2Bull Forex Blog

If you’ve spent some time searching the internet for Forex trading resources, chances are that you’ll have come across at least one scam Forex trading product.

On the internet, there are countless scammers that try to tempt their ‘victims’ into buying their latest “trading system” that promises instant wealth. But as ridiculous as these claims may sound, there are people every day who unfortunately believe them.

Before you hand over your money to purchase another Forex trading product, try to avoid websites with these characteristics:

Tell-tale sign #1 - “Guaranteed Profits”

I’ll say this now: any website that promises you guaranteed profits is outright lying.

You see, even if such a system did exist, chances are you wouldn’t be able to afford it as a typical retail trader. There are many people more powerful and richer than you who would pay to keep this system to themselves. I’m sorry for being blunt, but it’s the truth.

So please, if you’re considering forking your money over for a ‘guaranteed profit’ trading system, close your web browser and as fast as you can!

Tell-tale sign #2 - Signal-Generating Software

This is another obvious scam. There’s no way on earth that any financial market can be predicted using a formula… and yet that’s exactly what these software ‘developers’ claim that their software can do!

Let me just put it this way: if the financial markets could really be predicted using some sort of formula, don’t you think the big investment banks would be using at least a variant of it?

The simple fact that the large institutional traders still have a job - and have not lost it to computers - is because all attempts to use software to predict human behavior in the market have failed to produce consistent profits.

The Best Way To Trade

Many people don’t like to hear this, but unfortunately the best way to trade is to LEARN how to trade for yourself. Developing your own trading system is a tough, but highly rewarding experience.

Don’t sell yourself short by spending any money on ‘get-rich-easy’ schemes… you’ll be better off in the long run.

Could you really find a “best Forex trade system”? If you have browsed various web sites of the so-called “best Forex trading system”, you will soon be annoyed and feel cheated by the lot of useless and time wasting info you will find.

The truth is a lot of people and claim they know a lot about trade systems. Some claim to be Forex trade experts, when they are not really. And some, even scammers are wait for that perfect bait. So before you end up as a victim of these individuals do be cautious.

You can not have a currency exchange if you do not have a game plan or a system of currency. You must first establish this subject because you compete with the major organizations and establishments with a vast reservoir of resources. It is easier for them, because they have their own people like economists and analysts, who perform technical analysis and fundamental analysis, which allows them to make informed decisions as regards the negotiation FOREX.

Besides this, they also they also hire dedicated staff, which includes managers, analysts, and portfolio developers who dedicate entire work days to help the business succeed. It isn’t possible for you as a freelancer to afford this luxury. Whatever you undertake, you must be your own team of professional trading in foreign currencies.

With so many trade systems on the markets, how do you differentiate between what is worth it and what is not? If you are always looking for “best currency trading system”, do look for following characteristics:

1. For advanced in the market, look at an exchange of style and risk profile. See if your trade system can work with both.

2. Managing money is the key to being a successful trader. So, it is good to choose a trade system that puts emphasis on risk management technique as well as money management.

3. Look at trade systems promoted by people who have a lot of experience in the markets. Do not make hasty decisions. It is preferable to opt for people who have stood the test of time.

4. Don’t work with someone who bombards you with information. Work with a guy who takes the time to make you understand every move, and one whose logic you can follow.

5. Choose a trade system which provides tools to help develop your personal skills Figure out if the strategies are useful to you.

6. Look for a system that offer good value for your hard earned money. There are systems out that there are good for you, and some that are not, so take your time to choose.

Take your time to make any decision as to the use of a particular trade system. Work out the pros and cons of every one that you consider, and take your time on the research.

The wide popularity of stock investing has also attracted scammers, who are well armored with their frauds and ready to take your money away. Thus, you have to be well aware of their fraudulent actions and take the necessary actions not to become their victim.

The Internet has given scammers an additional field for action. They have managed to design such schemes that make you think that you are being part of a legal insider deal that will bring you a lot of money. However, most of the times you end up losing your money and with a lot of headaches.

Stock scams come in a variety of forms from very crude ones that are easy to be noticed to more sophisticated, that can need a lot of time to be revealed. They manage to give such legitimacy to the stock deals that will be undertaken that it is easy to fall their victim.

It is difficult to list you all of the stock scams that are already available. And even if we manage to do so, we cannot be sure that during this time a new fraud has not been designed.

However, certain events should serve you as a red flag that there is a scam behind the particular action. For example, if someone you don’t know calls you and offers you a stock deal that is provided only to insiders, you should ask yourself why this person wants to do it, especially if you are not one of the major stock players. Additionally, if the deal is really so good, why the caller does not keep it for himself/herself, but wants to make you rich.

Other scammers have tried to address the naivety of some people that truly believe that there is such a system that guarantees 100% sure profit. No one can guarantee you this with stocks. If this could be done anyway, be sure that the profit will be really negligible and not worth the effort. Some scammers have gone a step further by offering such clients secret codes or passwords, which when used give you access to immense possibilities. Again ask yourself even if such a thing really exists, which is almost impossible, why will they give this information to you?

These are the crude scams that you can easily identify. However, some scammers have decided to make more efforts for the money they want to steal from their victims. Thus, they attempt at the purchase of stocks of almost unknown to anyone company. After this they start to spread rumors over the Internet usually that this is the next hot company. This results in the soaring of its price to the desired level. You are also attracted by this price increase to later find out that the scammers have waited for this price levels to sell their shares. And you end up with a losing company and money losses.

To sum up, apply the necessary caution the next time you are offered a stock deal in order not to lose your hard earned money.

Whenever there is an opportunity to make large amounts of money, there will be people who are eager to jump right in and start making money. And where there are people who are eager to get rich quick with a minimum of effort on their part, there are fraudsters waiting to take their money. Experienced traders are wise enough to avoid the frauds - it’s the new traders who are most vulnerable to the forex scams that are slipping into the currency exchange market.

The U.S. CFTC (Commodity Futures Trading Commission), which regulates futures and commodities trading, warns new investors to be wary of frauds and scams that promise huge profits from your investments, in and out of the Forex market. The CFTC has issued several Consumer Fraud Alerts in connection with foreign currency trading. They offer the following tips to help you avoid being scammed.

Be skeptical of high-profit-low-risk come-ons.

“I made $1900 in one minute!” touts one sidebar ad for a Forex trading company. Ads that promise high returns on small investments with little or no risk to you are tempting bait. The fact is that while there are certainly big profits to be made in forex, there are correspondingly large losses. And most novice traders drop out of active trading by the end of their first year because they can’t afford the risk.

Be suspicious. Period.

Before you part with a penny, thoroughly check out the company or trader you’re planning to do business with. Check the CFTC’s consumer fraud alert page. Check to see if the company is registered with the CFTC, or is a member of the National Futures Association. Check to see if there’s any disciplinary action against the firm or company. Get even more basic. Get a valid address and telephone number, and verify that it belongs to the company. Check to be sure the person you’re dealing with actually works for the company. Especially if you’re doing business on the Internet, it’s very easy for a scammer to fake credentials.

Be wary of sending money over the Internet.

The Internet has made it incredibly easy for scammers to operate. It only costs $6.95 a month to have a professional looking web site hosted - that’s pennies a day to reach millions of potential marks. Before you part with credit card numbers, bank account transfer permissions or wire transfers, be sure to check out the company with all the authorities listed above.

Beware high pressure sales tactics.

Legitimate dealers don’t need to contact you with unsolicited email, or pressure you into doing business with them. If someone is pushing you to invest right now, tonight, this moment, it should set off huge warning signals in your head. A real dealer is more concerned with keeping you as a customer for the long haul. He’ll be patient while you check out his credentials and reputation. A phony dealer can’t afford that luxury - he needs to get you on the hook right now, or risk losing his score.

Be cautious of companies that tell you they’ll trade for you on the ‘interbank’ market.

The interbank market is a term for a loose network of currency traders that include banks, financial institutions and large corporations. Fraudulent currency trading firms often tell customers that they’ll trade for them on the interbank market where the prices are better. It should be a warning signal to you to stay away.

While technically not ’scams’, you should also be wary of paying good money for training courses that promise you systems that are ‘guaranteed’ to earn you high profits. If the course advertises that their system will earn you huge profits with minimal risk, or guarantee you 40% return on your money in six weeks, take the promises with a huge grain of salt. Experienced traders understand that the forex market is a time market - while it’s possible to make large amounts of money in short-term trades, finding those profitable trades is a matter of being in the right place at the right time… which means putting in the time and the effort to be there.

They also understand that they’ll lose more often than they win - the trick is to keep your losses short and your profits long. Any company that guarantees that you’ll make a profit on all or most of your profits is coloring their advertising. Stick with trusted companies whose credentials you can verify and whose background you can check.

Over the last four years, I must have attended five or six seminars, paying upwards of 800 US dollars each time. The seminars covered such topics as Fibonacci, Writing Covered Calls, Moving Averages and other well known applications of statistical methods to trading; what are commonly known as technical trading or charting techniques.

Once home, I would excitedly go over the material in the free attendee info pack. Invariably, I would find most of the information contained within the format of these seminars to be mere recycled material. The same, if not better, information is in fact available online, occasionally for free, but if not, at a much reduced cost.

You might point to the notion that if anything of value is desired, one has to pay for it. Granted, that for anything worthwhile and of substance, there will be a price tag attached; this should be even more valid for trading systems and information, after all one is expected to make some money using the information.

But, and make that a BIG BUT! there is so much more useful and appropriate information available online, for so much less than the costs of seminars: these run into the hundreds of pounds or dollars! These seminars charge you a small fortune, but the value that they return to you is a big letdown.

At all the seminars I attended, I even had to sign confidentiality agreements. Why? These people say they have something new and secret; yet they run hundreds of seminars exactly like the one they are giving, and they tell all the attendees of their seminars to keep quiet about what they are saying. Do they really expect that to happen?

Well, these clever people who run the seminars, say they are the Gurus. They take age-old techniques (there is nothing much that is new) and write their own copy or presentation style, package it as a new Secret Trading System, organize seminars at some glamorous hotels, and then charge big bucks for teaching their secret trading system or systems to a group of awe-struck attendees. I will hand it to them though; the professionals behind these seminars really know a thing or two about the human State of Mind; or they know someone who does.

From what I observed by attending seminars, the alleged unique or secret trading system is only classified as such because Gurus put together a bunch of two or more standard trading indicators, describe the behaviour in their own way, and bingo!, they announce to all and sundry that they have a unique and secret trading system. The hard part is the effort, time, gathering of and putting together the resources required, but most have staff to do this for them. The sad part is that they ask you to pay so much for their seminars and they give you so little in return.

Once in London in 2006, I went to one seminar (albeit a free taster) at which the so called Guru was not even present. OK, it was a free one, but there was such a strong and obvious sales pitch running throughout, with all the usual software and additional course promos fired at us towards the end. From my point of view the presenter was no more than a flashy salesman. He padded out 10 to 15 minutes of seminar time, telling us about his family history and other salacious details, as if anyone cared.

Of course, one had the option of leaving halfway through the free seminar if one was not pleased or captivated by the spiel; but, in case you have not noticed, they structure the seminars so that any information of value is kept under wraps and revealed only during the second half anyway.

After enduring seminars like these, I always find out that there is enough information that you can get online that will more than cover anything and everything that the core courses in the seminars contained. It may be that I would not get any free refreshments when I research things from home, but I can live with that. I will grant there were a couple of well spent outside excursions, where I learned of a method and a fresh approach to trading of which I had not previously heard. But again, you will realize that with sufficiently extensive and creative searching you are bound to dig up a trading system that will suit your personal trading style.

Seminars can sometimes become a venue for like-minded trading people to meet each other and talk shop. That is all really fine, but it surely does not seem right that you are required to shell out so much money just for the chance to chat with people.

Seminars are supposed to give us information of value, which is what they promote themselves to be; that is what they should give to us. Sadly, few seminars, if any, are not worth the fees you pay for them. But if you are still keen on attending trading seminars, perhaps for the possible research value, by all means you should. But I do not think it is wise to spend more than 10% of your trading budget on any one of these.