It's easy for people who are new to forex trading to fall for one forex scam or another. This can be almost any idea that scammers can come up with. Forex scams usually involve software and e-books that "guarantee" a profit on the forex market, an unscrupulous market maker who spikes customer accounts so they can get their fees, general false advertising, and even fake sites that take your money and disappear.
The fact that the currency market changes a lot and that most people don't know much about it makes new investors more likely to fall for these kinds of scams. If investors want to do well with forex trading, they need to learn about it, just like they would with any other investment. One way to do this is to know how to spot common scams. In 2001, the US Commodity Futures Trading Commission (CFTC) put out nine tips that investors on the forex market should keep in mind when looking for a broker:
- Don't take chances that seem too good to be true.
- Don't take a chance on someone who won't tell you about their background.
- People from ethnic minorities are often the victims of scams.
- Find out how well the company has done in the past.
- Stay away from any company that promises or promises to make a lot of money.
- Be careful about sending or transferring money online, by mail, or in any other way
- Don't trade on margin if you don't know what it means.
- Don't believe people who say they trade on the "Interbank Market" because it's "safer."
- Don't do business with companies that say there is little or no financial risk.
As is common with other types of scams, many forex scams depend on getting their victims to see dollar signs in their eyes. If you start to get too excited about the idea of making what seems like easy money, set your plans aside for now and come back to them later. You'll be much more relaxed and in a better position to decide if the broker or deal you're interested in is really worth it.
One of the most common scams is selling a product or system online that will "guaranteed" make you money in forex trading. Be wary of online ads for these products. Most of them contain information about the forex market that you can get from any other book on forex trading. It will give you information on the forex market if you are doing research, but it probably won't give you the guaranteed secret to success.
