Infamous forex scams, part 3

So far, we have discussed a few topics regarding forex scammers. We firstly looked at what forex scammers are and how to avoid them. We then had a discussion on some important forex concepts, before we continued on with forex scams. Here, we will expose you to some of the most common types of fraud in relation to forex. All of the ones we shall discuss are highly illegal. Therefore, you should definitely keep an eye out for them.

Ponzi schemes

Ponzi schemes start off well enough. They will be telling you about how great their investing strategy is. They will thus claim how much money they can make for you, with little risk. This starts off being true enough, actually. At the start, they do achieve great results for their investors and make them a considerable amount. Things start to deteriorate soon enough. But they have gained the trust of their investors, who will not move once things go sour.

How do they make the initial payments, then? Well, they actually use money from the newest investors to pay for the payments for the other waves of investors. This is because they have entry fees to start working with the company.

So, eventually, they are likely to run out of enough money to pay other investors. Things eventually collapse.

Pyramid schemes

This type of scheme is quite well-known and is present in all sorts of fields. Forex included. They have a sort of network marketing structure. Much like the other scheme, it uses the money from newer recruits. However, then, the new recruits have to find new members. So, eventually, there is exponential growth, as new recruits keep getting new recruits. All of the money flows to the top, almost nothing stays at the bottom.

Again, much like the previous one, things collapse. Not enough money, and too many people.