Beware of forex scams

Traders will find a variety of forex software on the Internet if they simply Google the term ‘Forex Software’.  Not all of it is legitimate software and there have already been two convictions of known forex scammers.  A forex scam is one that defrauds an individual trader by getting them to believe that they can gain a high profit by forex trading.  Victims of forex scams have lost around $15,000.00 to the scammers or to bad decision making.

forex scams

Forex trading is considered a zero sum or negative sum prospect because the trades are not usually equal.  Scams of forex traders have included the churning of client accounts in order to secure a commission, selling forex software that claims to ‘secure large profits’, false advertising; managed accounts that are not manages; and plain fraudulent activity against the trader.

The Commodities Futures Trading Commission (CFTC) has outlined nine things to watch our for so that traders are not scammed out of their money and every trader, from beginner to advanced, should know these by heart:

  1. If it seems too good to be true, it is.  Stay away from it.
  2. Stay away from companies that promise large profits
  3. Stay away from companies that promise little to no financial risk.
  4. Do you understand the term ‘margin’ when used in forex?  If the answer is no, don’t make any trades ‘on margin’.
  5. If firms say they trade in the ‘interbank market’, don’t believe them.
  6. Do not send cash over the internet or by mail and avoid anyone who asks you to do it.
  7. If you an ethnic minority in your area, you are at high risk of being scammed.
  8. Always research a company and look at their performance history before dealing with them.
  9. Do not deal with anyone who will not show you their credentials or background.

Foreign exchange market trading can be a lucrative financial opportunity for the trader who does his or her homework and gathers up the necessary tools of the trade.  Anyone interested in learning this skill should make sure they take the necessary classes in order to understand how the market works, and the terminology it uses.  Forex trading is not for the weak at heart and should be done carefully so as not to put oneself deeper into financial debt.

Due diligence and deep research on the many different software programs available for forex trading is highly recommended. There are many variable and this article has only touched on the most basic of them.  If at all possible, utilizing free software such as that offered by “Forex.com” will give anyone interested in trying their hand at forex trading a good indication of whether or not they have the skill, patience, and ability for currency trading on a global and national level.

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