Tackling Forex Currency Scams

Forex scams mostly occur with non-bank forex traders. The main reason being ignorance of individuals, greed, lack of education, improper selection of brokers or trading platforms and lack of control.

According to US Commodity Futures Trading Commission (CFTC), about 23,000 customers were defrauded to the extent of $300 million between 2001 and 2006, leading to the prosecution of 80 people mostly in managed accounts.

CFTC has recommended 9 guidelines that every individual forex trader should follow while trading foreign exchange. These are:

1. Beware of companies which promise huge profits with minimal risk.
2. There are no guaranteed profits. One should avoid any scheme which promises a fixed amount of return or any other guaranteed level of returns.
3. Avoid companies which guarantee no or least amount of risk. Don’t risk your retirement funds in a forex market.
4. Watch your investments in inter bank market. If some forex brokers claim to be engaged in such a market, be cautious and ask for full information.
5. Don’t trade on margin. One should understand that one can lose amounts much larger than margin amounts that one pays. One should clearly understand margins, before committing.
6. Don’t send or transfer cash on the internet as it can be lost for ever. It is highly unsafe. Many companies do not indicate their addresses or contact numbers on their websites. Avoid these companies.
7. Members of ethnic minorities like Russian, Chinese and Indian should particularly beware of fraudulent companies. They should not trade with their own funds if appointed on these companies as company executives etc.
8. Before committing with any company, one should obtain as much information about the company as possible. It should be verified from 3^rd party sources.
9. Avoid dealing with anyone who refuses to divulge their background.

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