It is no secret that the Forex market is by far the largest market in the world and because of that it brings out a myriad of scams and rip-off artists. They are like vultures hovering around in forums and blogs just waiting for an opportunity to feed. They can be disguised as forex signal programs, forex newsletters, automated trading systems or robots (incredibly hot right now!), brokers, high yield investment programs, account managers, forex software platforms, ebooks with the secrets of market success, and much more! So the question is how can YOU avoid being scammed by these thieves?
1. Know who you are buying from
If they are a product vendor, make sure they have a phone number on their website. This is not to say that businesses with phone numbers are not scams, but most scammers like to hide behind a website and will not speak with you on the phone.
Call them and talk to a representative and ask them tons of questions about their business. How long have they been around? How were they started? You are basically looking for things that a real company would have answers for.
If for some reason they do not have a phone number and you feel like they are legit, email their support department to see if you get responses.
2. If it seems too good to be true, it ALWAYS is in the Forex market
This may sound a big cynical, but if you’ve been around the Forex market for a while you will understand. Use common sense when you listen to claims made by websites and marketers. If you have read some sales copy and you are thinking you can buy a product and have all your dreams fulfilled there’s something fishy going on… Listen to your gut on this one.
3. Steer clear of companies that guarantee no losses
No one on the planet can guarantee there will not be any losses in the Forex market or in any other market for that matter.
4. Do not listen to companies that claim unrealistic profits
If they say you can double your money in a year or a few months, run like crazy! The sheer logic just does not make sense. If someone could make that kind of return, I can guarantee they would not be selling their secrets for $97 in the form of an ebook…
5. Find unbiased reviews of brokers or programs before you buy them
Now this one is incredibly tricky given all the affiliate marketing going on today (that’s where people recommend a product to you and get a commission if you buy it). You need to hunt for real reviews. Here are some tips on knowing if the review is real.
It is likely a real review if it is: really long and in depth, the person has insider information that cannot be found on the product’s sales page, they show you screenshots inside the product, they allow an open discussion on their review page (huge tip here), and it does not sound hyped up.
6. Keep your emotions in check
You might be wondering where I am going on this one, but the truth is we can all get temporarily sold on something. Have you ever looked at a new car on a lot and wanted to buy it immediately? However, for some reason or another you could not do it that exact day. After sleeping on it you realized that your emotions were ruling your decision and that you really didn’t need the car.
The same happens to us in looking at all these Forex trading programs, software, etc. The sales page might hype us up and we’ll buy based on our emotions. So I recommend that you actually sleep on it for a day or two before buying anything. This tip alone has kept me out of tons of scams.
7. Don’t believe ridiculous historical test results
No matter how much you want to believe historical test data, it’s simply too easy to make any system look good with optimized historical tests. If you want to learn how this trick is done, a great way to get started is to subscribe to MrAutomate.com and we will address backtesting in our mailers.
8. Test the system thoroughly on paper prior to the end of the return time frame
Almost any legitimate program offers a refund/return period these days. It’s usually 30, 60, or 90 days from your purchase date. Make sure to thoroughly test the system in your paper trading account prior to this date so you can return it if you are not seeing any results. Don’t believe them if they try to get you to test it for 6 months (and therefore forcing you outside the refund period..), just return it and move on.
If you have some other tips or tricks that will keep people from getting scammed out of their hard earned cash, please post them here. I’m interested to see what tips we can uncover.
5 responses so far ↓
1 forexdog // Sep 1, 2008 at 10:56 pm
I think the bit about the historical testing is the bitch for most people. Historical testing has it’s place and is in fact a very valuable tool, but not for sales purposes. like you said.
beside, there’s a reason most of the website have the disclaimer at the bottom of their page that goes something like this ….
“CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT” ….
great post man
2 Danielle // Sep 2, 2008 at 4:48 am
Thank you for sharing. Very informative post for newbies.
Totally agree with you, especially about “selling their secrets for $97 “! lol!
3 matt // Sep 2, 2008 at 6:34 am
I always try to remember to do two things. First I look for typos. Anyone trying to sell me something needs to know how to use correct spelling and grammar. They might use a spell checker but most won’t use a proof reader to check for grammatical errors. This is a peev of mine and know that almost zero persons ever proof read their ads these days. I just wonder why? Or are the proof readers not doing their jobs? Second is I always do searches on key phrases or the item being sold. Never go with the first or even the second review on anything over the internet because as mentioned, there is alot of affiliation sales out there and they usually have no real experience and/or knowledge of what they are selling. They just want that commission check. That is how I stumbled across Mr.Automate.com. I just kept searching till I found this site that seems to be run by people and not some Mr.Automate robot.
It is quite refreshing to finally find a site that is like this one. Thanks.
4 Dave // Sep 2, 2008 at 12:49 pm
Matt -
I cannot tell you how good this comment makes us feel…
“That is how I stumbled across Mr.Automate.com. I just kept searching till I found this site that seems to be run by people and not some Mr.Automate robot.
It is quite refreshing to finally find a site that is like this one. Thanks.”
We truly want to help people learn how to trade and not force feed them some boxed solution.
I’ve been on the side of the equation where I had been completely new and was taken advantage of - so I know EXACTLY how it feels and we want to keep as many people from going through that as possible with MrAutomate.com.
Thanks for the great tips too - typos on a sales page are a sure sign of someone who does not care or plan to be around for a long time. Of course no one is perfect either, but it’s obvious if someone just slapped together a sales page with tons o f grammar/spelling flaws.
Danielle -
It always amazes me how people buy into a program that supposedly will turn you into a millionaire for $97… Sometimes we all just need to step back and think about things logically for a day or two and we’ll realize that we’re being manipulated.
Forexdog -
Right on! Good observation with the disclaimer - although it is smart for any trading product to have an earnings disclaimer - most of these sites have to staple it everywhere just to ease their conscience and hopefully protect them from many many lawsuits.
One thing I did not add that I would like to add here is program age. Although there are definitely exceptions to the rule, usually if a product has been around for a while it is not a scam. The reason is that most scams get revealed in 3-9 months and they suddenly disappear.
So if you are looking at a program that has been around for 2-3 years, it is likely that it’s at least decent or they would not still be in business. Again - just another thing to watch out for - not a 100% of the time rule.
5 Paul Walsh // Oct 21, 2008 at 2:19 am
Very interesting and good points by all of you.
I wanted to point out another tip that not many forex traders are aware of: Forex Rebates
Bascially when you trade you pay a spread. We at FX Rebates will refund the trader $4.11 per round lot traded. This service is free and there is no minimum volume to qualify.
As a matter of facr many EA users get a considerable rebate every month.
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