Forex Scams

Despite many brokers claims to the contrary, trading foreign exchange successfully is not an easy thing to do. FX trading is at best a risky business and at worst, a scammer’s dream come true. The Commodities Futures Trading Commission (CTFC) has seen a marked increase in the amount of foreign exchange scams over the last few years as FX trading has become more and more popular.

There are many companies claiming to have a foolproof way of making money with one system or another and while some of those systems have a basis in fact, even the most well-researched, well developed system cannot take into account the vagaries of the market place.

The Division of Clearing and Intermediary Oversight (DCIO) recently released an additional advisory aimed at protecting consumers from this ever growing problem, but the CTFC has some basic, solid advice regarding becoming involved in Forex trading:

• No matter what you're told, Forex trading is risky.
• Don't be pressured into an immediate decision.
• Use common sense.
• Get everything in writing.
• Check with the CFTC.
• Seek advice from an accountant, lawyer or an independent 3rd party.
• Don't invest more than you can afford to lose.
• Don't mortgage your home or cash in your savings to trade Forex.

As a general rule, it is best to avoid any companies claiming that Forex trading is easy, guarantees results or encourages you to make small deposits and use high leverages. Regardless of how well educated you are, investing a small sum in FX trading is likely to end in losses. Some recent scammers who have been caught by the CTFC include:

• Lake Shore Asset Management
• Lake Dow and Ty Edwards
• Ben Ouyang
• Emerald Worldwide Holdings, Inc.
• Foreign Fund (First Bank)
• Equity Financial, Shasta, or Tech Traders
• IBS/IMC
• Kevin J. Steele
• Nawab Ali Khan Ali
• Sun Platinum
• Worldwide Commodity CorporationGraystone Browne Financial
• Sterling Trading Group, Inc.
• STG Global Trading or QIX, Inc.
• Universal FX, Inc.

There are case reports available from the CTFC website which are updated on a regular basis. In the meantime, if you have lost money in dealings with any of these companies or individuals, there is a contact page at CTFC.

One of the most disturbing recent trends is the amount of Forex sites claiming to be helping traders when in fact the opposite is true. Forexbastards.com claim they are there to help the trader distinguish the “good guys from the bastards.” Here is a video clip uploaded by Nick B, demonstrating how effective they are.

It is fair to say there is a LOT of disinformation being bandied around by the forex brokers. The CTFC website is perhaps the only guaranteed reliable source of information. Even the so-called anti-scammer’s sites appear to be just as populated with this type of information. Before beginning FX trading, remember these points:

1. It is NOT possible to make money starting with a small amount of capital.
2. Using high leverages is almost guaranteed to end in losses.
3. There is NO foolproof way of making money on the foreign exchange market.