Prop trading is a form of cooperation between companies and private traders, the meaning of which is that the trading firm provides its partners with financial capital for trading, and they, in turn, share a percentage of profits with the company. At first glance it seems that there are no risks for traders, as they do not invest their own money, but in reality everything is much more complicated than it seems at first glance.
In this article, we will analyze what fraud schemes are common in this type of activity, as well as what signals indicate that you have contacted scammers.
Prop scamming format - is the work of a financial organization in which partners manage capital on a profit-sharing basis. It is because of this wording that traders are convinced that there are no risks for them, as in this case they do not invest their own funds. However, in reality, there are always chances to run into fraudsters who successfully disguise themselves as legitimate proprietary firms. Swindlers use various schemes - from a fake terminal for manipulating transactions to paid training.
Prop trading scams:
Broker |
Year of scam |
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2024 |
|
2024 |
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2023 |
|
2023 |
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2024 |
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How to check the reliability of a prop company?
To make sure that the prop firm is reliable, take the following steps: believe whether the company has a license, study the key trading offers, pay special attention to the terms of profit distribution (reliable prop firms offer profit distribution ratios from 70/30 to 90/10% in favor of the trader), study the reviews of other users.
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What are the main signs of a prop scam?
The main signs that indicate that you have encountered fraudsters: lack of clear terms of cooperation, lack of documentation confirming the legality of the company, incomplete or unreliable information on the website, trading platform of dubious origin, use of strong pressure tactics.
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What to do if you were deceived by a prop company?
If you have been scammed by a prop firm, first gather evidence of the scam: screenshots of correspondence, recordings of phone calls, receipts confirming the transfer of funds, etc. Then, depending on your location, file an official complaint with the appropriate authorities. And to protect other traders from being scammed, don't forget to share a review with a detailed description of the fraud scheme.
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What are the risks in prop trading?
The main risks are related to the fact that fraudsters are often found in the financial market trying to pass themselves off as a reliable proprietary firm. As part of the scam, they ask users to pay fees, buy training courses without which they allegedly cannot pass the assessment stage, and provide them with fake software that is fully controlled by the managers of the scam project.