How to avoid Forex Scams
In this tutorial we will discuss some of the Forex scams and how to avoid them.
"Make $1000 a week trading Forex, every week guaranteed" Have you seen a claim like that one? If it seems too good to be true then it probably is.
Lets take a look at the claim. Firstly, trading is not like a job where you get a steady paycheck every week. Trading results vary and you will certainly not be able to win an exact amount of money from the Forex market every week consistently. Even with a good trading plan, some weeks will be profitable weeks, some weeks will be not so profitable or even losing weeks. Your aim is to be profitable over the long run. You will not be able to earn an exact amount of money from Forex trading every week.
Second part of the claim is that you will be able to make the money trading Forex every week guaranteed. There are no guarentees in trading. No-one can guarentee that you will be able to make $1000 a week in the market or any other amount. The market will behave differently every week and your trading results will also vary. So, to claim that you will be able to earn $1000 a week guaranteed is not possible and although it may seem tempting to find out more about the offer, don't.
Some more claims that you should be careful of which are most probably scams:
- No Loss system
- 100% success rate
An ad in my local paper stated:
"Exclusive No Loss system for trading Forex"
Losses are part of the business of trading, and to claim that someone has developed a no loss trading system is not credible. Even top traders will be happy with winning 60% of their trades and in any case, professional traders focus on their profitability and not their trade success rate. So beware of any claims of 100% success rate and a system that a system that never has a loss.
It would be great if such a system existed, as you would be able to risk all of your trading capital on every trade, relaxing in the knowledge that there are no losses and their is a 100% success rate, that you will not lose. Unfortunately trading is not like that and trading involves risks.
The risk in trading is that you will lose part of your trading capital and the skill is learning about risk management to limit losses. Why would someone share such a system anyway? If they had developed a forex system that never had a loss, they would keep it for themselves and not go to the effort and expense of marketing it to others.
Avoid any offers of "No Loss", "100% guarantee" as they are most certainly a scam.
Here is a list of points to look out for to avoid Forex trading scams:
- Claims that a system is "no loss"
- Claims that a system is "100% guaranteed"
- Claims that Forex trading is low risk and high return
- Promise or easy or fast money
- Claims that a system will offer very high returns e.g. 60% with low risk because of a new or proprietary trading technique that only a few clients will be able to learn
- Claims that a system will make you a certain amount of money every week guaranteed.
- Forex brokers that ask for personal and banking information just to signup for a demo account. In some cases the Forex broker website has been setup just gather personal information that can be used for identity theft.