The foreign exchange market is at best a zero-sum game, meaning that whatever one trader gains, another loses. In August 2008, the CFTC set up a special task force to deal with growing foreign exchange fraud. In 2012, Christopher Ehrman, an SEC veteran, was selected to run the new SEC Office of the Whistleblower. United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry. Between 2001 and 2006 the U. An inexperienced retail trader will have a significant information disadvantage compared to these traders.
Retail traders are, almost by definition, undercapitalized. Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources. By offering high leverage some market makers encourage traders to trade extremely large positions. This increases the trading volume cleared by the market maker and increases their profit, but increases the risk that the trader will receive a margin call. CIF authorisation as well as listed the current and past CySEC authorised companies. Regulatory Holes Provide A Playground For Forex Fraudsters”. Archived from the original on 2014-02-03.
CFTC establishes task force on currency fraud”. The Federal Register Archived 2010-08-28 at the Wayback Machine Section E. A: Christopher Ehrman, Director, CFTC’s Whistleblower Office”. Forex Fraud Investor Alert Archived 2008-10-29 at the Wayback Machine”. How to avoid scams – Financial Conduct Authority”. Archived from the original on 2015-06-10.
Cyprus Securities and Exchange Commission – CYSEC WARNINGS”. Cyprus Securities and Exchange Commission – BOARD DECISIONS”. Attorney’s Office, Northern District of Georgia. Archived from the original on 2015-05-10. 8 trillion each day as of January 2018. The forex market hasn’t had much in the way of regulation historically, although things have started to improve in recent years. Unfortunately, the opportunity still exists for many forex scams that tempt new investors with a promise of quick fortunes through “secret trading formulas,” algorithm-based “proprietary” trading methodologies, or “forex robots” that do the trading for you.
Regarding forex scams, following are some of the more common scams you need to be aware of so that you don’t get taken in by them while educating yourself on the best way to trade forex. Basically, a signal seller is offering a system that purports to identify favorable times for buying or selling a currency pair. The system may be manual, where the trader enters the info and gets a result, or it may be automated. Some systems rely on technical analysis, others rely on breaking news and many employ some combination of the two. But they all purport to provide information that leads to favorable trading opportunities.
Signal sellers usually charge a daily, weekly or monthly fee for their services. Some analysts propose that many or even most signal sellers are scam artists. A frequent criticism is that if it were really possible to use a system to beat the market, why would the individual or firm that has this information make it widely available? Wouldn’t it make more sense to use this incredible signaling system to make huge profits?