Candlestick Trading Blog

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There are a number of warning signs to consider when evaluating foreign currency trading and it is wise to be cautious and even suspicious of anyone that offers you Forex news. Among the warning signs of fraud in foreign currency trading are:

1. If It Sounds Too Good To Be True, It Probably Is. If it was as easy as some con-artist claim, wouldn’t everyone be doing it? There are plenty of pitfalls in currency trading and anyone who tells you it is so easy may be setting you up for the ultimate pitfall.



2. The Promise Of Incredible Wealth. Someone that boasts of how they can virtually ensure you make a $1,000 a week (using the method you purchased from him or her of course) is just one of the outlandish claims you will find on the Internet. Foreign currency trading is a commodity market that is very unpredictable and promising such things is very misleading.
   


3. The Assurance Of Little Or No Risk. Wow, that would be great, wouldn’t it? In Forex trading for beginners, everyone is taught that while you can reduce the risk in some cases, foreign currency trading IS risky and you can even lose more than you actually invested. Don’t be fooled by this one.
   


4. Trading On The Margin Is A Great Idea For Everyone. This might be one of the most evil claims of all. Margin trading is the most profitable and most dangerous part of commodities trading. Telling someone that doesn’t understand the responsibility of margin trading it is good for them should be criminal. Trading on the margin in foreign currency trading gives you the opportunity to leverage great sums of money to your advantage but it can also lead to substantial losses. If you don’t understand it, don’t do it.
   


5. Don’t Be Fooled By “Interbank Market” Trading. This phrase is in reference to a loose, unregulated network of trading by banks and other large companies. Put that way, it sounds like the suspicious activity that it is: an investment mistake just waiting to happen.
   


6. Be Careful About Sending Money Via The Internet. Online Forex trading is very popular but you should never forget to be sure where you are sending money. It is easy to send money but next to impossible to get it back.
   


7. Scams Often Target Minorities. Some foreign currency trading scams make a point to target Russian, Chinese and other groups with ads in ethnic newspapers and televisions infomercials. It pays to be suspicious when trading Forex.
   


8. Verify Their Background. This one can be difficult because companies don’t like to open the books. If you can’t verify the performance of a commodity broker or the firm, don’t do any foreign currency trading with them.
   


9. Don’t Be Fooled. If you are solicited by a company to purchase commodities, watch for the warning signs listed below:

• Avoid any company in foreign currency trading that predicts or guarantees large profits with little or no financial risk. Investment strategies carry risk. Don’t be led to believe otherwise.
  


• Be wary of high-pressure tactics to convince you to send or transfer cash immediately to the firm, via overnight delivery companies, the internet, by mail, or otherwise.
  


• Be skeptical about unsolicited phone calls about investment options from offshore salespersons or companies with which you are unfamiliar.