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Forex Trading Scams
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. There are several good sources to get you started learning about Forex listed here.
by Coopersview
Hi C4G,
What a nice topic for today and you have summed it up all so well.
After going through a few HYIP/autosurfing last year that claimed their earnings were from forex, I will not ever involve in a program that says they earn from forex trading. It is now an old tactic anyway. I have seen my friend losing money thousands upon thousands of dollars because he stubbornly believed in real good forex traders that earn so much every month.
A few years ago, another friend of mine spent thousands of dollars to buy those trading systems and signals, attend seminars and subscribe to buy/sell notification via e-mail. He was kind enough to forward me all the tips and it turned out to be total disasters.
We are not Warren Buffet and we don’t have that kind of money to enter their world of trading. Those market makers are pulling the strings on us the duffers like puppets; my teacher told us these hard facts. (And since then it was the end of my interest in any kind of trading.)
Nice quote from someone: “Without mistakes we can’t learn”
Yes, I have learned enough from these liars and scammers; that include those who sell their trading systems and seminars to the naïve newbies.
JMV
by C4G
Thanks for the comments. I was hoping more people would read this article and be made aware of the various Forex scams out there.
by JohnnyQ
I found this article very useful and informative. Thanks Dave.
by DragonFyre
Thanks for the info, Have Dugg and Stumbled.
by Forex Blog
Nothing can be done. I have seen many articles warning about the forex scams. We know about that and we save our money. But there are a lot of loosers in this world that will believe those bull..it about the guaranteed money. It is their problem not ours. After all everybody has a brain and can think whether this “guaranteed profit” is true or not.
by Anthony
Its a very great news I got from your post that forex is maintaining about how to spot the forex scam and about the forex signals are happening. There are Forex traders who have been relying on Forex signals arguing those Forex signals providers really help them making money in Forex trading. Which is a very great information you had given in your post.
by alysia
Nice blog. Thanks for your work on it.
I’ve recently created a completely free forex website which hopefully will be of use to you.
The purpose of this site is to show you how the forex market reacted in the minutes and hours after news was released. Patterns have emerged. For instance, if the USD Non Farm Payroll number is significantly better than expected, the USD will initially gain against the GBP and Euro in the minutes after the number is released, and then lose value shortly there after.
Site:
http://www.forexnewspatterns.com
by David G.
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by Dan
Aren`t You fed up with all those Forex E-books that promise heaven and deliver hell? The “Forex-Killer” is an automated Trading software that does it all! It analyzes the markets and gives you a clear buy or sell order. All you have to do is feed it with the necessary data. A simple 2 minute process !!!…Download The Amazing Software Now: http://www.urlpire.com/?MALFY
by stocks trading
stocks trading…
Cool Beans. After reading your blog I now understand “currencies trading”. Thank For the great post!…
by Automated Forex Systems
Have you used any automated trading systems? Perhaps you could post some reviews for us. It seems that automated forex systems are becoming very common in the currency markets.
by Danielle
I always say that you have to check and recheck terms and conditions of your forex broker before you make any commitment (aka deposit!). I know that it is extremely boring, but you have to find out if your broker is regulated, what kind of fees it takes, what kind of trading software does it have, what are the bonus requirements etc. The more you know, the better.