FOREX scams are scams where the scam artist tries to defraud investors who put their money in foreign exchange market (FOREX) trading. The scammers convince investors that they can earn large profits through FOREX trading if they follow their advice. While it is certainly possible to earn profits from FOREX trading, it is a complex endeavor that requires experience and market savvy most victims of FOREX scams lack. FOREX scams can take on many forms, but because FOREX is loosely regulated, many of them are not technically illegal. This is why investors must remain vigilant for any signs of FOREX scams no matter how tempting an investment opportunity may be.

Understanding FOREX Trading

FOREX trading involves trading one currency for another for the purpose of conducting business transactions. The value of currency depends on a wide variety of economic, political and social factors, and it can go up and down on a moment’s notice. Investors who choose to invest their money in FOREX markets hope to earn profit by using the changing currency exchange rates in their favor. For example, Americans investors who traded hundreds of dollars for Canadian dollars were able to earn significant profit when the value of Canadian dollars relative to US dollars increased, allowing them to turn Canadian dollars into more US dollars than what they started with.

FOREX trading in an innately complex, volatile process that involves a great deal of risk and requires the investors to be patient, yet decisive. Chances are pretty good that they will be years before they earn any profit, and profitable times may be short-lived. The FOREX scams paint an unrealistic picture of FOREX trading, claiming that the investors will be able to earn high profits without much delay. They aim to convince investors that they have what it takes to ensure those profits, something which not even the most experienced investors can say all the time. As mentioned before, FOREX scams forms take on many forms. Some of the most common FOREX scams are listed below.

In this scam, the con artists offer to monitor the foreign exchange market trends on the investors’ behalf and use that information to offer advise on which currency they should buy and sell. The con artists promise the investors high returns, so long as the investors are willing to pay what they assure are low fees (at least compared to the profits they claim investors will be able to earn under their guidance). Because their victims don’t know enough about FOREX to second-guess their suggestions and no way to verify their information, the con artists are free to earn money at their victims’ expense, with their victims none the wiser.

In this scam, the con artists offer customers software that can supposedly analyze FOREX markets and tell them what they should buy or sell in order to earn profits. The software tends to be expensive, with some scammers selling it for several thousand dollars. While there is software that can anticipate the shifts in currency rates, it can’t make reliable long-term predictions. Furthermore, some of the software the con artists offer is designed to steal the investors’ personal information, leaving them open to other types of fraud.

In this scam, the con artists encourage investors to buy shares in high-yield investment programs that supposedly take funds from several investors, invest them in FOREX and earn profit for everyone involved. In reality, such programs are Ponzi scams. It relies on constant influx of investors, with funds contributed by newer investors used to pay off older investors. Like all Ponzi scams, this scam is doomed to fall apart once the money runs out.