|Common Forex Scams|
Common Forex Scams
According to The Commodities Futures Trading Commission (CFTC) Foreign Exchange, a US Future markets regulatory body, forex scams have been on the rise in recent years. As a result, it is important to be vigilant when dealing with Forex-related companies online. That said, there are a number of common Forex scams that you should look out for in particular.
Some of the more popular Forex scams include:
HYIP or High Yield Investment Program Scams
A HYIP or High Yield Investment Program Scam usually involves a high return on your initial investment in a relative short period of time. For instance, the HYIP operators may boast of 10% returns per day – but fail to disclose proper contact information or information with respect to exactly how your money would be invested. In many cases, this type of investment program is a Ponzi scheme in which investors are paid interest from money from future investors. These types of HTIP scams can shut down at any time without warning and not surprisingly, the owners of these scams take the money with them. While Ponzi schemes have been known to exist since the early on in the 20th century, the Internet and digital payment options have resulted in an increase in such schemes. As a result, some HYIP operators have even set up their own online payment companies. Some examples of these payment companies include INTGold, EvoCash, OSGold, and others.
That said, because these types of systems do initially offer a high rate of return in a relatively short timeframe, many people invest more money in the hopes of making higher yields. Of course, this situation usually results in a disastrous situation as the HYIP can choose to stop the scheme at any time and take all investments with them.
Signal Seller Scams
One of the more popular scams involves Signal sellers. Signal sellers are independent Forex analysts that offer to monitor the Forex market for you. In essence, they essentially tell you when to buy or sell certain currencies. While there are reputable signal sellers out there, signal selling is also one of the more popular forex scams as well. Reputable signal sellers perform a technical analysis of the Forex market conditions and then look at a number of different indicators to find trends and determine the best entry and exit points. This information is then relayed to you – and you can choose to make trades based on this information if you wish.
In order to avoid signal seller scammers though, you should ask signal sellers for verifiable proof of successes. As an example, you can ask the signal seller to give you the performance summary of a real trading account over a year - or better still - over several years. Of course, you should ensure that this information is verifiable by an independent accounting firm. Remember that in many cases, signal sellers will not charge a very high fee per month. However, since they may sell a $15 a monthly membership to thousands of customers, the signal seller scammers do end up making a great deal of money.
Forex Software Scams
Another common forex scam to look out for is forex software. If you conduct a simple Google search, you will see that there are a variety of companies offering forex software. That said, there unfortunately is no forex software available that will magically figure out the currency markets for you. In fact, there are businesses out there that sell forex software – or an "automated trading robot" program - for thousands of dollars when in many case, you can find similar software online free of charge. Detecting scam software is especially difficult online as well since there are many fake reviews of software that endorse the product. As you may guess then, many Forex traders have been unrightfully scammed thousands of dollars by this type of software.
All in all then, it is important to remain vigilant when you encounter HYIP operators, signal sellers, and Forex software on the Internet; after all, you are dealing with your hard-earned money and livelihood.
This is a guest post written by ForexFraud, a online resource that helps prevent against forex scams. They offer free reviews, education, and news regarding forex and fraud in the investment markets.