Foreign Currency Scheme

Forex trading occurs in the largest market in the world. It can be a very lucrative place to trade. It also requires that beginning investors beware of falling into a foreign currency scheme. A case in point comes from a court complaint filed by the United States Commodity and Futures Trading Commission, CFTC, in Tucson, Arizona. In what is commonly referred to as off exchange foreign currency trading, investors place their money with an individual trader or company for trading. The individual trader or company, in turn, promises to trade in the Forex markets. In such arrangements the investor signs a contract handing over their money to the trader with the expectation that, first of all, a substantial portion of any profits made in trading the funds will come back to the investor. The second part of the investor’s expectations is that there will, in fact, be substantial profits. Here is where the foreign currency scheme comes in. Anyone who knows how to trade currency knows that profits are never guaranteed.

A skilled trader can make substantial profits on a given trade or throughout the year. The common experience of successful traders is that they make sufficiently more successful trades than unsuccessful trades. The foreign currency scheme part of the recent news, according to the CFTC is that the person charged in this case allegedly promised his clients a guaranteed 100% return on investment. The charges of a foreign currency scheme filed in Tucson, according to the CFTC, alleged misappropriation of funds and a Ponzi scheme. A Ponzi scheme, for those unfamiliar with the term, is when someone attracts new clients with claims of fantastic profits and uses new investor funds to demonstrate profits to or to pay old investors. So long as new investors keep coming, such a foreign currency scheme keeps fooling old and new clients. According to the CFTC complaint, the individual charged lost virtually all of the invested funds and those funds which he did not lose in trading, he used the rest to pay personal expenses, and pay his original clients in order to keep up the appearance of a successful operation. This sort of activity is, unfortunately, all too frequent, as commonly detailed on the website  How to trade Forex successfully is to learn the basics of the market, to develop a trading strategy, and to limit investment risk while beginning to trade. There are certainly successful traders with whom one could invest their money but any reputable trader offering off exchange investing will not promise any sort of profits, much less 100% per year.

If an investment opportunity sounds too good to be true it is probably too good to be true. The investor needs to ask himself how can I learn to invest safely in the Forex market. Although there are no guarantees of profits certain trading and investing behaviors are virtually guaranteed to fail. One of these is investing in a foreign currency scheme in which a stranger promises extreme profits with little or no risk. Traders limit risk in Forex trading by buying options. They set their stops after making a trade in order top take a profit when the market moves or to limit loss if the market moves adversely. It is sad that a number of people seem to have lost a large amount of money in the alleged foreign currency scheme reported from Tucson. For the next potential victim of a foreign currency scheme a good piece of advice is as old as ancient Rome, let the buyer beware. Do a little due diligence and never invest in Forex without a clear idea of the rewards and risks as well as how to limit loss.