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Learn Forex Trading / Currency Trading Tips
How
To Avoid Forex Scams
Whenever there is an opportunity to make large
amounts of money, there will be people who are eager to jump
right in and start making money. And where there are people
who are eager to get rich quick with a minimum of effort on
their part, there are fraudsters waiting to take their money.
Experienced traders are wise enough to avoid the frauds – it’s
the new traders who are most vulnerable to the forex scams
that are slipping into the currency exchange market.
The U.S. CFTC (Commodity Futures Trading Commission), which
regulates futures and commodities trading, warns new investors
to be wary of frauds and scams that promise huge profits from
your investments, in and out of the Forex market. The CFTC
has issued several Consumer Fraud Alerts in connection with
foreign currency trading. They offer the following tips to
help you avoid being scammed.
Be skeptical of high-profit-low-risk come-ons.
“I made $1900 in one minute!” touts one sidebar ad for a Forex
trading company. Ads that promise high returns on small investments
with little or no risk to you are tempting bait. The fact is
that while there are certainly big profits to be made in forex,
there are correspondingly large losses. And most novice traders
drop out of active trading by the end of their first year because
they can’t afford the risk.
Be suspicious. Period.
Before you part with a penny, thoroughly check out the company
or trader you’re planning to do business with. Check the CFTC’s
consumer fraud alert page. Check to see if the company is registered
with the CFTC, or is a member of the National Futures Association.
Check to see if there’s any disciplinary action against the
firm or company. Get even more basic. Get a valid address and
telephone number, and verify that it belongs to the company.
Check to be sure the person you’re dealing with actually works
for the company. Especially if you’re doing business on the
Internet, it’s very easy for a scammer to fake credentials.
Be wary of sending money over the Internet.
The Internet has made it incredibly easy for scammers to operate.
It only costs $6.95 a month to have a professional looking
web site hosted – that’s pennies a day to reach millions of
potential marks. Before you part with credit card numbers,
bank account transfer permissions or wire transfers, be sure
to check out the company with all the authorities listed above.
Beware high pressure sales tactics.
Legitimate dealers don’t need to contact you with unsolicited
email, or pressure you into doing business with them. If someone
is pushing you to invest right now, tonight, this moment, it
should set off huge warning signals in your head. A real dealer
is more concerned with keeping you as a customer for the long
haul. He’ll be patient while you check out his credentials
and reputation. A phony dealer can’t afford that luxury – he
needs to get you on the hook right now, or risk losing his
score.
Be cautious of companies that tell you they’ll trade for you
on the ‘interbank’ market.
The interbank market is a term for a loose network of currency
traders that include banks, financial institutions and large
corporations. Fraudulent currency trading firms often tell
customers that they’ll trade for them on the interbank market
where the prices are better. It should be a warning signal
to you to stay away.
While technically not ‘scams’, you should also be wary of
paying good money for training courses that promise you systems
that are ‘guaranteed’ to earn you high profits. If the course
advertises that their system will earn you huge profits with
minimal risk, or guarantee you 40% return on your money in
six weeks, take the promises with a huge grain of salt. Experienced
traders understand that the forex market is a time market –
while it’s possible to make large amounts of money in short-term
trades, finding those profitable trades is a matter of being
in the right place at the right time… which means putting in
the time and the effort to be there.
They also understand that they’ll lose more often than they
win – the trick is to keep your losses short and your profits
long. Any company that guarantees that you’ll make a profit
on all or most of your profits is coloring their advertising.
Stick with trusted companies whose credentials you can verify
and whose background you can check. # # # # # SolveYourProblem.com : 2007
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