Forex Scams and Frauds
Like every other finance and money business, Forex is also exposed
to the same or even greater amount of scam and fraud risks from
mediators like brokers and dealers. There are some authorities who
regulate and manage the currency exchange as well as the futures
trading in the United States, such as National Futures Association
and The United States Commodity Futures Trading Commission.
These regulating authorities take actions against the companies or
individual brokers who are allegedly involved in dishonest or
deceitful selling of foreign currency and futures. Any of the
Off-exchange trading activity related to Forex or futures, which
is not regulated by any known financial authority can be unlawful
and may turn out to be a fraud or scam.
Off late, many individual and retail traders have observed greater
numbers of investment openings and opportunities. While the
complexity and success of Forex market is increasing rapidly, also
growing are the fraud and scam risks wherein, there are chances of
investors coming along some Forex broker's or dealer's whose
dealings and strategies are sometimes not truthful and fair.
Many of these Forex scams or frauds are promoted in the form of
lucrative schemes and promotional offers on newspapers, television
and the Internet. New traders or individual investors easily fall
prey to all these schemes, and mostly end up losing all their hard
There are a lot of scam artists and swindlers a trader will across
while trading at the Forex market. What needs to be done is beware
of these frauds and take care not to get carried away by false
promises and claims. Some of the common fraudulent ways are listed
Companies that promises of No Financial Risks
Always stay away from the companies or brokers who claim to offer
its clients with currency trading strategies which proffer very
little or no financial risk to its traders. Any financial market
whatsoever, be it Stock Exchange, Foreign Exchange or Futures, can
only be profitable because it carries along with it, a very high
risk of loss for any and every trader equally.
Only good money management techniques can help the traders from
suffering losses. Be it an individual trader, retail investor or a
big financial firm, profit and losses can occur to anyone in the
market. Since the market is continuously changing and volatile, we
cannot say that there is anything such as a risk-less Forex
Is your broker firm regulated?
Before you decide to partner with a broker firm and give them your
money, make sure you know what you are doing. And also make sure
you your broker or broker company well. Always inspect the
individual or firm you are going to start dealing with for your
Always check whether the broker or the firm you are dealing with
is registered with the United States Commodity Futures Trading
Commission or the National Futures Association.
There are many firms which falsely claim that to be registered and
regulated by the CFTC or the NFA. This helps them easily gain
potential investors and their trust.
But instead of blindly believing the dealer or broker, it is
always advisable to cross-check with the brokerís regulatory firm
about the brokerís listing status and background. Also important
is to carefully read and comprehend the contract terms and
conditions put forth to you by your dealer or broker.
False guarantees of Larger Returns and Profits
In this ever changing and rapidly growing financial market, you
might come across a lot of firms or dealers guaranteeing large
returns or profits in Forex trading. These are sheer schemes and
tactics to attract potential investors and giving them false hopes
that whatever they invest will be returned to them safely along
with added money profit.
These are false claims and promises as no company, no matter how
big and professional can promise making profit every day, with
every investor. With such an unpredictable market like Forex, it
is not possible to assure profits or losses to anyone.
Other than the above mentioned most common fraudulent ways, some
other ways with which many traders have been cheated. It is always
better to keep them in mind and stay away from them, like openings
and offers which Sound Too Good.
Also, be cautious while Transferring Cash over the Net. Always
make sure to check the Company's Performance and past Record and
especially never deal with the firms or brokers who hesitate to
give you their background.