During the last few years you may have heard mention of the Forex scam in the media. Many people have already been hurt by this type of scam and there seems to be no decrease in the number of people being caught by it. One reason why so many people seem susceptible to a Forex scam is due to a lack of knowledge about how it works.
What is a Forex Scam?
A Forex scam involves swindling people out of their money by promising high rewards from foreign exchange trading; Forex is short for “foreign exchange”. The perpetrator of this type of scam will tend to only prey on the most vulnerable people by promising them huge rewards for their investment. The person arranging the deal can be very convincing and will be able to provide lots of supporting evidence to why the investment is sure to be successful. The average loser in a Forex scam will have lost thousands of pounds before they realise they have been conned. This type of scam is not as sophisticated as a Ponzi scheme but the results can be just as devastating. In fact, some Forex scams also employ Ponzi scheme tactics to give the investor the feeling of confidence in the beginning — for instance there will be some initial rewards that encourage the investor to put up more money.
One of the most common type of Forex scam these days involves computer software that the manufacturers claim will make those purchasing it rich in a short period. Not only is this type of software a complete waste of money but it can also mean that the individual loses money on ill-advised foreign exchange transactions suggested by the program. An individual may end up losing a lot of money before they realise that they have been duped.
How to Avoid a Forex Scam
As we have already mentioned, most of those who are caught out by a Forex scam will be people who don’t know any better. Therefore the best way to avoid becoming a victim of such as scheme is to learn about them. Here are just a few suggestions for how to avoid the Forex scam.
- If something seems too good to be true then it probably is. If you see computer software that promises to make you rich then you have to ask yourself why everyone else in the world isn’t using it. Surely it can’t be the case that only an elite number of people on the web have heard about such a wonderful piece of software? If anyone is making bold claims about how they can make you rich proceed with caution.
- Don’t be afraid to trust your intuition. Most of us will have doubts when we come in contact with such schemes but a lot of people will ignore them. Trust your instincts and walk away if anything smells fishy.
- Do a bit of research on the web from a reputable source to determine the veracity of any claims you might hear.