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October 4th, 2008
Prior to purchasing any " forex," check whether the company is registered with the CFTC (www.cftc.gov) or is a member of the National Futures Association (www.nfa.org). Other sources of helpful information include your state securities commission (www.nasaa.org), Attorney General (www.naag.org) and Better Business Bureau (www.bbb.org).
* "Too good to be true" claims. Get-rich-quick schemes are actually lose-everything-quick schemes. Be particularly cautious if you have recently acquired a large sum of cash. Retirees make easy victims.
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 operation? The CFTC and the Better Business Bureau offer the following warning signs of fraud to those who are considering forex investment opportunities.
* High-pressure tactics to send or transfer cash immediately. Phony currency trading firms have seized upon the Internet as an inexpensive way to reach potential customers. Many such firms are not located within the U.S. and do not display any information identifying their location. Once you transfer your funds offshore, it becomes very difficult or impossible to recover your investment.
The launch of Currenex, an independent non-banking forex emarketplace offering multibank dealing systems to customers, has encouraged banks to create their own emarketplaces. FxAll and Atriax, two of the first forex emarketplaces created by banks, are expected to go live in 2001. Despite the expected reduction in profits due to increased competition, the overall impact of the Internet revolution on the forex market will be positive because banks will achieve benefits such as cost cutting, improved risk-management capabilities, and an increased customer base.
* Offers that predict or guarantee large profits. Such claims are false! No person or business has a crystal ball that can predict the future.