Beware of Forex scams

Beware of Forex Scams: the know-how

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Technological development has had a positive impact on many sectors of the economy, foreign currency trading being one of them. The immense growth in the Forex market has given investors increasing opportunities and at the same time increased retail customers by 500%, according to Forex brokers.

Of course, the success of an investment is dependent on many intricate factors but the positive aura of the market has definitely helped. Inevitably, where there is opportunity there is crime.

Forex scammers will try to get to investors through various forms of the media and helplessly some who believe these schemes will be stripped of their money.

To paint a clearer picture for you let’s hear a story, a true and recent one. K the owner of a Forex asset management firm spoke in an infomercial on the radio, giving investors the sweet hope of little or no risks yet large profits.

“W”, an investor who happened to have heard that, got interested and decided to contact “K”. He later attended a seminar set up by “W” and they managed to reel him into a point where he gave them $100,000 that very day.

Almost a year later, “W” invested a whopping $800,000 more based on the false papers that were sent to him showing him fruitful returns on his initial investment.

This money was a loan from the bank. Very soon, and this was bound to happen, the Securities and Exchange Commission pulled the curtain on “K” and his firm freezing all his assets including the $900,000 that belonged to “W”.

Unfortunately for poor “W”, there was no priority given to any of the victims and hence like all they others he only got $22,000 of “K’s” remaining assets, not even 10% of what he had invested.

Don’t worry; there are countless ways to separate real schemes from false ones. While I cannot squeeze in a whole volume of knowledge here, I would just like the share the most important warning signs.

1.  The sweet hope of zero risks

You must remember that the Forex market is known for its volatility and is hence immensely risky. In fact, the risk you take is the reason you can expect big turn outs on your investment.

Since a big loss is just as likely as a good profit, you must stay away from those firms who will try to convince you that there is little or no risk involved.

2.  False promises of profit

You must understand that even the most experienced traders could never guarantee themselves a profit every day, and obviously neither could anyone else.

So beware of firms who put out profit as bate and make false promises to make you feel like your money is safe and secure. Given the unpredictability of the Forex market, no one can assure you of the safety of your money.

3. Don’t let the employment advertisements fool you

You will often come across ads on the internet and other sources that say that the firm is looking for individuals, the ones with money I must add, to teach how to trade in this business.

Of course in the ads it will give you an impression that you don’t have to spend at all and that it is all on the firm, but the truth is, after a few training sessions which use demo systems they will show you that you have learnt the trade and are likely to be successful in reality.

This encouragement will push you into investing your own capital and later suffering for this choice. Since they will make you use the firm’s system, they will charge you in every step and moreover, the Forex firm will also make money as an IB or introducing broker.

Eventually you will run out of capital and have to leave, but these firms like piranhas will just move on to their next prey.

4. CFTC or NFA? A background check

Most firms will claim to be registered with United States Commodity Futures Trading Commission or National Futures Association just to gain your trust. But the rule of the jungle is you should never trust anyone.

So make sure you do thorough research on whatever firm you are planning to get involved with, after all, money doesn’t grow on trees.

Don’t let everything I’ve said make you back out of Forex trading. The market is a thrilling and growth-rich environment and if you play your cards right, you may hit a gold mine.

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