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How To Identify Forex Scammers On The Internet

Updated on August 23, 2010

Common sense should be enough warning to stay away from all promises of big money with little investment on the internet. But as long as there has been the promise of making big money, there has been a sucker there to believe in it. Probably the best piece of advice that we can give to anyone on the internet is that if it sounds too good to be true, it probably is. One of the biggest and widest fads in scamming is called Forex Scamming. It promises high profit returns with little investments in the Foreign Exchange Market. Most victims are said to lose at least $15,000 or more. By setting up a special task force in August of 2008, the CFTC, Commodity Futures Trading Commission, is trying to control this scam by seeking out those trying to deal in foreign exchange fraud.

Companies in this scam practice very high pressure sales tactics. What they do not inform their would be customers is that the forex market is essentially zero-sum. What that means is that for every dollar that is earned as profit there is someone else in the market that lost a dollar. And of course, the company takes their commission off of the top, so the only people making money are the ones that are providing the service. Inexperienced traders are essentially helpless due to a disadvantage of gained information and little to no knowledge of the market in which they are dealing. The U.S. Commodity Futures Trading Commission over the past few years has taken legal action against more than 80 cases. The cases all deal in companies defrauding more than 23,000 customers, at an estimated $350 million. There are many ways to ensure that your money stays in your hands, or is safe in your broker's hands. The first is to check out the company’s Website and make sure that they are licensed or a United States Commodity Futures Trading Commission or National Futures Association member. Anytime you hand over money to any company, especially ones that deal in Forex markets you should check out their credentials. If the company is registered with the USCFTC or NFA did you take their word for it? Or did you look in a few other places to make sure it was true? Many scammers say that they are, but taking their word for it isn't nearly enough. You should definitely put a little bit of research in it yourself before handing over your money. Another way to spot the scam is that they ask for little and offer large returns. The whole Forex market is very volatile, and is unstable at best. It is essentially a win it big or bankruptcy kind of market, and the ones that usually win are the ones that trade in the market professionally. Amateurs should only invest at their own risk. Remember with every person that makes a lot of money there is always a person who lost a lot of money. And at the end of the day the company holding your money always gets their commission.

Companies dealing in Forex markets have also been known to dupe novice traders as well by offering unsuspecting people positions in the company. Willing to do anything and everything to move up and show their worth, these green traders are encouraged to wager their own monies. And once their money is gone, they usually too are shown the way out. The internet has established a lot of new ways in which to invest your money. The hard and fast profit is always tempting, but never pays off in the end. Always remember if it worked as much as they said it did a lot of people would be losing money and a lot more people would be doing it. To both of those points we know they are not true and it is the good investor who is careful with his money that is the one who profits in the end. 


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    • Hezekiah profile image

      Hezekiah 6 years ago from Japan

      I think the main scammers are the one who create the auto trading software, what a scam!!!

    • profile image

      wonderseeker 7 years ago

      The scam thing is really growing online and the two largest are Nigerian scams and forex trade.Some sort of authority should find a way of handling these things