GUEST ARTICLE by Vincenzo Desroches
Nothing can be more discouraging than to learn a new investment skill, put it work, and then find out that you have fallen for some scam that more experienced traders would have spotted in an instance. The popularity of forex trading in the past five years has been enormous due to easy access to trading platforms on the Internet and to its overall flexibility. The downside of such popularity, however, is that the criminal element in our society, eager to pounce on the unsuspecting, has jumped into the fray right along with you and your uncle Harry. Law enforcement and forex brokers have policed the area quite a bit over time, but antics from offshore con artists are difficult to eliminate in any field of endeavor where money is involved.
So what is a prudent forex trader to do to protect himself from these thieves? The first thing to realize is that you and you alone represent your immediate and last line of defense. Your awareness of the potential for fraud is a good second step. You must be highly skeptical of any attempt to sell you on anything, because all scams start and end with the “sell”. Train your mind to be wary, get your greed in check, and let caution be your guide.
Beyond yourself, look at how you “connect” to the market. Make sure your PC has no marketing “bots” that have been downloaded to convince you to buy or to send back information to someone who will. Give your bank a “stress test” by reviewing their public financial reports. Don’t use an offshore bank unless you like to play with fire. Next is your broker. Again, he should be of high integrity, onshore, well capitalized, respected by his peers, and well recommended by review sites, local business bureaus or government agencies, and by other traders whose opinions you trust. Lastly on connectivity, are you comfortable with your trading forex platform? Are trades transacted quickly? Do the spreads vary over time? Do backlogs or downtime occur frequently? These types of problems may be broker related or dependent on how your broker is connected to the market. If they are not up to standard, shop around for a better service provider.
Con artists generally update their devious schemes every year, their way of improving the probability that you will fall for their various designs. Scams come in all shapes and colors, but the general appearance will resemble one of these three genres:
- High Yield Investment Program: Be wary of any low risk/high reward promotion by anyone. Forex trading involves high risk and requires specialized training before anyone should attempt to trade the first dollar. A likely forex scam scenario may also tout high levels of leverage as the only path to success. As always, If it sounds too good to be true, it is;
- Unsolicited Approaches: Be extremely cautious of emails, phone calls, or mailers bearing tips or products with the “secret”. Rely on your best judgment when evaluating these come-ons;
- High Pressure Sales Efforts: Be skeptical of any salesman’s pitch that has a sense of urgency connected to it. Hold onto your wallet, and walk the other way when he asks for money, because he surely will at some point.
Investment fraud artists can come at you when you least expect it. For this one reason alone you always need to be ever vigilant, skeptical and aware. Put your greed on the back burner, and apply caution when appropriate.
Vincenzo Desroches, started a financial and forex journey as a young entrepreneur and through years of self-taught investment. However, his interest in economics has been a lifelong hobby, fulfilled through various books, magazines, and courses. Chenzo has added to his knowledge of international economics in business trips around the world including Europe, Asia, and Africa. Currently, he is writing a small business book while continuing his exploration of economics together with all of his prodigious interests.