Spot the Forex Scam

Based on the numerous and frequent number of forex ads pasted on just about every finance and investment webpage, you’d be very wise to be skeptical of the claims. The world of forex can be a dangerous place and many of these ads make outrageous claims about the ability and ease to make money. Rest assured, money can be made in forex trading. For every loser licking his wounds there is someone else out there reaping the reward. Many times, of course, it is the forex broker who profits. Other times it’s the signal provider or “guru mentor”, but somebody is always winning.

In order to begin trading forex, one must do a number of things. Education is the key and should be the first thing on the to-do list. Naturally, a new forex trader might be drawn to sites claiming to erase the need for proper forex education with quick, effortless signals that stream into your email throughout the day. These signal providers make it sound like you can turn your trading on auto pilot while the money rolls in. Of course, this is not the case.

To be sure, there are some forex professionals willing to provide reliable signals on a regular basis. But as any experienced forex trader will tell you, getting a signal to buy or sell a foreign currency is only one small part of becoming a forex trader. You must also be able to analyse risk, develop a strategy of when to exit an entered trade, devise a sound money management plan and so forth. Any forex “expert” who tells you otherwise is surely out to get your hard earned money.

Here are a few of the tell-tale signs of a forex scam:

Too good to be true. This age-old adage is right on the money. Forex can be a legitimate way to make money, but it is not easy. If the forex expert is making claims that just sound unreal, they probably are.

Easy profits with no risk. There is always a risk in all types of trading, and forex is no exception. With the ability to throw large amounts of margin into a trade, the chance of losing money is very high. With margin, it is true that profits can be made relatively quickly, but the higher the margin, the higher the risk.

Unrealistic profit goals. Many ads claim that you can realize xxx% returns in a matter of months. While it is no doubt true that these very high returns are humanly possible, it is highly unlikely that you can do it, let along for a sustained amount of time. Eventually you will lose, and if you’re trading with the kind of high margin that these unrealistic returns claim, you may lose everything.

These are just a few of the many tell-tale signs that a forex offer might be a scam. You can make money trading forex, but like any investment or trading opportunity, common sense and a lot of education and practice are the only way to go. There are no shortcuts.

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