How to Spot Forex Scams a Mile Away
Investors now have access to more investment possibilities and offerings than ever before. The Forex market is one of the industries with the greatest growth rates, despite the complexity and degree of success of these investment products varying. Many of the top Forex brokers reported increases in new retail customers of up to 500 percent. However, a substantial increase in currency trading frauds has coincided with the growth of the Forex industry. You can report a website.
Radio, television, newspapers, and the internet all frequently feature advertisements for these Forex frauds. Investors who fall into these schemes frequently lose everything they have invested.
Let’s look at the details of a recent instance involving Forex fraud and its effects as an illustration. We heard a radio commercial about a foreign exchange trading opportunity. During the infomercial, K, the owner of a Forex asset management company, talked and promised viewers substantial earnings with little risk. Following his viewing of the ad, W contacted K and later went to a seminar put on by K and his company. The seminar convinced W enough to give K a check for $100,000.
Several months later, W received phony statements from K’s company that claimed he had made a profit on his $100,000 investment. W then went to another session and made the decision to increase his investment. W borrowed money and added another $800,000 to his investment in K’s forex trading business. Shortly after W made his second investment, the Securities and Exchange Commission complained about K and his company for participating in an investor fraud scheme. Assets belonging to K’s company, including the $900,000 W invested, were frozen.
To transfer the remaining assets of K’s company to investors who had been duped, a receiver was appointed. No victim was given a legal preference; the assets were divided proportionately. W received just around $22,000 of the $900,000 he invested since K’s company’s assets were insufficient to cover all of the claims of the victimized investor.
Since a book could be written about the different strategies and techniques employed by Forex con artists, in this post I will concentrate on the key warning flags that one has to recognize to prevent falling prey to Forex con artists.
1. Guarantees of Low or No Risk
Avoid any Forex company that suggests they have created a foreign exchange trading technique that involves little to no risk. Because there is a very large potential for loss, forex trading may be very rewarding. Due to the high level of volatility in the forex market, investors risk losing the majority of their investment, if not all of it, over a short period of time. Therefore, those people and businesses that advertise riskless forex trading or other statements that are distant from market reality are truly just wanting your money.
2. Promises of Big Profits
Avoid companies that promise significant gains from trading foreign exchange. These alleged “guarantees” are really ruses to lure investors and give them the impression that their money is secure and that they would undoubtedly make significant returns. Such assertions are unfounded since even the greatest expert traders cannot ensure a profit on any given day. Like most financial markets, the forex market is incredibly unpredictable. So, be wary of such assertions and those who make them also, you can report a website.
3. Forex Trader Employment Ads
Many Forex trading companies utilize job postings to entice traders with funds to use their methods. A foreign currency trading company is looking for someone to teach how to trade the foreign currency market using firm funds, according to the employment advertising, which frequently appear in publications and on the Internet. The company promises anyone who respond to the ad that if they enroll in the firm’s training program, they will become wealthy currency traders.
The rookie traders are encouraged and informed that their demo trading records demonstrate that they have made substantial gains, that they are prepared to make real money, and that they would be highly successful during the training phase, which frequently takes place on a demo system. Despite the firm’s opinion that the new trader is an excellent rookie, the trader is not given firm funds; instead, the eager newbie is instructed to use her own capital to trade utilizing the firm’s platform.
The Forex company earns money as an introducing broker in addition to other fees charged to traders who use the firm’s trading platform. A significant portion of the spread charged by the broker is split and added to the firm’s funds each time a rookie trader uses the firm’s method. The new trader loses all of her capital within a few months and quits. The Forex company moves on to other traders anxious to become wealthy trading foreign currencies after realizing a profit during the inexperienced trader’s brief tenure.
