Fraud in the Forex market has become widespread in recent years, especially online. The Foreign Exchange market is an exciting and potentially profitable market to get into, but it is not for the uninitiated. If you know the Forex signals to look for, you can avoid getting trapped by those companies that are scamming thousands of unwary investors.

At the most basic level, the Foreign Exchange (Forex) market is very easily understood. Anybody who has traveled abroad and exchanged their currency for that of another country has done a basic “forex” exchange. Deregulated currencies are in a constant state of flux, rising and falling in value as they are perceived as weak or strong.

The U. S. Dollar is the currency against which all currencies are compared. In recent years, the U. S. Dollar has weakened in value. A good example of how currencies change in value is the United States dollar versus the Australian dollar. Before the U. S. Housing bubble burst, one Australian dollar was worth between 75 and 80 U. S. Cents. If it dipped below that, it was usually because of some perceived or real weakness in the Aussie economy.

When the U. S. Housing bubble burst and the recession came, the Aussie dollar began to rise steadily against the United States dollar. By 2010, it reached near parity with the dollar because investors saw it as relatively safe and secure.

Since the U. S. Dollar is the world’s benchmark currency, most currency exchanges are done on dollar comparisons with the United States dollar. Currency values are very volatile because they are intimately connected with political and economic developments. While they can be a fascinating and lucrative type of trade in engage in, they are subject to the same risks as other investments. The most dangerous risks in currency exchanges are for the uninformed, who may fall for scams.

Fraudulent Forex traders have taken advantage of the general public’s lack of understanding about the market. The level of fraud has become so great that the CFTC has actually published a warning on their website about Forex scams.

They cite several things investors should be wary of. These include promises of guaranteed high returns on your investments, false assurances that any losses will be minimal and temporary, claims that the Forex Market is “foolproof” if you use their “system” and other completely unsubstantiated claims. They also point out that these scammers target senior citizens who are just gaining access to their retirement funds. Many older people who have fallen for these frauds have lost their entire retirement savings.

These false promises are the Forex signals you should watch out for. If you are interested in entering that market, do so through reputable institutions and never through a company that promises you huge instant returns.

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