When considering the question “is Forex a scam” the first thing that comes to my mind is the old saying “Never invest in anything that you don’t understand.” Follow this advice and you are unlikely to fall victim to scams. Another saying worth consideration: “If it seems too good to be true, it probably is.” A third thing to remember is that you should know your risk tolerance and investment goals. Are you comfortable with the idea of losing your money? When will you need this money? You might be more risk tolerant at 20 than you would be a few years from retirement.

Foreign Exchange trading, or Forex, is the trading in international currencies. Is Forex a scam? The currency markets are a large and liquid market, attracting speculative short term traders. International currency markets are risky and reliant on rumors, world news, and politics. Foreign Exchange markets have been described as a zero sum game. There is a fixed supply of currency on the world markets and for one person to make money on a Foreign Exchange market trade, someone else must lose money.

There are two types of traders in Forex; market makers are the large banks and investment houses, and retail Forex brokers are smaller players. Cash FX is the shorthand name of the commodities traded. Retail Forex brokers can be the subject of scams. Although the market is legitimate and regulated by laws such as the Commodity Futures Modernization Act of 2000, it is common for people to lose money more than they gain. Broker’s commissions, and sales of software programs and information are more surefire ways money is made in the realm of Forex trading. So the answer to the question “Is Forex a scam?” might be yes, and it might be no.

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