Forex Scams

Beware of Forex Scams


A forex (or foreign exchange) scam is any fraudulent trading proposal used to deceive traders by convincing them that they can expect to gain a high profit by trading in the Forex trade. One example of an convicted scammer is Russell Cline. In 1998 he founded a foreign currency trading firm based in Portland, Oregon and in 2003 he was charged in federal court with running a classic Ponzi scheme. The Commodities Futures Trading Commission (CTFC) has noted an increase in the amount of foreign exchange ploys over the last few years as FX trading has increased in popularity. The information in this article will provide you with some helpful tips to help you recognize some of the forex ploys that are out there today.

Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The stated mission of the CFTC is to protect market users and the public from manipulation, fraud and criminal practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and sound financial futures and option markets.

CFTC is legally in charge of regulating the foreign exchange market of US. The CFTC works to ensure the integrity of the commodity and financial futures markets. It protects the public and market users from fraud, manipulation, and abusive practices while fostering an open marketplace for trading commodity futures as well as foreign currency. Some of the guidelines suggested by CFTC via its programs to avoid the forex plots are briefly discussed in this article.

It is important to be knowledgeable about the future market users and the trends which may influence the forex trading. With the knowledge of this, you will be able to correctly judge the integrity of the claims made by the forex product manufactures and thus stay away from the Forex market schemes.

It is very vital that the unsuspecting individuals involved in the forex trading are protected against forex ploys by adequate legal proceedings; which is strongly suggested by CFTC. You need to be skeptical before stepping into any of the next levels in Foreign Exchange Markets or while purchasing the forex software programs until there are enough facts to prove otherwise. There are some manufacturers who go after unsuspecting individuals from a particular area by offering special considerations to them.

Steer clear of any forex trading involving Interbank Market because it is not very secure as it deals with currency transactions over a loose network. The interbank market is the top-level Forex market where banks exchange different currencies. Another signal that caution should be taken of possible forex scams is when the concerned persons or companies try to coax you into transferring or sending money to them in a very short notice. Do not encourage unsolicited telephone calls in which companies or brokers claim they can provide you with the only best forex trading assistance available. Understanding more about futures trading will help you stay well educated about the Forex market.

The only funds that should ever be used to speculate in foreign currency trading, or any type of highly speculative investment, are funds that represent risk capital; in other words, funds you can afford to lose without affecting your financial situation. Forex trading is risky, don't be pressured into an immediate decision and always use your common sense before embarking in any type of trade. Keep away from those brokerage companies who ensure you a huge return and keep in mind that nothing in currency trading is risk free. Never use your hard-earned money, savings or retirement funds to invest in any Forex opportunity that claims you will be rich overnight.
Rachell enjoys writing on a variety of subjects and hopes that readers will be informed by her unique point of view.

For additional readings on forex, you may want to check out the forex blog.