Updated: Jan 11, 2020
The Forex Market Problem
Gold wrapped supercars, private jets and stacks of cash... what does this remind you of? On one side it might remind you of a luxury lifestyle which only celebrities can live, but in the Forex industry this is a common sign of an industry scammer.
He's just one of many Instagram personalities out there leveraging their image to lure in naive and vulnerable investors. He was even claiming to make £110,000/ month to over 1,250 people at the age of 20 all from trading the foreign exchange market.
Gurvin Singh or his former Instagram alias 'gs_3' was a typical signal provider you see online. The only difference is he was showing off his flashy lifestyle to target the most vulnerable in society and make them think they can also achieve where he is.
He amassed over 170,000 followers on Instagram by promoting his lifestyle on other social pages with over 1 million followers. Which begs the question, should influencer marketing without using Instagram's "paid ad" feature be allowed and should it be restricted to show that these pages are being paid to promote content.
What people didn't know was the hidden mechanics behind how he actually made his money. Which is... introducing broker agreements.
How do they make money like this you may ask?
Well, it's quite simple. Let's get an example for the fitness freaks out there. You've probably seen various Gymshark or MyProtein 'athletes' on Instagram who have their own personal "discount" links for products on the companies website right?
Whenever a customer uses that link and purchases a protein shake or a piece of clothing from the company, the athlete then get's paid a commission. Win win for both of you right, you get a discount and the athlete gets paid for promoting it.
In the Forex industry however, the introducing broker agreement is a little different. A big broker who normally owns the platform you're going to trade with will create 'affiliates', someone like Mr Singh here to promote their services.
Now, all Mr Singh has to do is refer interested customers onto the brokers trading platform with a minimum deposit of say £250-500. As soon as that person deposits that money into the broker, Mr Singh gets paid a fat commission of up to £300... that's not all, Mr Singh now gets paid based on how many trades you take AND how much you leverage.
Is that a BIG RED FLAG?
Is that a huge conflict of interest with the trader that's just been referred?
YES! We'll tell you why. Mr Singh no longer has an incentive for you to make money and be a good trader, his incentive is as follows to make the most money out of you and suck you dry:
Refer you to the broker with a minimum deposit (£250+), maybe persuade to deposit more.
Trade frequently so each time you trade he makes a commission.
Trade with more leverage so the more leverage you take on the higher his commission is.
He might be flashing his lavish lifestyle, but guess what, it's not money made from trading, it's money made from referrals and affiliate marketing.
Now you know exactly what to watch out for when you see these guys or girls online. But how can it be prevented?
FCA Investigation
Mr Singh is supposedly under investigation by the Financial Conduct Authority (FCA) which is the UK's financial services regulator. He has since deleted all his Instagram posts and even his account to try and hide his tracks. So we're here really to expose how these individuals are making money and why there needs to be action taken by the FCA.
But let's be honest here, what's the underlying problem?
The underlying problem is that brokers are able to use affiliate marketing to promote their services which creates a massive conflict of interest in the industry.
There's a reason IB agreements are already banned in the US.
Should the UK and more countries impose these bans? We think they should. More and more malicious individuals are using these schemes to make money off unsuspecting people and it needs to be stopped. The only ones who can enforce that is the FCA.
One of the core reasons why people don't see it's a scam is because all they think they're doing is "depositing" into a broker, so essentially they're seeing a free service. What they don't see is Mr Singh getting paid under the table when this happens.
Summary:
Watch out for anyone online trying to introduce you towards a broker platform. They don't have your best interest in mind.
Lavish flashy lifestyles are a big red flag and it should be sounding alarms of a scammer.
Don't believe all the articles you read about how the supposed "trader" quit their 9-5 and turned £1000 into £100,000 in two weeks.
Forex or trading signals are a complete SCAM.
Do your due diligence or learn direct through us.
Source: https://metro.co.uk/2020/01/09/rich-kid-instagram-trader-scammed-hundreds-victims-4000000-12033385/
