Forex Scams - How to spot them a mile away

Forex Scams - How to spot them a mile away

In recent years, investors have witnessed increased number of investment opportunities and offerings. While the complexity and success of these investment products vary, technological innovation has made the Forex market, one of the fastest growing areas. Many of the leading Forex brokers reported up to 500% increase in the number of new retail customers. However, the growth of the Forex market was accompanied by a large increase in foreign currency trading scams.

Many of these Forex scams are promoted on radio, television, newspapers and the Internet. Investors who are victims of these schemes, often lose all their money.

As an illustration, let's examine the facts of recent cases of fraud Forex and its consequences. W learned of a foreign currency trading opportunity through the infomercial on the radio. K, a business owner to manage the assets of the Exchange, spoke during the infomercial, promising viewers significant profits with minimum risk. After watching the infomercial, W contacted K, and later attended a seminar presented by K and his firm. The seminar was so convincing that W wrote a check to K for $ 100,000.

Several months later, W received statements (which were false) from K company reflecting significant returns on its initial $ 100,000 investment. Then, W attended another seminar and decided to invest more money. W took a loan and invested another $ 800,000 in K forex trading operation. Shortly after the second investment W, the Securities and Exchange Commission filed a complaint against K and his firm for engaging in a scheme to deceive investors. K means the company were frozen, including $ 900,000 invested by Tues receiver was appointed to distribute the remaining assets of the firm's S defrauded investors. The funds were distributed to pro-rate basis with no legal preference given to any of the victims. Company K of the funds were not sufficient to meet all requirements of defrauded investors, W received only about $ 22,000 of the $ 900,000 he invested.

The book can be written in different tactics and methods used by Forex scam artists, in this article will focus on the major warning signs that should be identified to avoid becoming a victim of Forex swindlers.

1st Promises of little or no risk

If you encounter a Forex firm that claims to develop a foreign currency trading strategy that carries very little or no risk, stay away. The reason forex trading, can be very profitable is because it also carries very high risk of loss. The FOREX market is very volatile, and, without good money management, the investor may lose if not all her capital within few days. Thus, individuals and companies who make claims that are far from the reality of the market, as is riskless forex trading, are really after your money.

2nd Guarantees of big profits

Beware of companies that guarantee large profits in forex trading. These so-called "guarantees" are just ploys to entice investors and make them believe that their money is safe and that they will definitely make a profit. Such claims are simply untrue, because even the best professional traders can not guarantee that they will make a profit every day. The FOREX market as well as most financial markets is very unpredictable. Hence, I doubt such claims and those who do.

3rd Ads for employment for forex traders

Many forex trading, firms use employment ads to attract individuals with capital to trade using their systems. For employment ads that often appear in newspapers and the Internet, said a foreign currency trading firm is looking for people to learn how to trade the foreign exchange market with firm capital. Those who answer the ad are convinced by the firm will make a fortune trading currencies if they participate in the training program of the company. During the training process, which often happens on the demo system, the novice traders are encouraged and told that their demo trading records show that has made significant profits, that they are willing to make real money and would very successful. Despite the firm's assessment of the novice trader as a brilliant newcomer, no firm capital is provided to a merchant, rather than excited novice is told to use their own capital to trade using the firm's platform.

In addition to various fees imposed on retailers with a platform to the company, the company makes money exchange rate, as introducing broker. Each time the novice trader trading system through the company, a good part of the spread charged by the broker is shared and goes into the company coffers. After several months, the novice trader loses all of its capital and leaves. Forex firm, having made money during the short stay of the novice trader, moving to new traders want to become rich trading foreign currencies.

4th Is Forex firm CFTC or NFA Member

Before you sign the check and give the capital of a company Forex, be sure to investigate the person. Check Exchange company with which you plan to do business, is registered with the U.S. Commodity Futures Trading Commission or the National Association future. Many scam artists falsely claim that their firms are registered with the CFTC or the NFA to gain a prospective investor's trust. Do not believe anyone, research the company and the background of the individuals involved before parting with your hard earned money.

The Internet has opened the way for many new opportunities for retail investors. The Forex market is exciting and fast. Investors who are careful and diligent are likely to avoid the danger of this market and will benefit from the opportunities foreign currency trading has to offer.



Previous Article
- A look at the Forex Market Makers