Warning About Trading Guaranty

Ludvik Cizinsky

Have you ever run across a fx broker who promised you a guaranty on your investment? The spiel usually goes like this: "Don't be concerned, you can never lose more than 20% of your initial investment, but the potential of making big money is unlimited. Our EA systems are the best in the business, never losing money and averaging 15% per month. See the performance record in the past years..." end of quote. Certainly, the numbers are always made to look good to be more convincing. Equally misleading is the "guaranty"!

So, if you ever consider such an offer you should approach it very carefully and get everything in writing. Choose only a very reputable well funded broker. Then ask several questions! The one which is most important: what will happen at the moment when my account drops under 80% of its original value? You may expect that the guaranty (the insurance) will automatically kick in. But, not necessarily. Your account can go all the way down to near 0 in less than two months and then stay there for the rest of the agreed time frame, which is commonly a year. And then you should pray that the broker will give you 80% of your initial investment back as promised!