How to Spot a Forex Scam and Save Your Money
The most annoying thing for me talking about Forex is a huge spread of Forex-related scams in recent years. The frauds use any methods to attract victims: TV and radio commercials, finansial newspaper classifieds and perfect-looking web sites, all promising extremely high investment returns with no risk. Scam artists even rent fancy offices(!) to make a solid impression. To survive in this scam minefield the novice should become keenly aware. The rule of thumb is do not believe anybody until you have some good reasons to.
Now, do you believe me? Ok, let’s move on...
No matter what you're told, Forex trading is risky. There are no safe trading strategies, otherwise why someone is telling you about it instead of just making millions. Trading on Forex requires qualification, experience and concentration. Therefore, do not invest more than you can afford to lose. Some people are persuaded to mortgage their home or savings to trade Forex. They are the frauds food.
When it comes to spotting the scam, I like the concept of a bad smell. If something smells bad, you are willing to keep away from it. It is a reflex, driven by your instincts, no thinking. After some experience in the field, you will be able to identify the bad smelling opportunities. However, here are some typical ones:
- "You can make six-figure profits within a year."
- "Forex investments are very low risk."
- "You can double your money."
- "Mortgage your house or use your retirement funds."
- "My recommendations can't miss."
- "You will make money whether exchange rates move up or down."
- "You can make six-figure profits within a year."
- "You must invest right now or it will be too late."
If you hear this crap - don't invest! It sounds too good to be true. The scammers are trying to manipulate you!
So, you should be in doubt now. How to choose the right broker? How to make sure you trust your cash to the legal firm? Fortunately, there are several authorities that keep an eye on the investor activities.
The Commodity Futures Trading Commission (CFTC) has been founded to protect investors in the USA. You may check if your potential broker is registered as a Futures Commission Merchant (FCM) with them.
Another place to research on your broker is the National Futures Association’s (NFA) Background Affiliation Status Information Center (BASIC). I highly recommend visiting this resource.
After all, use common sense. Educate yourself. And be alert.
Mark Manning