What is Forex?
The forex market, also referred to as the Foreign Exchange or FX market, is basically the simultaneous buying of one currency while selling another. Profits and losses depend on the fluctuations in the exchange rate between the two currencies.
What is a Forex Scam?
Forex scams offer investors the opportunity to invest in foreign exchange, but in the end, the money is lost to those running the scheme. Sometimes the fraudsters steal it to fund a lavish lifestyle, or they may lose it by making poor trading decisions.
Forex trading is extremely high risk. Making money in this market is difficult, even for large financial institutions that employ professional traders, run million-dollar trading accounts, and use sophisticated technology.
How Does it Work?
Promoters often find investors by advertising on television, the internet, or radio. Some will prey on affinity groups, friends, or family to find willing investors, promising an opportunity to invest with expert traders employed by financial institutions.
The promoters often promise high returns. They will try to get you to sign paperwork, attend trading seminars, or buy software that will unlock the mysteries of the forex market.
When you respond to their promotions, sellers or their affiliates may encourage you to invest in a forex opportunity. They provide you with a contract and encourage you to wire your money offshore. After you invest and some time passes, you may find out the investment is a scam or a Ponzi scheme.
Watch out for one or more of these common characteristics:
- An offer to pool your money in a fund that will be managed by expert currency traders.
- A guarantee of little or no risk and high investment returns.
- An unwillingness to discuss the past performance or track record of the expert currency traders.
- High-pressure sales techniques to buy an investment, purchase software, or take courses.