Why does people say that forex is scam?

<p id="isPasted">People think forex is a scam due to:</p><ul><li><p>Misconceptions and unrealistic promises by brokers.</p></li><li><p>Scams by fraudulent individuals and platforms.</p></li><li><p>High leverage and potential for large losses.</p></li><li><p>Loss of control and market unpredictability.</p></li><li><p>Negative media portrayal and lack of regulation in some markets.</p></li></ul>

<p id="isPasted">Forex trading is a legitimate financial market used by central banks, major corporations, and retail traders globally. However, it is often called a "scam" because it is a highly deregulated, complex environment that attracts fraudulent actors and suffers from a massive retail failure rate.&nbsp;</p><p><strong>1. High Retail Failure Rate</strong></p><ul><li>Success Statistics: Recent data from 2025 shows that less than 5% of retail forex traders achieve consistent profitability.</li><li>The "Gambling" Perception: Between 70% and 82% of retail traders lose money. Many beginners treat it like a "get-rich-quick" scheme, leading them to view the market as "rigged" when they inevitably lose their capital.&nbsp;</li></ul><p><strong>2. Common Fraudulent Schemes</strong></p><p>The market is frequently used as a front for specific criminal activities:&nbsp;</p><ul><li>Unregulated Brokers: Many platforms operate from offshore jurisdictions with no oversight, often manipulating price feeds to trigger "stop-loss" orders or blocking withdrawals when traders try to take out their money.</li><li>Signal &amp; Guru Scams: "Influencers" on social media often use AI-generated screenshots or deepfake videos to promise "guaranteed profits" through paid signal groups or expensive courses that provide no real value.</li><li>Ponzi Schemes: Some entities act as "managed funds," using money from new investors to pay older ones until the scheme collapses.</li><li>"Pig Butchering" Scams: Fraudsters groom victims through dating apps or social media, eventually persuading them to invest in a fake forex app that shows fictitious profits to encourage more deposits.&nbsp;</li></ul><p><strong>3. Structural Risks (Not Scams, but Dangerous)</strong></p><ul><li>Extreme Leverage: Brokers may offer leverage up to 1000:1, meaning a tiny market move can instantly wipe out an entire account.</li><li>Complex Mechanics: Forex is a "negative-sum game" once commissions and spreads are factored in, meaning the average participant loses money by default.&nbsp;</li></ul><p><strong>Important for Indian Traders (2025-26 Update)</strong></p><p>The Reserve Bank of India (RBI) maintains a strictly regulated environment for forex.&nbsp;</p><ul><li>Legal Restrictions: Residents can only legally trade currency pairs involving the Indian Rupee (INR) on SEBI-approved Indian exchanges.</li><li>RBI Alert List: As of late 2025, the RBI has flagged nearly 100 unauthorized platforms (including well-known names like Exness, OctaFX, and eToro) on its "Alert List" for operating illegally in India.</li><li>Penalties: Using unauthorized overseas brokers can lead to frozen bank accounts and penalties under the Foreign Exchange Management Act (FEMA).&nbsp;</li></ul>