CFD Scams — What Is It? How Do You Avoid Them?


CFD Scams — What Is It? How Do You Avoid Them?

Common Types of CFD Scams and How They Trick the Investor; If you have a lot of money invested in Contracts for Difference, there’s one thing you need to know: CFD scam. Yes, it’s a real thing, and it happens all the time. One moment your account is flush with cash, and the next moment poof! It’s gone.


Nowadays, people fall for CFD scams every day. And yet… most people don’t even know what they are. If you think you’re going to be able to spot a CFD scam by looking at a picture of someone in a suit or reading an email that looks nice and official, well… we hate to break it to you, but chances are good that you’re wrong.

So how do you avoid getting ripped off? We’ve put together this helpful guide on the different types of CFD scams out there so that you can make sure your money stays safe, secure, and right where it belongs: in your bank account.

The world of finance is changing at an unprecedented pace and it’s important to stay on top of the latest trends. A few years ago, CFD ( Contracts For Difference) trading was only seen as a niche product for those who wanted more control over their investment but now these types of contracts can be found in almost every market because they provide reduced risk with increased liquidity; this means that if you buy cheap shares then sell them higher during any given time span – your profit will grow exponentially unlike other strategies where gains might not even reach the original purchase price.

So, what is CFD Trading?

Types of CFD Scams

A contract for difference is an agreement between two parties to exchange the difference in the value of a financial instrument over a set period of time.

The instrument can be anything from shares, commodities, currencies, or even cryptocurrency. The key point is that both parties agree to pay each other the difference in value, so if the price of Bitcoin falls by $100 then the person who sold you the contract will pay you that amount.

CFDs are derivative instruments where you speculate on the price movement of an underlying asset. You don’t actually own the asset, but you do stand to profit if it moves in the direction you predict. This is why CFDs are considered high-risk investments and that’s why we require our users to have at least $50,000 in their accounts before trading CFDs.

CFDs are traded on margin, which means that instead of depositing the full value of your trade, you can deposit a smaller amount (called “margin”), and your broker will lend you the difference between that and the total value of your trade. This is called “leveraged trading” because it allows you to open larger positions than would otherwise be possible using your existing capital; however, it also means that losses can quickly mount up if trades turn against you.

Benefits Of CFD Trading

The benefits of CFD trading are numerous but one of the main reasons it’s become so popular is because it allows traders to take a position without owning the underlying asset. This means that you can short a market (sell shares you don’t own in the hope that the price will fall and you can then buy them back at a lower price) which is not possible with traditional share trading.

It’s also worth noting that CFDs are margined products which means that you only need to deposit a small percentage of the total trade value as security. This is in contrast to buying and selling shares where you might need to put up a large percentage of the total trade value as collateral.

So, if you’re looking for a new way to make money from the markets or want to start trading but don’t have the capital to buy stocks outright, CFDs may be the perfect solution for you.

Types of CFD scams to avoid in 2022

Investing can be scary, we get it. And when you’re new at it, it can be hard to tell the difference between a legit investment and a scam.

So today, we’re going to talk about Contracts for Differences or CFDs. A CFD is basically an agreement between two parties to exchange the difference in the price of an asset from the time they enter into the contract until the time they decide to end it. If you think prices will rise, you go long (buy); if you think prices will fall, you go short (sell).

Unfortunately, sometimes agreements like these are scams and scammers usually use one of two methods to trick people into entering into them:

They may use high-pressure sales tactics. this technique is called “boiler room” sales. You’ll get calls at all hours of the day from people urging you to buy something ASAP before the price goes up even more. They may lie about what you’re buying. You’ll get told that you’re buying stock in some big company when really you’re buying CFDs in that company’s stock.

Other examples of CFD scams include;

Pump and Dump:

This is one of the most common types of scams in the world of CFDs. It works by artificially inflating the price of a particular asset through false or misleading information so that unsuspecting investors will buy it. The scammers then “dump” their shares at a higher price, leaving investors with worthless stock.

Binary Options:

This is a type of scam where the broker offers you an unrealistically high return on your investment, for example, 80% or even 100%. However, when you try to withdraw your money it’s impossible because the broker has rigged the trade so that you always lose.


This is a type of scam where the broker gets you to trade frequently so that they can generate more commission. They do this by giving you false or misleading information about a particular asset and persuading you to buy or sell it.

Stop-Loss Hunting:

Stop-loss hunting is when a broker deliberately sets the price of an asset just below your stop-loss level so that you’ll sell it and they can make a profit. They do this by manipulating the market or using bots to push the price down.

Are you looking for a legit CFD Broker?

CFD trading is not a scam, but there are some things to look out for when choosing a broker. We’ve seen a lot of people get scammed by CFD brokers. So we decided to put together a list of tips to help you identify which CFD brokers are legit, and which ones are just out to take your money.

1. Look for an established company, with a physical address, phone number, and email address on their website. They should also be listed on an official government registry of businesses.

2. Don’t choose a broker who offers more than one product or service in addition to CFDs (like binary options or forex). This is because it’s not possible to be a good broker in multiple areas of the financial world at once.

3. Choose someone with a history of paying back clients who have lost money due to technical issues with their platform or software integration issues on their end—and who has been doing this for quite some time!

4. Reputation and history: Do they have a reputation for being honest? Have they been in business long enough to establish themselves as reputable? If they’ve been around for a while and haven’t had any complaints, that’s a good sign.

5. Customer support: Is their customer service responsive? Are they easy to reach? Do they respond promptly when you submit a ticket or email them? If it takes days for them to get back to you, that’s not good.

6. Fees: Are there any hidden fees? Do they have any type of minimum balance requirement? What are their margin rates? All these things can add up quickly and make CFD trading more expensive than it needs to be if you’re not careful!

7. Trading platform: Does the trading platform look user-friendly? Is it easy for you to navigate and understand how everything works so that you can get started making trades right away?

Points To Note

If a Contract for Difference (CFD) offer sounds too good to be true, it probably is. Your first red flag should be that someone you don’t know is promising you a lot of money without asking anything from you in return.

If you’re feeling unsure about the legitimacy of an investment offer, keep these points in mind:

  • Is this person or company promising you guaranteed returns? That is not how investments work.
  • Is this person or company asking for your personal information, like your bank account or credit card number? You should not give out this information unless you are absolutely sure you’re dealing with a legitimate company. A legitimate company will have ways of verifying your identity that does not involve them asking you to provide sensitive personal information.
  • Is this person or company promising to keep your personal information private? They should not be sending your personal data to third parties without telling you, and they definitely shouldn’t be selling it.


So, what exactly is a CFD?

So, how can you protect yourself from CFD trading scams?

The best way is to use a regulated broker who is authorized by the Financial Conduct Authority (FCA) in the UK or another financial regulator. You should also be aware of the risks involved in trading and only invest what you can afford to lose.

Finally, don’t rely on tips from strangers or unsolicited investment advice, no matter how convincing it sounds.

If you think you’ve been scammed, contact the FCA immediately. Also, report it to Action Fraud, the UK’s national fraud and cybercrime reporting center.


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