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Forex Trading Scam

Forex scams attract customers with sophisticated-sounding offers. Promoters often lure investors with the concept of leverage: the right to control a large amount of foreign currency with an initial payment representing only a fraction of the total cost. Coupled with predictions about supposedly inevitable increases in currency prices, these contracts are said to offer huge returns over a short time, with little or no downside risk.

According from the source, Wikipedia, A forex scam is any trading scheme used to defraud individual traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading "has become the fraud du jour," according to Michael Dunn of the U.S. Commodity Futures Trading Commission. But "the market has long been plagued by swindlers preying on the gullible," according to the New York Times. "The average individual foreign-exchange-trading victim loses about $15,000, according to CFTC records" according to The Wall Street Journal. The North American Securities Administrators Association says that "off-exchange forex trading by retail investors is at best extremely risky, and at worst, outright fraud".

Here are some tips for you to avoid being a victim of forex scam.
  • Stay away from opportunities that seem too good to be true - Get-rich-quick schemes, including those involving forex currency trading, tend to be frauds.
  • Avoid any company that predicts or guarantees large profits - Be extremely wary of companies that guarantee profits, or that tout extremely high performance. In many cases, those claims are false.
  • Stay Away From Companies That Promise Little or No Financial Risk - Be suspicious of companies that downplay risks or state that written risk disclosure statements are routine formalities imposed by the government.
  • Don't Trade on Margin unless You Understand What It Means - Don't trade on margin unless you fully understand what you are doing and are prepared to accept losses that exceed the margin amounts you paid.
  • Question Firms That Claim To Trade in the "Interbank Market" - Be wary of firms that claim that you can or should trade in the "interbank market," or that they will do so on your behalf.

  • Be Wary of Sending or Transferring Cash on the Internet, By Mail or Otherwise - Be aware that if you transfer funds to foreign firms it may be very difficult or impossible to recover your funds.
  • Currency Scams Often Target Members of Ethnic Minorities - What appears to be a promising job opportunity often is another way many of these companies lure customers into parting with their cash so be aware of that.
  • Be Sure You Get the Company's Performance Track Record - Get as much information as possible about the firm's or individual's performance record. You should be wary of any person who is not willing to do so or who provides you with incomplete information.
  • Don't Deal With Anyone Who Won't Give You His Background - Get the background of the persons running or promoting the company, if possible. Do not rely solely on oral statements or promises from the firm's employees. Ask for all information in written form.
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