The main advantage of the forex markets is that there is no bear market. rate of return within two months. Stay Away From Companies That Promise Little or No Financial Risk. Be suspicious of companies that downplay risks or state that written risk disclosure statements are routine formalities imposed by the government. The currency futures and options markets are volatile and contain substantial risks for unsophisticated customers The currency futures and options markets are not the place to put any funds that you cannot afford to lose For example, retirement funds should not be used for currency trading You can lose most or all of those funds very quickly trading foreign currency futures or options contracts Therefore, beware of companies that make the following types of statements. deposit, the maximum you can lose is 200 to 250 per day.
We promise to recover any losses you have. Your investment is secure. Don t Trade on Margin Unless You Understand What It Means. Margin trading can make you responsible for losses that greatly exceed the dollar amount you deposited. However, those amounts, which are relatively small in the currency markets, actually control far larger dollar amounts of trading, a fact that often is poorly explained to customers.
Don t trade on margin unless you fully understand what you are doing and are prepared to accept losses that exceed the margin amounts you paid. Question Firms That Claim To Trade in the Interbank Market. Be wary of firms that claim that you can or should trade in the interbank market, or that they will do so on your behalf. Unregulated, fraudulent currency trading firms often tell retail customers that their funds are traded in the interbank market, where good prices can be obtained Fir ms that trade currencies in the interbank market, however, are most likely to be banks, investment banks and large corporations, since the term interbank market refers simply to a loose network of currency transactions negotiated between financial institutions and other large companies.
Be Wary of Sending or Transferring Cash on the Internet, By Mail or Otherwise. line, but often can be impossible to get a refund. It costs an Internet advertiser just pennies per day to reach a potential audience of millions of persons, and phony currency trading firms have seized upon the Internet as an inexpensive and effective way of reaching a large pool of potential customers. line are not located within the United States and may not display an address or any other information identifying their nationality on their Web site Be aware that if you transfer funds to those foreign firms, it may be very difficult or impossible to recover your funds. Currency Scams Often Target Members of Ethnic Minorities. Some currency trading scams target potential customers in ethnic communities, particularly persons in the Russian, Chinese and Indian immigrant communities, through advertisements in ethnic newspapers and television infomercials.
called job opportunities for account executives to trade foreign currencies Be aware that account executives that are hired might be expected to use their own money for currency trading, as well as to recruit their family and friends to do likewise What appears to be a promising job opportunity often is another way many of these companies lure customers into parting with their cash. Be Sure You Get the Company s Performance Track Record. looking charts, that the information they contain might be false. Don t Deal With Anyone Who Won t Give You Their Background. Plan to do a lot of checking of any information you receive to be sure that the company is and does exactly what it says.
Get the background of the persons running or promoting the company, if possible Do not rely solely on oral statements or promises from the firm s employees Ask for all information in written form. board, the wisest course of action is to avoid trading foreign currencies through those companies. If you are solicited by a company to purchase commodities, watch for the warning signs listed below.
Avoid any company that predicts or guarantees large profits with little or no financial risk. pressure tactics to convince you to send or transfer cash immediately to the firm, via overnight delivery companies, the internet, by mail, or otherwise. Be skeptical about unsolicited phone calls about investments from offshore salespersons or companies with which you are unfamiliar.
Visit the CFTC s forex fraud web page. or by checking the NFA s registration and membership information on its website at While registration may not be required, you might want to confirm the status and disciplin ary record of a particular company or salesperson. the Better Business Bureau and the National Futures Association.
Be sure you get all information about the company and verify that data, if possible If you can, check the company s materials with someone whose financial advice you trust. Learn all possible information about fees charged and the basis for each of these charges. If in doubt, don t invest If you can t get solid information about the company, the salesperson, and the investment, you may not want to risk your money. More Information and Contacts. Futures Trading Commission Three LaFayette Centre 1155 21 st Street, N W Washington, D C 20581. The Commodity Futures Modernization Act is available in our Law and Regulation page requires an A dobe Acrobat reader, which can be downloaded for free from and numerous other sites on the Internet. For other consumer advisories concerning possible fraudulent activity in the commodity futures and options industry, click on the Customer Protection page.
Contact the National Fraud Information Center. The CFTC s website also offers general information about trading in the commodity futures and options markets You may wish to visit our Before You Trade page. Federal Financial Institutions Examination Council. Federal Deposit Insurance Corporation. Securities and Exchange Commission. The Office of the Comptro ller of the Currency. Office of Thrift Supervision.
National Credit Union Association. National Association of Securities Dealers Regulation, Inc. All U S Government web sites can be located through links at. Your state Attorney General s office and state banking, insurance and securities regulators which often have their own web sites. Friday, May 19, 2006. BBB Spotting Forex Fraud. risk investment opportunities in foreign currency trading are blanketing local newspapers, radio promotions and attractive Internet sites Are these offers too good to be true. Sometimes, they are While much forex trading is legitimate, the Commodity Futures Trading Commission CFTC reports a sharp rise in foreign currency trading scams How does one sort through the offers to select a reputable opera tion The CFTC and the Better Business Bureau offer the following warning signs of fraud to those who are considering forex investment opportunities.
