Speculator’s Weakness is the Swindler’s Strength

Speculator’s Weakness is the Swindler’s Strength

Forex market is the largest in terms of trading volume with daily turnover of over US$ 5 Trillion. The markets are open 24 hours during the weekdays and offers maximum liquidity. It easy to enter and exit a position in any of the major currencies within a fraction of a second for a small spread in most market conditions.   Financial Institutions and large banks are the major players. They have access to excellent infrastructure, knowledge, real-time information and data to be successful in trading. 

While a small section of the retail Forex trader make money trading Forex, a majority of individual traders lose money consistently. More often than not, they are victims of their lack of understanding of the Forex markets or were misguided by signal provider or software seller.  Social trading platforms is a relatively recent phenomena which makes retail Forex traders fall in the line for getting wilfully scammed. Social trading platforms has enabled easy copying of trades from “successful” traders who show incredible gains over past few months or even couple of years. The lure of quick gains without the need to actually learn the basic concepts of Forex trading has lead to a large number of traders losing entire accounts due to copy trading badly managed grid and martingale strategies. In all these cases, traders lose their invested money in the process of trading bad strategies or blindly copy trading high risk systems.

In 2008, Traders International Return Network cheated investors of over $15 Million – This had been a raging topic for many years in the financial circles, but has now been forgotten.  Over past few years, a growing number of cases have come to light when financial firms or even brokers have lured investors with high yield investment programs by providing proofs and valid trading history. Financial Conduct Authority (UK) has warned of an increase in rise of fraud in online trading platforms. The reported number of cryptocurrency and Forex scams had tripled in the 2018 to more than 1,800.

With very strict regulations in US, Europe and Japan cripplingForex and Binary Options trading, traders are looking outwards towards brokers located in countries with trader friendly regulations. Traders are speculators by nature. This is both their strength as well as their weakness – They are willing to take risk and go in for higher rewards. But the same trait sometimes makes them act too quickly – a weakness that the scammers are waiting to exploit.  Scammer often re-emerge with different names and identities, getting better with each scam they operate. They setup perfectly legitimate looking businesses complete with licenses from regulatory agencies. They are often successful to win the trust of traders and investors by saying they are regulated by an organisation that sounds legitimate. Australian Securities and Investments Commission (ASIC) has provided a comprehensive list fake names used by scammers – The complete list of the fake regulatory agencies has been collected by ForexInfoBook in their report : Beware of Fake regulators & exchanges. The organisations listed are all fake entities and no genuine government regulators exist under those names. Traders and Investors should not deal with them.

Common sense is always the best line of defence. As a thumb rule, traders should subject any “too good to be true” opportunity to serious scrutiny. The first among them is to make sure the firm’s claimed regulation is not from among the list of fake regulatory agencies pointed out by ASIC.

Clare Louise

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