Compared to every other stock market, foreign exchange (forex) is the most traded sector, expected to be worth a whopping $2.409qn in 2019. The global forex industry’s valuation started to rise in 2020, primarily due to instability and confusion caused by COVID.
If the overall valuation rises, like every new sector, so does the possibility of attacks, fraud, and cybersecurity scams. Financial regulators worldwide have been warning forex traders following the occurrence of COVID-19 about the increased danger of security breaches. Australia’s regulator (ASIC) uncovered evidence that within the first three months of the pandemic, corruption grew 20 percent. Similarly, Current Zealand and US authorities have recently raised fears regarding the spike in forex fraud linked with COVID.
Because forex traders and brokers rely on software for retail trading services, hackers leverage the dependency of the industry on technology in several cases. The need for retail traders to use controlled brokers and trustworthy trading platforms to reduce the possibility of being attacked is highlighted more than ever by the financial authorities.
Forex Trading Software and Security
The three most popular trading platforms worldwide are MT4 and MT5 (developed by MetaQuotes), and cTrader (Spotware). Several top traders sell the app, and MetaQuotes has controlled the forex software room since 2005, with MetaTrader 4 holding a 55 percent market share.
MetaQuotes launched MetaTrader 4 in 2005, and many consider the MQL4 programming language of the network redundant after 15 years, with a growing majority of traders opting instead for MetaTrader 5 (MQL5) or cTrader (#C). In addition to being more user-friendly, both MQL5 and #C codes are more stable and safe. Although providers of applications such as MetaQuotes and Spotware periodically upgrade their platforms, the increase in COVID-19 scams demanded frantic changes to the software’s protection and functionality.
Common Security Breaches and Scams
While there are plenty of licensed and registered brokers functioning as local authorities need, it is becoming more challenging to locate illicit brokerage services. An illegal broker can more usually have bogus trading software that is not related to foreign exchange markets. In addition to counterfeit trading platforms, dishonest brokers can unlawfully obtain traders’ funds by offering extortionately large spreads.
Trading robot scams are getting more popular on top of misleading trading platforms and spreads. Trading robots are a common technique to automate trading, often known as Expert Advisors (EAs). However, some algorithms lure traders by distorted backtesting reports that reveal unsustainable income.
Unfortunately, financial authorities are not just increasingly worried about dishonest traders and exchange platforms. Sophisticated hackers will secretly hijack compromised trading accounts, obtaining access to private data and trading strategies. Hackers that obtain remote control and personal data breaches will position trades and pass account funds undetected.
The variety of methods utilized by hackers and dishonest brokers illustrates the need to trade in protections and protection measures with controlled brokers who sell apps. Hackers and scammers will follow suit as more retail traders seek to take advantage of the uncertainty and confusion created by COVID-19. If the pandemic persists, it would be necessary for leading trading platforms such as MT5 and cTrader to continually reassess the protection mechanisms they provide as other scams and breaches are expected to occur.
How to Avoid Forex Scams
Legitimate brokers understand that trading platforms and account protection are essential for prospective clients in today’s climate. To address the increase in forex fraud, app developers and brokers are continually upgrading protection features.
Many brokers will provide steps to introduce another layer of account protection, such as a two-factor authentication login method. But firewalls and anti-virus, anti-malware, anti-spyware, and anti-ransomware are also encouraged to be built by merchants. Similarly, the risk of being the victim of anyone with sinister intent is significantly enhanced when trading electronically via public networks or devices.