Three Ways to Avoid Forex Scams

Every so often there is another Forex scam in the news. The ones that hit the news are usually pyramid schemes. Someone offers to trade currency on your behalf and tells a story of great profits. He or she proclaims great profits and may even show you fantastic results, on paper. If you actually demand your money they will probably pay up. That is they will pay up early in the game as money from new investors in still coming in. If you arrive late in the game the story may be different and there may be no profits to return to you and even your original investment may be gone. Other scams may be less overt but still damaging. With these thoughts in mind here are our three ways to avoid Forex scams. They all boil down to the old Roman adage, let the buyer beware.

There Is No Free Lunch in Currency Trading

Our first of three ways to avoid Forex scams is to realize that if it looks too good to be true it probably is. Really, a guy has a system that returns twenty percent per month per month or so he says. That would mean that he would double his own money every four months and increase his trading capital eight fold in a year. So why does this guy bother to deal with you? If he starts with $10,000 he has $80,000 in a year, $640,000 in two years and $5,120,000 in three. First of all these sorts of results are probably not what the guy you are talking to can make. Second of all, if he really makes that kind of money then you are not in his league and he will not be talking to you or trading your money for a few percent of the gain. There is no free lunch in Forex trading. That is the first of our three ways to avoid Forex scams.

Do They Really Know Better Than You?

There is an old saying that says that if one man can do a thing then another can do it a well. If this guy who is offering to trade for you or sell you a trading system can do so successfully, why don’t you? You can learn to profit from the fluctuations in foreign currency rates. You can develop a trading system based on your own experience. The insinuation that the guy who wants to sell you trading software or trade your money for you is smarter than you is a poisonous insinuation. Learn the ropes of Forex. Check out what it takes to successfully make money on volatile foreign currency exchange rates. This is the second of our three ways to avoid Forex scams.

What Do They Have to Lose

The third of our three ways to avoid Forex scams has to do with who is taking on the risk of trading. The saying is, put your money where your mouth is. Does the guy who is going to trade your money for you have any of his own money invested in this scheme? What does the developer of the software stand to lose if his programming is faulty and you lose your trading capital on the first day? We certainly do not expect for a software developer to share in your trading losses unless he is also sharing in your gains. But, it would be comforting to know that the guy who is hyping the software has actually used it and can provide you with solid proof of its success. Otherwise, what do they have to lose? That is the last of our three ways to avoid Forex scams.