Can you go to jail for forex trading

Is forex trading illegal ? Can you go to jail for forex trading? These are the two most frequently asked questions whenever Forex trading and investing are brought up. Perhaps you have heard someone ask that question before; if not, by the time you finish reading this article, I’m sure you would’ve found the clarity and the assurance that you need.

can you go to jail for forex trading
can you go to jail for forex trading

Before we can move forward, I want to strip the concept of foreign currency and forex to its core to have a deeper understanding of what it means. Its role in financial markets, Forex, also known as FX, is the buying/selling(exchanging) any two digital currencies. You will usually have a base currency that is the main currency you will buy or sell in the transaction. In addition, you have a quote pair that is the currency being weighed against the base pair. For example, in the USD/INR, the base pair is USD which stands for United States dollar, and the INR is the quote pair, which stands for the Indian Rupee. although i personally suggest to stick only 28 major pairs.

Forex traders trade Forex intending to profit by speculating on the strength or weakness of one currency against another currency and the transaction being mediated by forex brokers. The forex market is the biggest market, with a volume of close to $7 trillion traded daily.

Can you go to jail for forex trading

If you want to get a straight-forward answer to this question, then NO. A big NO about going to jail for trading forex. If you are just a forex trader or investor, why would you worry about jail? If you don’t have any bad intention to deceive people like some fraud brokers do or some fake signal providers do, then you should not be worried about punishment.

Just chill and trade, boys! There is nothing to worry about trading forex. Forex trading is 100% legal.

Then why some people ask “can you go to jail for forex trading”

As long as you follow the correct procedures, rules, and regulations, tax laws, and other obligations that govern financial laws in your country, then you do not need to worry about getting arrested, trading forex is legal; however, there are strict guidelines that are to be followed by institutions and Investors in order to mitigate and regulate the industry.

Every country has a financial regulatory board, e.g., Financial conduct Authority, FEMA, also known as the Foreign Exchange Management Act, which adjudicates the financial regulations to ensure that institutions and citizens abide by fair financial practices.

The biggest problem, however, is that Forex is a huge market, and for that very reason, it cannot be regulated completely; this is seen as a gap for scammers or fraud institutions to perform financial malpractices.

In recent years there has been a huge uptick in scams in the forex industry as some individuals mask themselves as Forex investors in order to trick people

No forex punishment for you if follow the following 5 rules

can you go to jail for forex tradingHow to avoid
Suppose you are a signal provider and take money promising false statements and provide fake signals.Don’t give false signals to any
If you open fraud brokers or promote fraud brokersAvoid scam brokers
If you take funds for fund management services without having strong proof that you are knowledgeable and capable of handling those funds.Acquire proper knowledge regarding trading
If you sell scam forex robotsOnly a handful of robots are profitable. So try to avoid scam robots
Suppose you engage in money laundering.Don’t engage yourself in any kinds of money laundering
can you go to jail for forex trading-comparison table

Who trades Forex?

Big banks and Commercial banks make up most of the forex transactions that are made on a day-to-day basis; individuals who are also known as retail traders and small institutions, which are commonly Hedge funds, are the main players involved in the forex markets.

Forex trading is legal; however, some organizations and individuals conduct an illegal exchange of currencies to avoid paying taxes or for money laundering. In addition, some countries prohibit forex trading completely for individuals who do not have academic expertise to trade financial derivatives.

What could get you arrested

Some things could get you into trouble generally. For example, although just as in stock trading, insider trading is the most prevalent malpractice that gets investors into trouble, that is not the case in Forex.

Soliciting funds from other investors, individuals, or organizations is one of the prohibited actions as specified by the financial conduct authority, more specifically in a situation where you lose the money. At the same time, trading, you are liable to be banned from trading, and the worst-case scenario is you could find yourself doing jail time for contravening financial conduct laws, that is, if you are doing so without the correct certification, only financial service providers such as hedge funds or qualified financial advisory personnel are cleared to solicit money from investors.

 It is always a good decision to do research and due diligence before undertaking any form of investing from their hard-earned money.

Advantages of forex market

The market has a high volume which translates to high volatility; with that comes a huge profit potential, 24-hour market, which means you do not need to worry about being stuck in a trade, but this only applies during weekdays,  The ability to buy and sell any currency pair.

 Low spreads are a common advantage in this market as the price of running the trades doesn’t cost brokers a lot of money. The most attractive advantage for retail traders in this market is the low capital. For some brokers, you can start with as little as $5.


High volatility is a double-edged sword if you do not apply adequate money management. It can make your trading career a living hell of big losses. On the other hand, high liquidity, like high volatility, can be both an advantage and a disadvantage in the forex markets. 

The biggest vice about a market that cannot be completely regulated is that brokers can also partake in service malpractices such as manipulating the spread of quotes on price, which is the ability for the forex broker to deny you entry into the market before big price movements.

Importance of research and how to avoid forex scam

Research is a vital element in investing as it can save you a lot of money; 90% of beginner investors lose money because of lack of adequate knowledge regarding foreign exchange market, currency market, digital currency; so research can help you avoid losing money, it can also save you from unknowingly breaking financial laws and keep you in the course of being a law-abiding citizen. 

As we have touched on the prevalence of scams or fraud in the forex industry, doing research can help you know the difference between what is a legit investment and what is a scam because there are fraud wolves who are willing to take your hard-earned money without any remorse or fear.

Protect your personal information as criminals have gotten smarter and tech-savvy; it is very easy to be scammed or defrauded if you do not protect your information.

Always seek advice on tax issues to ensure that you do not end up in prison for tax evasion. Tax is like that quite problematic child; you never know when the officials will come knocking to ensure that you have been fulfilling your tax obligation.


Start learning from the basics to advanced factors of forex. Then build your own rock-solid forex strategy. Open a forex demo account with any reputed brokers. Download their forex trading platforms like mt4, mt5 or c trader. if you make profit in currency trading in a demo account only then go for a live account. This is a whole transparent process. If you went through the same mechanism then at least you should not be worried about can you go to jail for forex trading. There is nothing about illegal forex trading or fraud ponzi schemes ! trading is fully legal.