Foreign exchange scams (AKA forex scams) are unfortunately a reality for anyone who ever enters the market. Foreign exchange fraud is any fraudulent trading system used to swindle traders by telling them that they are able to easily gain a large profit from trading in the forex market. Forex trading has become a very popular form of fraud over the past few years, according to Michael Dunn of The U.S. Federal Trade Commission. Because of this, many foreign exchange scams have been brought online and many people who want to make quick and easy money have been attracted by them.
How to spot forex scams
Forex scams always try to sell their investors short, as what they call “guaranteed profits”. They promise to make you rich in just a few days or weeks of investing with their forex automated systems and software. They also promise high returns on your investment, even if you invest small amounts. These forex scams would tell you that the currency market is very volatile and unpredictable, thus making it an ideal place for you to invest large sums of money. However, all these promises are lies. These are just schemes to get your money from you.
Foreign exchange scams usually target small individual traders. While these investors make money from currency trading, the forex scams attract them by telling them false stories and enticing them to invest large sums of money. This is how foreign currency frauds operate. First, they create or pose as professional individual traders who claim to be able to predict huge changes in the currency market within minutes.
They would then send their recruits to convince these small investors that all they need to do is purchase their software or systems and that everything will be paid for them. The only thing that they will get from these unsuspecting traders is a bunch of worthless e-books and other useless materials. Once these newbies have enough money, the forex pyramid schemes move on to another group of unsuspecting investors. These newbies are lured into joining the main types of forex scams: scalping and pips. While these two are not as popular, there are many others.
One of the most common forms of scams is the opening up of a brokerage account. The investor would pay for a broker service, such as a bank or a brokerage firm. He would deposit his money and the broker would advise him on which currency pairs to trade-in. However, the investor would not receive any sort of advice as to whether the currencies he is dealing with are profitable or not. In fact, there is really no reason for the broker to give any advice at all as he earns his commission from the sale of these currency pairs.
Another forex scam is the use of leverage. This is the practice of using borrowed money to invest in an entirely different venture. In the case of overages, the trader is advised to buy a large number of dollars and put small amounts of money aside. Although this may result in small profits, the trader’s capital becomes extremely valuable once he starts making huge profits.
Forex traders fall into the trap of investing solely in currencies that are highly correlated to the US dollar. Examples of forex currency pairs like US dollar/Japanese yen, US dollar/Swiss franc, and so on. When these currency values fluctuate, the investor stands to profit handsomely, because they have bought dollars when the exchange rates were low and sold them when the exchange rates rose. However, if they had invested in currencies that are not highly correlated with the US dollar, they would have stood to make much smaller profits. In a forex scam, the investor is tricked into investing money that he does not have and into trading currencies that will eventually lose value. If you want to avoid becoming a victim of this type of scam, you should learn how to analyze the forex market before making any investment decisions.
Forex scams are just not real, even though the forex market is a vast pool of potential money-making opportunities. Real forex scams are usually schemers who know what they are doing and who take advantage of other people’s needs to earn quick and attractive profits. Forex pyramid schemes are illegal, although they are very popular among people of all ages. If you want to learn about different types of scams, check out the website below for some interesting and informative information.