Many investors are familiar with the negative attitude of people towards investments. It is especially difficult for beginners – their relatives and friends begin to dissuade and tell scary stories of those who were deceived and lost all their savings on investments. Stories also periodically appear in the media about how an employee of some broker or bank ran away with clients' money, how the promised mountains of gold turned into black holes of capital losses.Is everything really so scary in the investment market, who is to blame for all this and how to protect yourself from fraud on the stock exchange?Who is a brokerA broker is a professional bidder. He is an intermediary between the exchange and the investor. Not all bidders can trade directly on the exchange, there are certain restrictions for this. Organizations that do not have direct access to trading on the exchange, as well as individual investors, can only trade on the exchange through an intermediary broker. The broker registers the client on the exchange, organizes the client's technical access to trading, withholds taxes in accordance with the legislation. For its activities, the broker charges clients a commission, which depends on the chosen tariff and the operations that the investor performs on his account. A bank or an investment company with a special license can act as a broker.Thus, in his investment activity, the investor contacts directly with the broker. Therefore, choosing a broker is very important. The client's capabilities also depend on the broker: available exchanges and a set of tools, the threshold amount of investment, costs and quality of service. Well, if something goes wrong, it is logical to assume that who is to blame? - broker!Broker's deception or investor's mistake?So how can a broker cheat? Next, let's look at the main traps that an investor can fall into and which can cause the loss of a significant part or even all of the funds. We will immediately warn you that there will be no loud revelations. Not all the troubles and losses in investments are deception of the broker. An investor can sometimes make mistakes himself, be led by fabulous promises, make rash decisions."He who is warned is armed" - it is important for an investor to know about all the nuances, since mistakes in investing can cost too much.Forex brokersMost often, well-known fraud schemes are associated with the Forex market. In general, Forex is an over-the-counter interbank foreign exchange market. That is, in principle, individuals cannot be participants in this market. However, there are a huge number of offers on the Internet to make money on Forex / Forex / FX, and so on. At the same time, such earnings are positioned as investments, trading, and organizers as brokers. However, such activities have nothing to do with investments. This is the market of derivative financial instruments - essentially a casino where bets are placed on changes in the exchange rate of a currency pair. And in the casino, as you know, the casino wins. No one brings these individuals to any foreign exchange market, and we are not talking about real currency trading. And, despite the fact that an article about Forex dealers appeared in the law "On the Securities Market" (they are dealers, not brokers), and the Regulator even issued licenses to several Forex dealers, this market has not become safe. The number of scammers is large, and the number of people who want to get rich here and now is no less. Clients are offered training. You can start trading with small amounts that allow you to win first. Appetites are growing, and so is leverage. Unlike a deposit and traditional investments in the stock market, such games really usually end with a loss of funds. If the client still wins, there may be problems with the withdrawal of funds, under various pretexts: for example, to additionally replenish the account to withdraw income, or to wait for some time. And they can withdraw funds in an unknown direction with the help of frankly fraudulent actions. The fantasies of scammers are limitless.Thus, real brokers have nothing to do with it, and forex games have nothing to do with real investments.Read more: Forex broker: how to choose a good brokerScam brokersThe securities market has its own schemes of deception, but they are all based on the same desire of the client to get rich quickly and easily, which scammers use with might and main. Customers are persistently lured by tens and hundreds of percent of profits, "super promotions", bonuses, cashbacks, exceptional offers, put pressure on the need to make decisions quickly, without giving time to think. An experienced investor will not be led to such offers, and an inexperienced one will be offered a consultant or mentor who will accompany his transactions. While the deposit is small, customers make a profit, and are more willing to invest more money. The "broker" is very attentive and usually aware of the financial situation of his client. Further, the options for the development of events may be different, depending on the credulity of the client and the imagination of scammers. For example, a consultant may inform you that a great deal is planned, offer to make a bigger deposit in order to break a big jackpot. And if the client no longer has his own money, he will offer a loan. Trusting clients allow the broker's employees to make transactions on their behalf without instructions from the client himself, issue a power of attorney to perform transactions on the brokerage account, provide access to the account (login, password). This is how deceived investors appear, whose assets are "merged" by a broker, or disappeared together with a personal manager. In this case, yes, the broker is a fraud, the only question is, was there a broker (a real, licensed bidder), and who and why gave him a power of attorney, provided direct access to the account?Each broker may well have its own trading platform, and this is normal. However, not all platforms are certified. Fraudulent brokers can install special programs on them that ensure price slippage, delay execution of orders, limit the client's profitability when trading derivatives, fake price charts, and other tricks that are not always noticeable to the client, but are very reflected in the state of his account. These schemes relate more to trading, rather than long-term investment, but you need to know about them in order to understand how important it is to choose the right broker.Chargeback - challenging the transaction. When the client realized that he was deceived, he can try to return the money from the false broker by contacting his bank. This complicated procedure exists, but no one will give guarantees, and it will most likely not work to return the money. The recipient and the broker may be completely different persons, the recipient may have disappeared altogether, or the client transferred money to an individual on the card, or the client does not have enough documentary evidence, and the bank is not eager to bother, some employees may not even know about the possibility of such a procedure. However, there are companies that offer money-back services from "black" brokers. If they promise a 100% guarantee and require prepayment, it is likely that the client will fall for the bait of scammers a second time.Read more: Stock market Broker: how to choose it and how to work with itClone sitesClone sites that completely duplicate the interface of the original site. The difference may be in just one sign in the address bar. The site may contain all the necessary information and documentation - information about the organization and license, only fake. Such sites belong to scammers, and the money transferred using such sites, the details specified there, will go to the scammers, and not to the client's brokerage account.Overnight on the broker accountOvernight is a loan of securities that the broker, with the consent of the client, takes from his brokerage account for his short-term transactions between trading sessions at night or on weekends and undertakes to return before the start of the trading session. Remuneration is paid to the client for overnight transactions. At the same time, the client himself allows the broker to perform such operations with his securities, sometimes without even suspecting it. This item can be included by default in the brokerage agreement. Of course, this cannot be called fraud, unless this clause of the contract is deliberately hidden from the client. But this is an additional risk for the investor. After all, in the event of a sharp jump in the prices of borrowed assets, a situation may arise when the broker will not be able to redeem and return the securities to the client. And as you know, assets on brokerage accounts are not insured. Therefore, in this case, it is up to the client to decide whether to allow the broker to make overnight transactions.Increased broker feesBrokers charge clients a commission for their services, as well as for the services of the depository. The commission amount differs from broker to broker and depends on the selected tariff. The rates may differ significantly from each other and are targeted at different categories of customers. Someone performs ten operations per quarter or per year, and someone per hour. Someone needs access to foreign exchanges, someone does not. Someone is just starting his way as an investor and forms capital with small amounts, while someone is already operating with very significant amounts. The broker can also provide a personal consultant, trader or additional analytics. Obviously, the rates for different customers will differ. Imagine that a client with a small capital chose the tariff with the lowest transaction fee, but at the same time did not pay attention to the presence of a subscription fee on such a tariff. As a result, even if there are no transactions on the brokerage account, it will incur exorbitant maintenance costs. Or an active trader client will choose a tariff without a subscription fee, but with a commission for transactions, as for investors who make few transactions. Its maintenance costs will also be overstated.Read more: What is OvernightTwin tickersThere are companies with similar tickers on the stock exchange and there are cases when investors, either afraid of missing the moment and falling behind the trend, or simply out of ignorance or inattention, bought shares of another little-known company with a similar ticker instead of the shares of the desired company, accelerating the value of the latter to an incredible size. On the one hand, the situation is curious, but it can also become seriously unpleasant, depending on the size of the transaction and the consequences. Here are some examples:APLE and AAPL: real estate investment fund REIT (Apple Hospitality Reit) and the well-known "apple" (APPLE). As a result of confusion, you can become the owner of such different assets:ZOOM and ZM: In April 2020, investors mixed up the tickers and instead of shares of ZOOM VIDEO COMMUNICATIONS (ZM - developer of video conferencing service) bought shares of ZOOM TECHNOLOGIES (ZOOM is a supplier of wireless communication equipment, currently ticker ZTNO), as a result of which the price of the latter soared by almost 800%, but not for long.TLSA and TSLA: These twin tickers also represent very different companies. The well-known technology giant TESLA and the company from the biotechnology industry Tiziana Life Sciences.In this case, of course, there is no deception, this is the mistake of the investor himself. Such a mistake can end up being expensive. Therefore, when applying for the purchase of an asset, the investor should be very careful.Read more: Practical advices on choosing a Forex broker for a beginnerMargin tradingMargin transactions are transactions with leverage, on borrowed funds provided by the broker. If successful, such transactions can bring multiple profits. However, you need to understand that if an investor makes a mistake in his calculations and strategy, then losses can reset the investor's capital. Therefore, before entering into such transactions, you should evaluate your capabilities, strategy and risks well. As Warren Buffett said, "If you combine ignorance and credit, you will get very interesting results," and it is unlikely that he meant fabulous profits. If the possibility of margin lending is not disabled in the settings of the trading program, the investor may accidentally open such a deal without even knowing about it. And this, too, is no longer a broker's fraud, but an investor's own mistake. The broker offers opportunities, and it's up to the client to decide whether to take advantage of such opportunities or not.Trading robotsTechnology is our everything. The robot is an automated trading program that connects to the interface of the broker's application or terminal and, according to a given algorithm, opens and closes transactions on the exchange, also analyzing the price movement of the instrument in accordance with the settings. Robots are more relevant for traders, not long-term investors. A trading robot is significantly faster than a human. Some robots can make up to 1000 trades per second. There is no fundamental analysis, emotions – only indicators, signals and an algorithm. The robot can trade 24/7 and monitor several instruments at the same time. This can greatly facilitate the trader's work, as well as his capital. Is the speed of trading and the number of applications so important?A trading robot can, of course, be used if a trader understands how it works, what settings and algorithms it has, regularly checks and adjusts it to the market. If not, then one day the algorithm can drain all the capital at its tremendous speed. Besides, if someone has created a robot that can make the owner rich in a short time, why would the developer sell it? After all, the more users of the robot, the less they earn. And which of the developers of trading robots is listed in the FORBES lists? And even if the developer really sold the robot with a profitable strategy that worked well in a certain market situation, the robot may not be adapted to another situation.Deciding whether or not to use a robot is also the prerogative of the investor himself, and if something goes wrong, there will be no one to blame.Read more: What are stock trading robots and how do they operateStock market manipulationManipulations on the stock market can be carried out with both stocks, derivatives, and cryptocurrencies. Individual market participants are accelerating asset quotes to sell them at the peak. Advertising, mailing lists, groups-communities of investors in social networks, including paid, fake news, insider information are in use. The object of manipulation is more often low-liquid assets of small capitalization, companies of the "last echelons" (2.3 levels of listing or unlisted list). There is usually little information on the financial condition of such companies. In the absence of market makers and regulators, lack of information, and given the low liquidity and value of the asset, it does not take a lot of money to pump up the price. Manipulation schemes are often based on trading features and traders' strategies. As a result, manipulators earn money, and those who chased the hype and the crowd suffer losses. Manipulation is really fraud, for which a large fine or a real term can be threatened in America. Manipulations also happen in every country, mainly with third-tier stocks. They often end with a warning and a fine, however, in the case of a particularly large size or an organized group, criminal liability and imprisonment may also occur. Brokers, their employees, and other market participants may be involved in manipulations.How can an investor protect himself from fraud and mistakes1. Careful selection of a broker.The broker must have a brokerage license. It must be posted on the broker's website. You can check the license on the regulator's website. There are many other useful lists and registries on the same site: forex dealers, exchanges, trading systems, depositories, securities issuers and others:2. Really evaluate advertising promises and offers.Investing is always a risk. And the greater the expected profit, the higher the risk. No need to believe fabulous promises to get rich quickly, not troublesome, with a 100% guarantee. There are no guarantees in investments. Aggressive promising advertising, intrusive calls and "burning" super-offers should be treated with caution.3. Do not follow links from advertising offers in social networks and messengers.Perhaps the link will lead to a fraudulent site. It would not be superfluous to check whether the connection on the site is protected: the image of the lock at the beginning of the address bar.4. If you fall for the bait of scammers, you can contact the competent authorities about fraud, and your bank about the possibility of a chargeback. The probability of a refund is low, but there is a chance, and a considerable one, to fall into the trap of scammers for the second time, trying to carry out a chargeback with the help of intermediaries (perhaps the same ones who cheated the first time, but have already "retrained").5. Select the tariff deliberately in accordance with your portfolio and strategy.6. Disable overnight in the broker's application settings, for greater reliability, especially in a volatile crisis market.7. Disable the ability to make margin trades if the investor does not have sufficient knowledge and experience for margin trading. Everything can also be done in the broker's application or in the investor's personal account on the website.8. Carefully weigh whether it is worth using robot programs for trading and auto-research for investment. It may be much more effective for an investor to be trained to understand how to build and manage their investment portfolio. It is worth recalling Warren Buffett's quote again: "The risk comes from not knowing what you are doing."9. Carefully evaluate the asset before buying. What is the idea in this asset, what is its value and source of profit, does it correspond to the investor's strategy, is the price for the offered value adequate? Fundamental analysis will avoid manipulating asset prices and buying a dummy at a fabulous price. Also, preference should be given to highly liquid assets with large capitalization, which are difficult and expensive to manipulate.10. Invest in long-term debt. Traders are more susceptible to fraudulent manipulations, as they trade on news and price fluctuations. Technical analysis, signals, indicators, and often margin lending are the main tools of traders. And this is always a much greater risk than a reasonable investment in long-term investments based on fundamental analysis and diversification.11. Be a reasonable and cautious investor. Listen to official sources of information and make important decisions on your own, relying on your own knowledge, calculations and analysis. Do not follow other people's advice without passing them through the prism of your strategy. Do not give in to panic and hype. Do not forget that where there is money and the desire of people to get rich, there will definitely be scammers. Well, the most elementary thing: do not tell anyone your usernames / passwords. Law enforcement agencies and mass media regularly warn about possible fraudulent actions.Read more: What is Slippage in trading?ConclusionYou should not be afraid of cheating a broker if he meets the selection criteria: he has a license, a large number of active clients, large trading turnover, a certified trading platform, a convenient application, a tariff policy and a set of tools suitable for the investor, access to the trading platforms necessary for the investor, good customer service. You should be more afraid of your own rash actions, unjustified risk, lack of knowledge.As W. Buffett said, "The most important investment you can make is to invest in yourself." This is the safest investment and the most profitable. It is knowledge that will allow you to protect yourself from fraudsters and your own mistakes and self-deception.Learning is not scary, not difficult and cheaper than losing capital on scammers and your own mistakes. You can start with free information, which in our age of information technology has become more accessible to everyone than ever. However, it is worth filtering the information and checking its sources. You should trust only those who have achieved success themselves, invest their own funds, and were able to save and increase capital not only during periods when everything is growing in the market, but also during periods of corrections and crises.