Commander in Pips: So, as I’ve promised we will talk a bit about the other side of the moon – possible pitfalls that wait on the road of forex trading. One of the biggest pits is Forex Scam. We even more have to speak about it, since we are the Forex Peace Army and “seek and destroy” scam is our major aim. So, we know a lot about them, their tricks and cunning. But here we will just point out the biggest issues and will not overlap with other content of our website. In corresponding parts you will find a lot more information that also appears to be really practical and not just theoretical as it is here.
Rizwan Awan lures in a new victim
Click here to read the true story a forex account manager who never stops scamming.
Pipruit: Yes, I need to know more. Forewarned is forearmed.
Commander in Pips: Right and we will start with Trading Managers. May be this will not touch you at this time, but I’m ready to bet that before you have come to our school – you’ve thought about it. Trading Managers are those who offer you to trust them your money. These people will trade/invest for their clients. Many people think about this seriously. “I do not know how to trade and know nothing about Forex and financial markets. But I want to increase my capital, and increase it solidly. If I put my money on bank deposit – this will give me too small of a return, while here I can become rich fast, at least this is financial markets – fast way to high wealth.”
That is the thought sequence of many people. When they come to this conclusion, the next thought is: "They take just a part of my profit. This sounds reasonable” and then “What do I know about trading and forex – nothing. But they are professionals with large experience of successful trading, they know what to do, since they have spent a long time in this business. With my job on my shoulders – I have no time to study trading and forex, why I shouldn’t trust professionals?"
Commander in Pips: Well, don’t you think that this is a bit of curious venture – give your money to the first comer?
Pipruit: … I don’t know, he is still a manager…
Commander in Pips: Right. The major question is manager of what and to where? To take clients money is very simple task, especially on over-the-counter market as Forex, that are not so strictly regulated, compared to exchange markets. As a result your so-called manager charter a private plan and leave for some tropic personal island somewhere and will use your money to help pay to build a castle on the shore. And you will try to start a lawsuit to catch this bastard and get your money back. If you will get very lucky and lawsuit will start – it will appear that there is huge drawdown in client’s assets, but your manager now claims to be unemployed and all his property is hidden away in some banana republic offshore and does not appear to belong to him legally.
Pipruit: I can’t believe it…
Commander in Pips: Ok, may be this is too ultimate a picture and I carry it too far for the average managed forex scammer. But still, manager could be in cahoots with the broker so he will trade too much to pay more spread, he could intentionally lose all your money and get kickback from Dealing Desk broker and it will be very hard to prove it. There are a lot of different chances to grab your money.
Pipruit: So, I can’t trust to any manager?
Commander in Pips: Not quite. In fact, there are persons that are really good managers who are real old sweats of trading with huge experience and knowledge. They exist, but they are more the exception rather than the rule.
Pipruit: I see and what I have to do to find one?
Commander in Pips: Yes you can. This may or may not be a smart decision. But here is some advise to you:
1. Before giving your trust to anybody – scrutinize and investigate his results in trading. Our Managed Accounts reviews and Managed Accounts Performance Tests will help you with that;
2. Depending what you’re searching for, signals, trading systems or managers – investigate all of our other reviews and all of our performance tests.
3. Pharaoh does a great work – visit Pharaoh Financial Blog and particularly the topic dedicated to managed forex accounts to learn some ways to separate scam managers from real ones.
For the short haul that will be enough. If you will need some more – you can ask questions at the FPA and try to dig into this issue deeper.
Major anti-scam rule to follow
Commander in Pips: Do you remember “Dennis The Menace 2” movie, where two crooks have come to Mr. Wilson and offered him a rejuvenation machine “for only $15,000”. This is such a good machine, it’s priceless and we will give it to you just for 15 K USD advance payment. You have no risk, since you have our priceless machine as a pledge. Surely we will return you your puny 15 K USD if somehow you will become unsatisfied, what is hardly likely. Don’t you think that we can change puny 15K for our super machine – this is madness.
Pipruit: Yep, excellent movie – one of my favorite, especially Denis’ dog – Briar.
Commander in Pips: Right. I like this dog too, but let’s return to our business. You have to remember what kind of machine this was…
Pipruit: Sure I do – that was a fake
Commander in Pips: Right. Now I’ll give you another description. What will be if some well-dressed gentlemen will come to you and offer some superb trading system or managed account or software or anything else, that will give you 10000000…0000% of profit in 1 year with 100% probability. This is just a pips machine – just take a look at past performance! It will turn your 1000 USD account into billions in just one year and Mr. Buffet will clean your boots to make some money! This system (software, manager) costs just a puny 20 K USD. You have no risk, since you will get our priceless software or trading system on your hands. If something will go wrong – we will surely return your money, since we will not want to risk our priceless invention for your puny 20 K USD.
Pipruit: I get the analogy, sir. By the way, I’ve seen this offer a lot of times. Some advertisement I even got by post in pretty good envelopes on excellent glossy paper with charts, explanations and so on.
Commander in Pips: Yep. This is also of this kind. So, anybody has to understand that the major rule – There is no Holy Grail on Forex. You can get money and profit only as a result of hard work – sounds equal to any other sphere right? Those swindlers also get money by hard work – but their work is of another kind. Trading is an exciting journey, but there is no trigger that adds to your 1000 USD the letter “K”, turning your cash to 1000 K USD. 90% of all who offers you such products mostly are swindlers and as we call them – scam. They are not some mystic substance – they do really exist and their hard work is to grab your money once you have become careless.
Pipruit: But why does it continue to happen even now, since this fact is well known already?
But not all forex companies, managers, brokers are evildoers.
Be careful and keep your eyes open – and you will be fine.
But fortunately, the Forex Peace Army is here. If you spend some more time with us and not just in our Military School – you will get much more material, both theoretical and practical, that will prevent you from been a scam victim of any forex scam.