The foreign exchange (forex) market is an active one. If you include futures and currency options, trading can be more than $6 trillion a day, yes, a day! With all this money in and around an unregulated market, you can be sure there will be plenty of scams there too. Please note that trading in foreign currencies can be very risky.
How these con artists lure people into their scam is the promise of quick fortunes. If you hear of promises of 100 percent annual returns, no losing quarters, or there are long lock-out periods, it’s likely a scam.
Following are two scams you need to be aware of so you don’t get taken in by them.
Currency scams usually focus on obscure currencies whose true value many people would not commonly know. They tout currencies like the Vietnamese dong which trade at a fraction of a U.S. dollar, making them seem cheap.
Be leery of anyone who states we have found the “secret formula” on the foreign currency market. They promote the “how can I lose at this price?” mentality. Some of these currency sites charge many times what you would pay for the same currency at your local bank.
If you want to invest in currencies, please note this is generally a high-risk proposition, so be sure to find a legitimate firm to trade. Or better yet, don’t invest in things you know nothing about. The willingness to do so, coupled with a generally trusting attitude, places a huge target on your life savings.
Forex Robot Scams
A forex robot is a trading program which uses algorithms that automates trading decisions by using technical signals to enter and exit trades. While not all forex robots are scams, beware of those who promise huge returns. The most popular robots for retail traders are built around the MetaTrader platform.
Many companies create and sell forex robots, but be careful who you deal with if you’re in the market to buy one. It’s not uncommon for a company to spring up overnight and start selling an “instant riches” forex robot, including a money back guarantee, only to disappear in about 45 days or so.
At the end of the day, if you are considering using a forex robot, then treat it like a business rather than make an emotional decision. Start with an online search for a forex robot scams list and then do your own due diligence.
Scammers target those who have little to no experience trading in forex. Begin with small sums and spend the time learning the forex trading market.
Conduct due diligence on the forex broker you’re considering by going to the Background Affiliation Status Information Center (BASIC), created by the National Futures Association (NFA). Many changes have driven out the crooks and the old scams and legitimized the system for the many good firms. However, always be wary of new forex scams; the temptation and allure of huge profits will always bring new and more sophisticated scammers to this market.