is one of the main reasons, along with the involvement of large players, and information gaps make it susceptible.

When fake Forex brokers place large fake orders while trading and then cancel them to trick other traders into participating in the market. These scammers are the ones to benefit from this “spoofing.”

When scammers simultaneously buy and sell currency pairs to create fake trading volumes, it is called “wash trading.”

Even though the Forex market is unregulated, the government makes it mandatory for Forex brokers to protect the financial interests of the investor. These Forex brokers are required to carry a certificate that proves they are regulated by either a governmental department or a reputable and trusted private firm.

Yes, with a lot of practice and by executing your research-based strategies, you can surely be a successful Forex trader.

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