Avoiding Forex-Related Frauds and Scams

Avoiding Forex-Related Frauds and Scams

Avoiding Forex-Related Frauds and Scams, A lot of people have been ‘burnt’ from scam operations on the Internet. Their sites may look so perfectly legitimate that you doubt whether they would have gone through all that trouble building a trading platform just to steal your money. Beware.

The first thing I look for is the geographical location of the broker. If I find that they are based in a country where the financial industry is, in my opinion, relatively unregulated and under-developed, I quickly forgo signing up. This is terrible news for honest brokers in those countries, but your job as a trader is to protect your capital. If you loose that, then you cannot trade. The onus is on them to convince you that they will do the right thing by you as an investor.

I started out with an Australian broker. Currently I am using an American one. I have not tried UK-based brokers but the British financial industry is one of the best. Companies that are based in countries such as Japan , Germany and France are probably just as good too, if their website speaks your language.

Notice any license numbers that they may have registered with regulatory bodies that act like government watchdogs who oversee the finance and investments industries. These are organisations that impose strict rules to safeguard your investment. Some of these rules may include the requirement that brokers segregate all customer funds from the operational funds of the business. Your money is required to be put in highly-reputable banks and the funds are only withdrawn from these accounts upon specific withdrawal requests.

Take note that there are some fake regulatory bodies being thrown around in cyber-space as well. Take a look at how long they have been operating for. Try and search out any reviews or comments made about them. See if you can find forums where traders have discussions about their brokers.

Below is a list of things to keep in mind to help you avoid being a victim of a scam:

o Stay Away From Opportunities That Sound Too Good To Be True

There are people who may have just acquired a large amount of money just and recently are the same and are shopping around for safe investment vehicles. These may include retirees who have access to their retirement funds. It is understandable why retirees would be drawn to ‘high-return, low-risk investments’. This is also what makes them very vulnerable. If you identify yourself to be one of these people, be careful. A lot of deceitful characters are after your money. Furthermore, only allocate a tiny amount of your money to trading until you can start growing it. Not all people can trade successfully, so it is a venture you should take on haphazardly. It is your life savings at risk.

o Avoid Individuals Or Organizations Who Claim To Predict Or Guarantee Large Profits

Any form of trading is hard. Trading currencies is no different. Be wary of statements that make it sound easy. Statements like:

o “Whether the market moves up or down, in the currency market you will make a profit”;

o “Make $1000 per week, every week”;

o “We are out-performing 90% of domestic investments”;

o “You’ll make returns of 70% a year”;

o “Here is a no-risk strategy”.

If they could make such returns, why would they even bother letting you know about it.

o Be Wary Of Companies Who Downplay Investment Risks

Hold your wallet tight and zip up your purse when companies say that written risk disclosure agreements are routine formalities imposed by the government. Watch out for statements like:

o “With a $10,000 deposit, the maximum you can lose is $200 to $250 per day”;

o ” We promise to recover any losses you have “.

o Be Wary Of Companies That Claim To Trade In The ‘Interbank Market’

Do not believe it when some people say that they have access to the ‘Interbank market’ or that they can give you access to trade in that market because that’s where bargain prices can be obtained. This is not true. The ‘interbank market’ is not a place, it is not a physical building. It is simply a loose network of currency transactions that are negotiated between big financial institutions and other large companies.

o Ethnic Minorities Are Often Targeted

Ethnic newspapers and television ‘infomercials’ are sometimes used to attract Russian, Chinese and Indian minorities. Sometimes these ads offer so-called ‘job opportunities for account executives to trade foreign currencies’, whereby the recruited ‘account executive’ is expected to use his own money to trade currencies and would often times be encouraged to recruit members like their friends and family to do the same.

o Seek Out The Company’s Background

Check any information you receive to be sure that the company is who they claim to be. If at all possible, try and get the background of the people operating the company. Do not rely solely on oral statements and promises made by the company’s employees.

o If You Are In Doubt, It Is Not Worth Risking Your Money

If after trying to solicit information and at the end of it all, you are still in doubt about the credentials of a particular company, my suggestion is to start looking elsewhere.

You may find further information by contacting government ‘watchdogs’ because they keep up to date with trends and reports regarding scams and other fraudulent activities. Please check the resource section of this site for the information of organizations that regulate the securities industry, sorted by country. There is also a list of brokers that you may want to look at.

Marquez Comelab,
This is an excerpt, modified from the book: The Part-Time Currency Trader.

Marquez Comelab is the author of the book: The Part-Time Currency Trader [http://www.marquezcomelab.com/]. It is a guide for working men and women interested in trading currencies in the forex market. It explains everything you need to know to create your own trading methodology; touching on the basics and preparation before expanding onto the topics of market analysis, tools, trading systems, risk management strategies, discipline and psychology. See: http://marquezcomelab.com [http://www.marquezcomelab.com/]. His other articles can also be found at http://thefreedomtochoose.com; along with other helpful trading, business, investing and self-improvement articles.

Forex scams – what are they? By definition, a scam means anything that represents a fraudulent business scheme, or what we call a “swindle”; these are illegal means of having a goal to “bamboozle” or deceive anybody. Now, the people’s mindset when it comes to this matter is this: “for anything that doesn’t make me rich overnight… I call those scams!”. You see, the truth is that they don’t want to take any time developing any kind of skills in forex marketing – people want “magic”, something that pops up right then and there…. without them having to deal with those what they call “forex scams”, putting no effort at all in the process. Now, that’s something what I would call “crazily impossible”! If ever there’s that kind of magic, two things would happen: first, every single person would be using it; and second, its effectiveness in any kind of business would not last. You must remember something: the money that you earn each and every day has to come from a source. With technology, the methods of the production of goods would improve, giving way to the improvement of every individual’s standard of living and his income. It just a matter of “balance”, if you do something that involves “real money”; gambling, trading, etc.– without having any kind of goods and services produced in the process, what happens is that one person gains something and another one loses something.

When we talk about currency exchange, people or institutions who don’t know and don’t care take some of the “bad prices”. People who take vacations abroad and institutions/businesses that import/export goods have one thing in common: they barely try to schedule their transactions/payments when the time comes that the currency rates are at their advantage. However, in the forex trading scenario today, the market is cluttered with many people and institutions in the “pure” forex market that it becomes impossible for everybody to earn their share of profits. So, if you’re in some kind of online forum on the Internet, trying to determine whether those bad comments you have read about a certain kind of product are really a hint of scams, it would be of great help if you’d picture the things that are happening outside of the Internet… in the real world.

Think of this scenario: you purchased a book from a local bookshop, but the system that’s in it is not effective for you. There could be two possibilities for this: either the things that are in the book are outdated, or just not suitable for you in some way. Probably you learned something from it, but it just wasn’t that effective for you. But you wouldn’t go back to that local bookshop and call the store owner/employees there a bunch of “scammers”! You’d be calling them as such if they would invite people to pre-order a brand new and great book about forex that was about to be produced and distributed, and everybody (including you) gave them the money… but what happened is that they closed the store and the store owner went out and left your town, then that’s what you can safely call “one of those scams”! Now, going back to our earlier definition of what a scam is, it is not right to use this kind of word to point out to something being offered and given in any kind of good faith.

What’s happening now is that everyone’s getting very apprehensive about online purchasing, and they’ll throw much of the word “scams” to everything that doesn’t work for them without any grounds. The truth is is that it’s just an output of a frustrated customer who’s blaming the product for his/her incapacity to gain success with it, or rather the material itself did work at one point in time but is now outdated and used over and over again that it has become quite ineffective. You shouldn’t buy those unless you’d want it for your personal collection, but to give justice to these materials, it’s just isn’t right to call these as “forex scams”.

Forex trading can at times be a tough business to do, so what you need are quality tips, the techniques and tools that you can use while trading. These tips, techniques and tools will be the ones to get you the success and profits in trading forex.

Check out these helpful tips, techniques and tools you that you need from Mike Araujo so you too can get success in forex trading. Act now by clicking on this link: Forex Trading Revealed

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