Forex trading Safety Tips.
1. Beginners should stay away from opportunities that promise huge profits for large investments.
Be especially cautious if you have acquired a large sum of cash recently and are looking for a safe investment vehicle for the whole sum. In particular, retirees with access to their retirement funds may be attractive targets for financial experts. Getting your money back once its gone could prove difficult.
2. Avoid a company that guarantees large profits.
Some companies guarantee large profits. Those claims can be false. The following are examples of statements that could be fraudulent:
"Whether the market moves up or down, in the currency market you will make a profit."
"We are out-performing 99% of domestic investments."
"We guarantee you will make at least a 30-40% rate of return within two months."
3. 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 risks for beginners. 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 could lose those funds trading foreign currency futures or options contracts. Therefore, beware of companies that make the following types of statements:
"With a $10,000 deposit, the maximum you can lose is $200 to $250 per day."
"We promise to recover any losses you have."
"Your investment is 100% secure."
4. Don't Trade on Margin Unless You Understand What It Means.
Margin trading can make you responsible for losses that exceed the dollar amount you deposited. Some currency traders ask customers to give them money, which they sometimes refer to as "margin," often sums in the range of $1,000 to $5,000. However, those amounts, which are relatively small in the currency markets can actually control larger dollar amounts of trading, a fact that isn't always explained well to customers. Don't trade on margin unless you understand what you are doing and are prepared to accept losses that exceed the margin amounts you paid.
5. Firms That Claim To Trade in the "Interbank Market".
There are firms that claim that you should trade in the "interbank market" and they will do so on your behalf. But bear in mind: Firms that trade currencies in the interbank market 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.
6. Sending or Transferring Cash on the Internet, By Mail or Otherwise.
Some companies offering currency trading on-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 difficult to recover your funds.
7. Currency Scams Often Target Members of Ethnic Minorities.
There are currency trading scams that target potential customers in ethnic communities, particularly persons in the Russian, Chinese and Indian immigrant communities, through advertisements in ethnic newspapers and on tv. Sometimes those advertisements offer so-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 seems to be a promising job opportunity could be a scam.
8. Try to Get the Company's or person's Performance Track Record.
Get information about the firm's or individual's performance record on behalf of other clients. You should be aware, however, that It may be difficult or impossible to do so. While firms and individuals are not required to provide this information, you should be wary of any person who is not willing to do so.
9. Don't Deal With Anyone Who Won't Give You Their Background.
Do some checking on information you receive to be sure that the company is and does exactly what it says. If possible, get the background of the persons running or promoting the company. Do not rely solely on oral statements or promises from the firm's employees. Ask for information in written form. If you cannot satisfy yourself that the persons with whom you are dealing are completely legitimate, the wisest course of action is to avoid trading foreign currencies through that company.
1. Beginners should stay away from opportunities that promise huge profits for large investments.
Be especially cautious if you have acquired a large sum of cash recently and are looking for a safe investment vehicle for the whole sum. In particular, retirees with access to their retirement funds may be attractive targets for financial experts. Getting your money back once its gone could prove difficult.
2. Avoid a company that guarantees large profits.
Some companies guarantee large profits. Those claims can be false. The following are examples of statements that could be fraudulent:
"Whether the market moves up or down, in the currency market you will make a profit."
"We are out-performing 99% of domestic investments."
"We guarantee you will make at least a 30-40% rate of return within two months."
3. 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 risks for beginners. 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 could lose those funds trading foreign currency futures or options contracts. Therefore, beware of companies that make the following types of statements:
"With a $10,000 deposit, the maximum you can lose is $200 to $250 per day."
"We promise to recover any losses you have."
"Your investment is 100% secure."
4. Don't Trade on Margin Unless You Understand What It Means.
Margin trading can make you responsible for losses that exceed the dollar amount you deposited. Some currency traders ask customers to give them money, which they sometimes refer to as "margin," often sums in the range of $1,000 to $5,000. However, those amounts, which are relatively small in the currency markets can actually control larger dollar amounts of trading, a fact that isn't always explained well to customers. Don't trade on margin unless you understand what you are doing and are prepared to accept losses that exceed the margin amounts you paid.
5. Firms That Claim To Trade in the "Interbank Market".
There are firms that claim that you should trade in the "interbank market" and they will do so on your behalf. But bear in mind: Firms that trade currencies in the interbank market 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.
6. Sending or Transferring Cash on the Internet, By Mail or Otherwise.
Some companies offering currency trading on-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 difficult to recover your funds.
7. Currency Scams Often Target Members of Ethnic Minorities.
There are currency trading scams that target potential customers in ethnic communities, particularly persons in the Russian, Chinese and Indian immigrant communities, through advertisements in ethnic newspapers and on tv. Sometimes those advertisements offer so-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 seems to be a promising job opportunity could be a scam.
8. Try to Get the Company's or person's Performance Track Record.
Get information about the firm's or individual's performance record on behalf of other clients. You should be aware, however, that It may be difficult or impossible to do so. While firms and individuals are not required to provide this information, you should be wary of any person who is not willing to do so.
9. Don't Deal With Anyone Who Won't Give You Their Background.
Do some checking on information you receive to be sure that the company is and does exactly what it says. If possible, get the background of the persons running or promoting the company. Do not rely solely on oral statements or promises from the firm's employees. Ask for information in written form. If you cannot satisfy yourself that the persons with whom you are dealing are completely legitimate, the wisest course of action is to avoid trading foreign currencies through that company.
