|
Author: John Bekian Article source: http://forex-traders-choice.blogspot.com/. Used with author's permission.
In recent years, investors have witnessed increased number of investment opportunities and offerings. While the complexity and success of these investment products vary, technological innovation has made the Forex market one of the fastest growth areas. Many of the leading Forex brokers reported up to 500% rise in the number of new retail customers. However, the growth of the Forex market has been accompanied by a sharp rise in foreign currency trading scams.
Many of these Forex scams are promoted on the radio, television, newspapers and the Internet. Investors who fall victim to these schemes, often lose all of their money.
As an illustration, let's examine the facts of a recent case involving Forex fraud and its consequences. W learned of a foreign currency trading opportunity through an infomercial on the radio. K, the owner of a Forex asset management firm, spoke during the infomercial, promising viewers significant profits with minimum risk. After seeing the infomercial, W contacted K, and later attended a seminar presented by K and his firm. The seminar was so convincing that W wrote a check to K for $100,000.
Several months later, W received statements (which were false) from K's firm reflecting significant returns on his initial $100,000 investment. Thereafter, W attended another seminar and decided to invest more money. W took a loan and invested another $800,000 in K's Forex trading operation. Short while after W's second investment, the Securities and Exchange Commission filed a complaint against K and his firm for engaging in a scheme to defraud investors. K's firm's assets were frozen, including the $900,000 invested by W. A receiver was appointed to distribute the remaining assets of K's firm to defrauded investors. The assets were distributed on pro-rata basis with no legal preference given to any of the victims. Since K's firm's assets were not enough to satisfy all of the defrauded investor's claims, W received only about $22,000 of the $900,000 he invested.
Since a whole book can be written on the various tactics and methods used by Forex scam artists, in this article, I will focus on the major warning signs that one needs to identify to avoid falling victim to Forex swindlers.
1. Promises of Little or No Risk
If you encounter a Forex firm that claims to have developed a foreign currency trading strategy that carries very little or no risk, stay away. The reason Forex trading can be very profitable is because it also carries a very high risk of loss. The Forex market is very volatile, and, without good money management, an investor can lose most if not all her capital within few days. Thus, individuals and firms who make claims that are far from market realities, as is riskless Forex trading, are really after your money.
2. Guarantees of Large Profits
Beware of firms that guarantee large profits in Forex trading. These so called "guarantees" are mere ploys to entice investors and make them believe that their money is safe and that they will definitely make large profits. Such claims are simply untrue, because even the best professional traders cannot guarantee that they will make a profit any given day. The Forex market, as most financial markets, is very unpredictable. Hence, be suspicious of such claims and those who make them.
3. Employment Ads For Forex Traders
Many Forex trading firms use employment ads to attract individuals with capital to trade using their systems. The employment ads, which often appear in newspapers and on the Internet, state that a foreign currency trading firm is looking for individuals to teach how to trade the foreign currency market using firm capital. Those who reply to the ad are convinced by the firm that they will make a fortune trading currencies if they participate in the firm's training program. During the training process, which often occurs on a demo system, the novice traders are encouraged and told that their demo trading records show that have made significant profits, that they are ready to make real money and would very successful. Despite the firm's assessment of the novice trader as a brilliant newcomer, no firm capital is provided to the trader, instead the excited novice is told to use her own capital to trade using the firm's platform. In addition to various fees imposed on traders using the firm's platform, the Forex firm makes money as an introducing broker. Each time the novice trader trades through the firm's system, a good part of the spread charged by the broker is shared and goes into the firm's coffers. After few months, the novice trader loses all of her capital and leaves. The Forex firm, having made money during the novice trader's short stint, moves on to new traders eager to become rich trading foreign currencies.
4. Is the Forex Firm a CFTC or NFA Member
Before you sign a check and give your capital to a Forex company, make sure you investigate the entity. Check to see whether the Forex firm, with which you plan to do business, is registered with the United States Commodity Futures Trading Commission or the National Futures Association. Many scam artists falsely claim that their firms are registered with the CFTC or the NFA to gain a prospective investor's trust. Do not trust anyone, research the firm and the background of the individuals involved before parting with your hard earned money.
The Internet has paved the way for many new opportunities for retail investors. The Forex market is both exciting and fast paced. Investor's who are careful and diligent are likely to avoid the perils of this market, and will profit from the opportunities foreign currency trading has to offer. John Bekian is the founder of http://www.electronicforextrading.com, an informative resource for novice and professional Forex traders.
Home Interior Decorating
A small guide to decorating your home.
The Effect of Hysterectomy on Sexual Response and Sexual Identity
Women have mixed emotions regarding the effect of hysterectomy on sexual response and sexual identity. Most woman go on to have a normal sex life, some have a h...
RSS Can Keep You In The Loop
When webmasters first hear about RSS they tend to concentrate on the promotional side of things. They want to know how it will bring more traffic to their site ...
Frustration Is Typical When Operating A Home Based Business
Operating any type of business will present its share of challenges and online businesses are certainly no exception.
Real Estate Mortgage Loans Online
When getting a mortgage loan online, there are a few things you can do to compare different real estate lenders and compare different mortgage loan programs.
Maintaining That Summer Shape
Ahhh, summer. It's the season of hot temperatures, skimpy bathing suits, backyard barbecues and swimming pools. It's relatively easy to focus on health, fitness...
Lessons Learned: Correcting an Error in Judgment:
Lessons can be learned when one makes an error in judgement.
Extended Family Relationships: Staying Friends with Former Lovers and Spouses
It's natural to want to maintain a relationship with our former romantic partners
(assuming that the relationship ended on reasonably good terms, of course). W...
Profits are within 6 Degrees of Freedom
It has been said that everyone is connected in some way. We are all within 6 degree of freedom. This article discusses ways you can tap into the network of othe...
Okay Lets Do A Poodle Again
My wife and I have been married for 32 years. In that time our pets, more commonly known to us as dogs, have taken a large part of that shared life together.It ...
Sales Commission – What Return Should You Expect On Your Sales Compensation Investment?
This article answers the following questions: How do most companies look at return on investment (ROI) for their sales compensation expense? What portion of sal...
Key Aspects Of A Successful Network Marketing Program
A successful network marketer always needs to keep a clear focus on Promotion, Persistence, and Patience.
Anatomy of a Poem
Take your poetry writing to the next level.
The Market for Testosterone Creams and Gels
Testosterone cream is one of many topical testosterone products to help increase testosterone levels. Safe, yet extremely potent, testosterone gel is absorbed t...
Effective Resume and Cover Letter Writing - Part One
To begin, make a decision to discard any former knowledge learned about the "rules" of resume and cover letter writing. People commonly become stuck in "bad" w...
What You Need to Know About Interest Rates
For all people shop around for the best rate, there are few who have taken the time to sit down and add it all up. After all, why would you bother? The answer i...
What is on Your Credit Report?
Your credit report is a very important piece of the puzzle in your financial picture. It contains a historical record of your personal and financial information...
Shop: Is Shopping Online Secure?
Is shopping online becoming popular and safe enough for you and I to do the vast majority of our shopping on the Internet?
A Simple Guide to Analyzing All Those Web Traffic Ideas - Part 4
If you have been following this series you will know that I am exposing some common "web traffic" frauds. Yes, I am up to calling most of them downright fraud a...
How to Flirt and Never Get Rejected!
This is one of the easiest ways to flirt and let someone know you're interested in them without having to run the risk of getting rejected face to face.
How Did This Happen to Me? Top 10 Ways to Get Spyware or Viruses on Your Computer
If you use the internet, you have probably been infected with a virus, trojan or spyware. Many people want to know what they did to get infected. Unfortunately,...
How to Mold Concrete Using Windows
Do you want windows in your decorative concrete? Here is how to do it.
Your Elevator Speech – Have You Updated Yours Recently?
Do you have an elevator speech? Does it get people's attention? Do they ask you lots of questions when you tell them what you do? Every great elevator speech n...
Baby Boomers and Booklets – Share and Share Alike
As one of those fabulous Baby Boomers, you now own a lifetime of valuable experiences, experiences that are useful to other people. You've given so much to your...
|
Print this page