The nature of the currency market tends to leave new investors vulnerable to such scams, simply because it fluctuates a lot and little is known about the market by the general population. Its up to investors to educate themselves on forex trading, just as they would before making any other investment if they expect to do well. This includes being aware of common scams. In 2001 the US Commodity Futures Trading Commission (CFTC) released nine tips investors in the forex market should keep in mind when looking for a broker:
- Stay Away From Opportunities That are Too Good To Be True
- Avoid Any Company that Predicts or Guarantees Large Profits
- Stay Away From Companies That Promise Little or No Financial Risk
- Be Wary of Trading on Margin Unless You Know What That Means
- Be Wary of Those Claiming To Trade in the "Interbank Market" because Its Safer
- Be Wary of Sending or Transferring Cash on the Internet, By Mail or Otherwise
- Scams Often Target Members of Ethnic Minorities
- Get the Company's Performance Track Record
- Anyone Who Won't Give You Their Background Isnt Worth the Risk
Many forex scams, as is common with other types of scams, rely on getting dollar signs to appear in their victims eyes in order to pull off the scam. If at any point in the decision making process you start to feel yourself getting overly excited by the prospect of making what seems like easy money, then set your plans aside for the time being and come back to them later. Youll be much calmer and in a better position to decide if the broker or deal you are interested in is really worth it.
One of the most common scams simply involves selling a product or system online that will guaranteed make you profits in forex trading. Be careful of online advertisements for these products, after all most of them contain information about the forex market that you can obtain by reading any other book on forex trading. It will give you information on the forex market if you are doing research, but it probably wont give you the guaranteed secret to success.
Ralph Nunes's Forex Free Guide website offers articles, tips and updates on Forex Trading. To find this and more, check out his website at: http://www.forexfreeguide.com/