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28 Jul 2020
6 min read

Cat Phish: How to Detect and Avert Online Trading Scams

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Written by OspreyFX News Team



*OspreyFX would like to state that traders should research extensively before following any information given hereby. Please read our Risk Disclosure for more information.

Cat Phish: How to Detect and Avert Online Trading Scams

Trader’s Takeaways
  • Type of scams
  • How traders can avoid these scams
  • Why it’s important to arm yourself with the right information

It’s not breaking news that the forex market is the largest financial market worldwide. With the sizeable volumes of money floating around in such an enormous arena, the forex market is breathing ground for crooked operators to tempt naïve traders. It gives these scammers ample opportunities to earn fortunes in a small space of time. More recently we have seen greater adoption in cryptocurrencies, and the digital asset space is not immune to risk. Scams are everywhere. To give a clearer indication, according to the Financial Conduct Authority scammers stole a total of £27-million through, FX and crypto-related scams in 2017/18.

While in recent years scams have come under wraps, thanks to heavier restrictions, these architects, still find old and new ways of inching their way in. Nobody likes a ‘Cat Phish’. So, in today’s article, we bring you a guide on how to avoid these sorts of scams and have a trading journey filled with peace and ease of mind.

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What is a Trading Scam

Foreign exchange or crypto fraud is any trading scheme that is used as a mechanism to defraud traders. Trading scams often pitch “too-good-to-be-true investment opportunities” in a ploy to entice traders to part with their money. Where lack of experience is evident swindlers will try to exploit your enthusiasm, fear, and lack of knowledge. By arming yourself with the right information you are no longer an easy target.

Types of Investment Scams

The “virtual/digital” landscape presents unscrupulous actors with more opportunities to convince uninformed or naïve traders to invest their money in risky investments. Such frauds can be accomplished through many different formats:

  1. Impostor Websites

There is an alarming number of websites that have been either set up to resemble the original or claim affiliation with particular brokers. OspreyFX does not charge any membership fees when traders sign up and are not associated with any external source.

To avoid such scams use the OspreyFX URL to sign up for an account, to avoid these trading scams (

  1. Phishing Emails

A common method in recent years is through the medium of email. The worst thing of all is that they are becoming more ingenious and harder to identify. Phishing scams of late are able to appear identical to the actual brand. Always verify the email address and ensure that it is legitimate to the correct source. If a source seems untrustworthy, do not provide information such as full name, address, or contact information. Always be aware of where your data is and how it’s being used. The devil is in the detail, always be sure to read the risk disclosure thoroughly.

  1. Social Media

Social media has presented an arena where “influence” has almost become a way of living. Everyone wants to have and be like the “it” celebrity. However, how do you know that the accounts that your following are not imposter accounts? The same applies for trading, mischievous bots are rampant. Be hesitant of offers on social media in particular where there seems to be an impossible result. Furthermore, just because people engage doesn’t mean they aren’t bots.

  1. Signal-Seller Scam

Traders rely on seller signals to trade, as they are an indication of how well markets are performing. It is now possible to buy information products that include allegedly useful indicators of which way to trade. Thus, a common modern-day scam is a signal-seller. How is this done? Some swindlers will create phony signals that appear authoritative when in reality they are leading them down a rabbit hole that only they can benefit from. Be cautious of subscription fees or broker-tied signals.

  1. Robot Scamming

Robot scams are programs that tout their ability to generate automatic trades. The term “robot” is derived because of the use of algorithms or code as technical signals to open and close trades. It’s like putting an aircraft into autopilot. Traders sleep easy knowing their trades are placed at assigned positions, and their fortunes are skyrocketing. Sounds idyllic right? The problem here is market conditions aren’t considered, robots are based on automated mathematical algorithms.


Trading Scams

Red Flags and How they Can be Avoided
Over Promising

A clear red flag is a guarantee of unrealistic profits and the downplaying of financial risk. Scammers often entice investors by making false promises, claiming they can expect to earn high profits. If this were true, why would they share the wealth, any ordinary person would want as much as the pie for themselves.

The lesson here: If something sounds too good to be true, it most likely is.


Any broker or independent traders want their traders to have the ultimate trading experience. To that end, before investing any funds they will do everything in their power to make you feel comfortable.

If you find yourself in a situation where an individual is insisting you deposit funds from the first conversation, cease your exchanges instantly.

Similarly, when it comes to withdrawing funds, crooks will often have a hesitance here and may advise against it.

The lessons here: Persistence isn’t always key. Pushiness will often mean they are involved in a trading scam.

No Apparent Trace or History

In today’s era, social proof is a necessary ingredient in almost all critical decisions, trading is no exception. It’s not uncommon to be blinded by the “halo” effect. Fraudsters are clever, appearing as trustworthy and likable is in their DNA. Sincerity can be faked.

Always ask for a record of validated stats from live trading accounts, this way you can evaluate their resources and capabilities for yourself. The best way for traders to fully absorb a broker’s or independent trader’s practices is through trial and error. OspreyFX offers demo trading accounts meaning you can test our systems without risking any capital, prior to any final decision. If this isn’t enough, we can demonstrate our credibility.

The lessons here: Always carry out your due diligence, ask yourself “can I trust them to trade with my money”?


Do they appear to have something to hide? Those who have nothing to hide will have no reason to be evasive. A reliable source fully understands their client’s need for more information, particularly where there is the managing of funds involved.

The lesson here: Be wary where a broker or individual is dodging your questions and trying to divert your focus or seem confrontational.


Questions to ask to Avoid being Duped

You would never purchase a car without asking the necessary questions first and your trading journey should be no different. Fraudsters rely on traders who don’t do their research or any prior investigation before investing. Asking the right questions will allow you to gauge if the person/people you are dealing with are trustworthy or a scam artist.

  1. What level of customer service is provided?
  2. Can I trust them with my money?
  3. Can they provide performance history or prove their integrity?
  4. Are they aggressive in their approach or is the customer’s journey at the forefront?


Why Arming Yourself with the Right Information Helps

It’s not unknown that trading carries risk, and that losses are part of the game. In all facets of your trading journey, planning and education are key. Irrespective of your level, novice, or pro, those who spend time developing a proper trading plan and educating themselves are those who will win in the end, as they are more informed.

Need help developing an effective trading plan? Read our guide “How to Create Your Trading Plan Part 1 and Part 2”.

Tips to remember:
  • The 2 Rs: Research & Reputation above all else
  • Learn, learn, and learn some more
  • Plan, plan with a sprinkle of planning
  • Protect yourself online
  • Be wary of high-pressure sales pitches or false promises
  • “Assured returns”, aren’t
  • Common sense is your best alloy

Final thoughts

Some of you might be thinking, is trading one big scam. The simple answer is no. Nevertheless, it doesn’t come without its flaws. The expectations that trading will make you a millionaire overnight or the idea that it’s all centred on profit and success, are not a reality. It’s for these reasons people could think it’s all phoney. However, once you dive into the realm of trading you will soon realise it requires grit and elbow grease. More importantly, failure is part of the game.

Carry out your due diligence and be sure to take the right risks. We hope that this guide will help you in your quest to identify the unsavoury perils the market can presents and how you can avoid the temptation and allure of sophisticated scammers.

Furthermore, OspreyFX prides themselves on being a client-first broker. Transparency is at our core, to that end we do not associate or affiliate ourselves to any off-site memberships, accounts, or academies. Traders can be rest assured that a trading journey with us is one of peace of mind.