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Forex related scams

Updated on March 2, 2014

First of all, we really describe what the Forex market. The Forex is the world's largest financial market in which transactions take place every day by many billions of dollars.Basically what you do is purchase and sale transactions of foreign exchange to make money speculating on the price of them.

The transactions are based on the price of one currency against another, for example Euro vs U.S. Dollar, Euro vs Japanese Yen, British Pound vs Japanese Yen, etc..

In this case, the investor must try to predict if the price of a particular currency will increase or decrease with respect to another. For example, if I think the price of the Euro will rise relative to U.S. dollar, the Forex allows me to buy as many Euros as I want, after which only I have to wait and see what happens in the market.

Being a highly leveraged market (allows a leverage of 1:400 or more), the Forex can make big profits with a more or less modest investment. However, being a very volatile market movements and to some extent unpredictable, can also cause heavy losses, especially for novice investors, so your investment should be done as carefully.

To invest in Forex and other financial markets requires a broker, which is basically a company that acts as an intermediary between the investor and the market. Its basic function is to place the purchase / sale of the client, providing direct market access.That is, if you as an investor enters a purchase order the broker is someone who sells and if your order is selling the broker is someone who buys. Of course the whole process can be more complex, but in the background is as described above.

The Forex and scams

Now that we have seen what is forex, we will discuss the problem of scams that have given bad name among many people Forex.

Internet constantly proliferating type of business known as "HYIP", which basically provides investors with very high yields for their money. Yields in some cases are almost 1% per day which are clearly absurd, no serious business can offer such performance. The HYIP operate under a pyramid scheme and are created by scam artists who run off with the money from the unwary after several months of operation.Of course, at first paid to continue to attract clients, but eventually disappear and the money loosing a lot of their hard-won.

Some HYIPs have exploited the popularity of Forex and argue that their clients' money is invested in this market, which probably is not true, just what they want to attract more and more investors. To this end create websites with a very professional appearance, make strong internet marketing campaigns and ready. Thus emerged "firms" whose memory is bitter for many who invested with them, such as Forexmacro, Finance, Forex, TIRN PanaMoney and much more.

When you encounter an "opportunity" of these, represented by a company that they promise to invest in the Forex with an incredible performance, the best thing to do is to ignore the offer, though the temptation is too strong.

To invest in this market requires a properly regulated broker recognized by financial authorities, so that the client has the assurance that their money is safe and that the broker operating under an appropriate legal framework. Also there is the opportunity to invest in managed accounts, automated trading systems and other options offered by reputable companies related to the Forex market.

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