In foreign exchange market there are many experienced well-capitalized professional traders (usually working for banks) who can devote their attentions full time to trading. The player with the lower amount of capital has a higher probability of going bankrupt first. The Commodity Futures Trading Commission’s Forex fraud advisory is an important reference for us to know about Forex fraud.
Stay away from opportunities that seem too good to be true
Be especially cautious if you have acquired a large sum of cash recently and are looking for a safe investment vehicle. Getting your money back once it is gone can be difficult or impossible.
Avoid any company that predicts or guarantees large profits
Be extremely wary of companies that guarantee profits, or that tout extremely high performance. In many cases, those claims are false.
Stay Away From Companies That Promise Little or No Financial Risk
The currency futures and options markets are volatile and contain substantial risks for unsophisticated customers. The currency futures and options markets are not the place to put any funds that you cannot afford to lose.
Don’t Trade on Margin Unless You Understand What It Means
Many currency traders ask customers to give them money, which they sometimes refer to as “margin,” often sums in the range of $1,000 to $5,000. However, those amounts, which are relatively small in the currency markets, actually control far larger dollar amounts of trading; a fact that often is poorly explained to customers.
Question Firms That Claim To Trade in the “Interbank Market”
Be wary of firms that claim that you can or should trade in the “Interbank Market,” or that they will do so on your behalf. Unregulated, fraudulent currency trading firms often tell retail customers that their funds are traded in the “Interbank Market,” where good prices can be obtained.
Be Wary of Sending or Transferring Cash on the Internet, By Mail or Otherwise
Companies offering currency trading on-line will usually be located in different legal jurisdictions to you. Even if they display an address or any other information identifying their nationality on their Web site it may be false.
Currency Scams Often Target Members of Ethnic Minorities
Some currency trading scams target potential customers in ethnic communities, particularly persons in the Russian, Chinese and Indian immigrant communities, through advertisements in ethnic newspapers and television “infomercials.”
Be Sure You Get the Company’s Performance Track Record
Get as much information as possible about the firm’s or individual’s performance record on behalf of other clients. Even if you do receive a glossy brochure or sophisticated-looking charts, that the information they contain might be false.
Don’t Deal With Anyone Who Won’t Give You His Background
Get the background of the persons running or promoting the company, if possible. Do not trust solely on oral statements or promises from the firm’s employees. Ask for all information in written form.
