Hi everyone, how are we faring? I guess we have been good so far. Its been a long time since I dropped a post so I decided to drop this real quick.
So a few days ago, I was talking to some of my friends and we had this heated argument as regards forex trading being a scam or not. The argument had a lot of really shady and not so clear points, some that were backed up by statistics while others were just opinions. So I did some research and decided to make this post.
In this post, I will be writing about forex being a scam or not. Stay tuned because I am about to give you details of what forex is and what the real scam is.
For me to clear address this question, I will have to define some terms.
What is the Forex Market?
Forex means foreign exchange. The forex market is a decentralized market where all the currencies of the world are traded. It is currently worth about 5.1 trillion dollars. It is opened twenty-four hours a day and five days a week.
What is forex trading?
Forex trading is the act of trading one currency for the other with the aim of making a profit however a loss is always inevitable. Forex traders are participants in the forex market. A successful forex trader makes profits while a failed forex trader makes a loss. It should be noted that the chances of winning in the forex market are very low and most traders end up blowing up their accounts.
What is a scam?
Dictionary.com defines a scam as a deceptive scheme or trick used to cheat someone out of something, especially money.
From the above definitions, it is clear that the forex market and forex trading is not a scam. So the question is
why do people still think that forex trading is a scam?
There are a whole ton of reasons why people think forex trading is a scam.
So while talking to one of my friends, he made a claim that all forex investments are Ponzi schemes and I didn't quite agree with him on it because I am also a trader and I can say that forex trading is legit. But does this mean that forex traders are legit? The answer is definitely NO.
The truth is that most forex traders first might not be real traders and maybe disguising to be what they are not. they then come into the umbrella of a legit structure such as forex.
With this point, I can say that not all forex traders are scams, however, most scams try to use forex trading as their selling point and this is where the problem lies for the legit forex traders.
In a country like Nigeria, where Ponzi schemes have prevailed over and over and there are a lot of cybercriminals, you can arguably say they are Ponzi till they can prove themselves over a period of time. To back this point up, a friend of mine asked as to why they crash or they stop paying when people stop depositing. This just goes to say that they are dependent on the next person's money to continue their growth.
That's why some of the forex investments in and around the world have this pyramid-like structure in which the people at the bottom earn little to nothing and the people at the top are cashing out big time. An example of this system is I markets live
So what's the advice or the take-home message of this whole post?
In as much as forex is a legit business, the black sheep are out there and they are way more than the real traders.
- So first and foremost, do your own research and this involves probing and asking a lot of questions before giving them your money. Some of them might make you feel like you are too cautious about your money, please be extra cautious.
- Ask for their track record. I recommend a 3-year track record of consistency before I do any investment with anyone. If they can't provide it, they are probably still new in the game and they don't know their average gain or loss.
- This is the most important of all; If the offer is too good to be true, then it probably is too good to be true. You should run in such cases. No one should promise you 30% monthly and you believe them. It most likely won't be sustainable.
Well, I think that will be all for now. In my next post, I will be writing on the profit margin in forex trading.
Thank you for reading...