A Profile of Forex Scams and How to Avoid Them

For every good thing comes an opposition. There truly is an opposition in all things. So it is with the foreign currency exchange market. With its remarkable growth in the previous decade comes its own form of threat - Forex Scams.

The Commodity Futures Trading Commission (CFTC) posted an advisory regarding forex scams. The CFTC regulates commodity futures and options markets in the U.S.

This federal agency has noticed the growth of financial investment opportunities. This growth is inclusive of both in the number of opportunities and also growing complexity of the financial investment. With this growth, sadly, comes also a rise in trading scams. Various forms of forex scams have been concocted to defraud the public.

Unfortunately there is no typical profile of individuals or entities that engage in trading scams. They may be fast-talking professional reps that can present a foolproof investment scheme or they may turn out to be a shy and soft-spoken person who seems honest enough that can earn your trust. They may even have a flashy web site on their profile. Professionals who hold a position of trust have also been found to be involved in forex scams as well.

Anyone can be a victim of forex scams. If you think that only people with deep pockets are the common targets of those involved in forex scams you ought to think again. Since a dollar is a dollar, it doesn't matter if they swindle it from a guy who has a big bank accounts or it's from a guy who's betting his last buck.

Another thing that makes forex scamming worse is that those involved in forex scams mimic legitimate methods of contacting prospective investors/victims. They may even buy bona fide mailing lists and look legit at first glance. Other legitimate methods that are used by both legitimate firms and forex scamming groups are through electronic mail, phone, regular mail or even referrals. One good piece of advice is to investigate first before investing.

The advent of the internet and the boost in our technology has propelled the forex market in leaps and bounds. Sadly, it also has become an effective tool in promoting forex scams. It is interesting to observe that the same forex scams by phone and mails are also found online.

The CFTC has given signs of possible forex scams. They include get-rich quick schemes, a guarantee or a prediction of possible large profits, companies that promote little or no financial risks, trading on margin, trade in the inter-bank market, high-pressure tactics to convince individuals to transfer cash immediately to the firm, and possible offshore companies to invest in. Though some of these schemes may be legitimately possible it is not a bad habit to be wary or skeptical and investigate beforehand.

"An ounce of prevention is worth a pound of cure" so goes the saying. With the rise of the opportunities in the foreign currency exchange market comes a spike in the number of forex scams. Knowing how to detect a fraudulent activity and support from government agencies help reduce exposure to this greatly potential risk.

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