The Forex market is one of the largest worldwide trading markets and is one of the most popular for scammers to exploit innocent and niave victims. Combined with the anonymity of the internet, many con artists and criminals have found it easy to steal large sums of money from investors using the guise of Forex trading as a sales pitch for a scam or ponzi scheme. In an effort to enlighten anybody who stumbles across this blog, I’m going to give some basics on preventing yourself from being a victim of fraud by way of Forex Trading.

What is Forex Trading?

Forex is the act of trading of foreign currencies. Much as on the stock market, an investor will buy and sell a stock to make a profit or cut a loss, the Foreign Exchange (or FX market) is similar except you are not trading stocks, you are trading actual foreign currency. Various economic conditions create a leverage value between currencies of various countries allowing Forex traders to buy and sell currencies and make a profit. Forex is an extremely volatile market and the profit margins are very small compared to the amount of money necessary to make a profit. Unfortunately, the Forex market has always been the bread and butter for scammers who are out there looking for inexperienced people to sucker into their schemes and rip them off.

How Do I Spot a Forex Scam?

If a person, website or program you are dealing claims to be trading Forex to pay back guaranteed unreasonable rates any higher than a few percent per week, it is more than likely you’re looking at a Forex scam. Especially is they use the word “guaranteed”, run away and save your money. Nothing in the investment world is “guaranteed” and the only guarantee is that you will be ripped off in the end, usually after you have been baited into investing more money than you could afford to lose.

If you are dealing with an autosurf program that claims to be trading Forex to pay you returns, again, it is a scam and you will eventually be left holding the bag. Over the last few years, autosurfs such as Surf2Prosperity, DadnDaves, PhoenixSurf and many others have run with millions of dollars of investors money based on claims that the “admins” of these programs were expert Forex traders capable of sustaining daily profits of up to 12%. Simple math will clue you into the fact that anybody who could trade Forex at a 12% per day profit margin could eventually destabilize the world economy with a few years given the initial capital. Imagine if an imaginary trader named Lee Smith or Dave Cannard had $1 million in investors money to trade with, at the rate of 12% per day, that person would be making $120,000 per day profits. Actually, think again, after day 1, the trader whould have $1,120,000 to trade with and the second days profit would be $134,400, giving the trader $1,254,400 on day 3 where the profits would be $150,528. It’s easy to see how quickly at this rate that our expert trader would be into the billions of dollars within 62 days. I made this imaginary Interest Calculator that demonstrates exactly how ridiculous these type of claims are for those of you who are not mathematically inclined.

Once again, you can apply the old adage, if it looks to good to be true, it is.

Forex Signals and Forex Trading Systems

Maybe you’ve seen all the offers for Forex Signals and Forex Trading Systems littered about the internet. Probably you’ve noticed the hefty proce commanded for these training materials and maybe you’ve even thought about buying them. Well, save your money. One of the biggest myths in the Forex market is “signals”, which are essentially buy and sell points that will supposedly guarantee you a profit in the Forex market but more often than not, they will be bogus and cost you not only the price of the signal, they will cost you your investment. Not all companies offering Forex Signals are inaccurate, there are legit sources for signals out there but unless you’re hanging around where the real traders ply their trade it’s highly unlikely a novice will ever get a valid signal. As for Forex Trading Systems, all you have to do is use logic and realize that if somebody actually had a system that guaranteed them continual profit, do you really think they would be marketing it to strangers on the internet? Professional Forex traders are not likely to give up there secrets for a few hundred dollars because if everybody were using the same system, if there was a system that worked, the whole world would be billionaires like Warren Buffet. in fact, if there were a system that worked, don’t you think Warren Buffet or George Soros wouldn’t go out of their way to obtain the exclusive rights to it ?

If you are interested in learning to trade Forex and think you might have an aptitude and the intestinal fortitude for it, there are many freely avaliable sources that you can start the learning process.