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Forex Scams How To Spot Them A Mile Away
n recent years, investors firm, spoke during the
have witnessed increased infomercial, promising viewers
number of investment significant profits with minimum
opportunities and offerings. risk. After seeing the
While the complexity and success infomercial, W contacted K, and
of these investment products later attended a seminar
vary, technological innovation presented by K and his firm. The
has made the Forex market one of seminar was so convincing that W
the fastest growth areas. Many of wrote a check to K for $100,000.
the leading Forex brokers
reported up to 500% rise in the Several months later, W received
number of new retail customers. statements (which were false)
However, the growth of the Forex from K's firm reflecting
market has been accompanied by a significant returns on his
sharp rise in foreign currency initial $100,000 investment.
trading scams. Thereafter, W attended another
seminar and decided to invest
Many of these Forex scams are more money. W took a loan and
promoted on the radio, invested another $800,000 in K's
television, newspapers and the Forex trading operation. Short
Internet. Investors who fall while after W's second
victim to these schemes, often investment, the Securities and
lose all of their money. As an Exchange Commission filed a
illustration, let's examine the complaint against K and his firm
facts of a recent case involving for engaging in a scheme to
Forex fraud and its consequences. defraud investors. K's firm's
W learned of a foreign currency assets were frozen, including the
trading opportunity through an $900,000 invested by W. A
infomercial on the radio. K, the receiver was appointed to
owner of a Forex asset management distribute the remaining assets
of K's firm to defrauded market is very volatile, and,
investors. The assets were without good money management, an
distributed on pro-rata basis investor can lose most if not all
with no legal preference given to her capital within few days.
any of the victims. Since K's Thus, individuals and firms who
firm's assets were not enough to make claims that are far from
satisfy all of the defrauded market realities, as is riskless
investor's claims, W received Forex trading, are really after
only about $22,000 of the your money.
$900,000 he invested.
2. Guarantees of Large Profits
Since a whole book can be written
on the various tactics and Beware of firms that guarantee
methods used by Forex scam large profits in Forex trading.
artists, in this article, I will These so called "guarantees" are
focus on the major warning signs mere ploys to entice investors
that one needs to identify to and make them believe that their
avoid falling victim to Forex money is safe and that they will
swindlers. definitely make large profits.
Such claims are simply untrue,
1. Promises of Little or No Risk because even the best
professional traders cannot
If you encounter a Forex firm guarantee that they will make a
that claims to have developed a profit any given day. The Forex
foreign currency trading strategy market, as most financial
that carries very little or no markets, is very unpredictable.
risk, stay away. The reason Forex Hence, be suspicious of such
trading can be very profitable is claims and those who make them.
because it also carries a very
high risk of loss. The Forex 3. Employment Ads For Forex
Traders the excited novice is told to use
her own capital to trade using
Many Forex trading firms use the firm's platform. In addition
employment ads to attract to various fees imposed on
individuals with capital to trade traders using the firm's
using their systems. The platform, the Forex firm makes
employment ads, which often money as an introducing broker.
appear in newspapers and on the Each time the novice trader
Internet, state that a foreign trades through the firm's system,
currency trading firm is looking a good part of the spread charged
for individuals to teach them how by the broker is shared and goes
to trade the foreign currency into the firm's coffers. After
market using firm capital. Those few months, the novice trader
who reply to the ad are convinced loses all of her capital and
by the firm that they will make a leaves. The Forex firm, having
fortune trading currencies if made money during the novice
they participate in the firm's trader's short stint, moves on to
training program. During the new traders eager to become rich
training process, which often trading foreign currencies.
occurs on a demo system, the
novice traders are encouraged and 4. Is the Forex Firm a CFTC or
told that their demo trading NFA Member?
records show that have made
significant profits, that they Before you sign a check and give
are ready to make real money and your capital to a Forex company,
would very successful. Despite make sure you investigate the
the firm's assessment of the entity. Check to see whether the
novice trader as a brilliant Forex firm, with which you want
newcomer, no firm capital is to do business, is registered
provided to the trader, instead with the United States Commodity
Futures Trading Commission or the The Internet has paved the way
National Futures Association. for many new opportunities for
Many scam artists falsely claim retail investors. The Forex
that their firms are registered market is both exciting and fast
with the CFTC or the NFA to gain paced. Investor's who are careful
a perspective investor's trust. and diligent are likely to avoid
Do not trust anyone, research the the perils of this market, and
firm and the background of the will profit from the growth and
individuals involved before opportunities of foreign currency
parting with your hard earned trading.
money.
About the Author:
Please visit http://www.forexweek.com.
Source: www.isnare.com
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