Forex HYIP programs - the tell tale signs of a forex scam

Real Source: http://www.forexfraud.com/forex-articles/forex-hyip-programs.html

High yield investment programs or HYIP is when the con artist and his affiliates defraud investors through promises of return on investment as high as 80 percent per day. These scams have been proliferating in the Western World since the legendary exploits of Mr. Charles Ponzi and his ilk. Usually, the blatantly unrealistic promises of income are reinforced by claims of exclusivity, limited admissions and some kind of secret formula that will allow unlimited profits to investors.

Of course, these HYIP's are just scams and many investors can consider themselves lucky if they can escape with their jackets still on their backs. While these artists and showmen of deceit convince the prospective investor that the returns are generated through their unparalleled skills at investment, peerless business acumen and stratospheric level of intelligence, in fact the business model is very simple and doesn’t depend on any kind of business acumen or investment insight. All that these industrious individuals do is take the capital which they receive as deposits from gullible new investors and distribute it among the other victims of their schemes, disguising the endless flow of investor funds into their fake investment program as the return on investment generated by shrewd and skillful investment practices.

So what they are doing is taking your money and giving it back to you as yield on their investment programs. Doesn’t it sound insulting to human intelligence that there have been so many people who have been deceived by such an insultingly simple fraud scheme? It probably is, but lack of intelligence certainly isn’t the real cause of the gullibility suffered by the many victims of these schemes. As we mentioned before on this website and you yourself have heard from many others, human beings love to believe what they want to believe. Although logic tells us not to trust in anything which we can’t understand or have explained to us, we are prone to overestimate the value of a promise that offers great returns for just a little exertion.

The managers of HYIPs are intelligent people too. After all they are artists, masters of their craft, who take great delight in destroying the livelihood of innocent people, stealing their life savings and leaving them like fleeced sheep in the middle of the icy landscape of modern life. They know how to addict their clients to the fast returns of the high yield investment programs by moderate, measured injections of the venom. At the first stage, the victims are incredulous of the offers made to them and will join the HYIP with very small sums, for the sole purpose of testing if the managers of the fraud scheme will return anything at all on their investments. Once the small sums deposited come back with a very large profit, the initial insecurity of the victim is also erased, albeit gradually. Slowly and slowly, the small deposits keep building up, as $100s add up to $1,000s and $1,000s to $10,000, until all caution is thrown to the wind and a bout of limitless euphoria incapacitates the reasoning ability of the “investor”. All the while, the managers of the HYIP program keep promoting their beautiful scheme, using the testimonials of past clients to prove the reliability of their impossible claims and if they are successful which in many cases they are, they watch the funds at their disposal balloon to outrageous amounts.

Often the earliest victims of the HYIP are those who are the luckiest, but even that is illusory. As the managers pour the deposits of their victims into a yield pool which they distribute to their older members, those at the top of the pyramid will usually earn the highest amounts due to their seniority in the structure. Those who are the latest usually lose every penny that they deposit, as the scheme collapses and the managers disappear among shades and winds along with client money, leaving hot or cold air on which their victims can build castles.

Of course, while the HYIP pays out well to the earliest victims, they too will regret their gullibility as lawsuits, colloquially known as clawbacks reclaim most of the distributed money as stolen deposits of investors. The managers are winners in Hawaii, Tahiti, the Caribbean Islands or somewhere similar by now, unless caught by law enforcement agencies. Everyone else back at home are losers, their dreams collapsing into a heap of subpoenas, unpaid bills, depression and despair.

Eventually, the manner in which the clients are defrauded will differ from case to case. In some, a pyramid or ponzi scheme will progress as we outlined above, with the number of victims growing through referrals and those at the top getting the highest share of the purported investment income. In other cases, the clients funds are misappropriated through mismanaged managed accounts and in other cases the fraudster doesn’t worry so much about the finesse of his methods, just pockets the deposits and runs away. Often, how they steal is immaterial to the victims but knowledge of their methods could be useful for law enforcement agencies as they attempt to bring the thieves back to justice, with the hope that some of the stolen funds will be regained.

We’ll examine the forex HYIP shortly, but let us mention that the way to avoid the aftermath of financial ruin is to avoid the pink dreams that cause the victims to be manipulated so easily by the nonsensical promises of the fraudsters. There are some golden rules of trading and investment in general and one who adheres to those with determination and consistency will find himself invulnerable to HYIPs, pyramids, ponzis and their many other varieties. Do not engage in an activity which you don’t understand. Do not believe in something that you can’t explain. If the promises that you’re told sound too good to be true, do not risk your wealth and savings to chase them.

The forex variety is widespread these days. In the early days of high yield investment programs the advertiser would be limited to a geographical region due to the underdevelopment of international communications. Many conmen and fraud artists are deeply appreciative of the possibilities created by the spread of internet all over the globe. Just like serious business people, they see new frontiers and new profit potential that has been created by these new technologies. Today with one click a Chinese farmer, an American retiree, a Russian businessman can all be lured into the spider’s web and fleeced and skinned is a source of great excitement to the scammers. They were quick to exploit the possibilities of the internet age, with anonymity, lack of regulation and transparency creating the most perfect environment for the spread of their financial diseases. Visit our who to contact page if you have encountered any forex HYIPs and wish to report it.

In the forex HYIP program, the fraudster will usually claim knowledge of some kind of secret formula which allows him to register very high profits on a consistent basis. Since the claimed knowledge is almost certainly non-existent, its nature can be anything from an automated trading method, some kind of special and exclusive arbitrage strategy, or less frequently, some proprietary combination of technical indicators that allows the con artist to outperform professional investors and large firms with great skill. What they say that they do is irrelevant: Because in the vast majority of cases they do nothing and just pay you back with your money, depending on your seniority in the structure.

A fine, but somewhat anti-climactic sample of these interesting individuals was Joel Ward, who we also discussed in our forex managed account article. Joel Ward started his career with $300,000 in client deposits at the time of the launch of his Joel Nathan Fund in 2003. In just two years, the amount he was managing had ballooned to $7 million, he was interviewed and quoted on such reputable and credible news sources like the Financial Times, Market Watch and the Wall Street Journal. As a particularly spineless creation of Heaven, Joel Ward would even comment on the irrational attitude of many investors to forex, how they saw the business as a get-rich-quick scheme, how very high leverage was greatly detrimental to a career and how hard he and his firm worked to educate their clients on sensible investment practices and methods. He always emphasized the importance of ethical conduct in the forex industry.

Ethical or not, Joel Ward was very effective in utilizing every penny that was deposited with his firm towards the goal of maximizing profits, but in his case the profits were only for himself. Eventually, when his Joel Nathan Fund ran out of money, he emailed his investors that “There are no funds left in JNF as all monies have been misappropriated.” in this remarkably candid way, which could well be regarded as a good example of high ethics in the forex fraud business. The law sentenced him to nine years in prison for stealing $11 million from his clients.

Later it was found that of the $15 million Joel Ward had acquired, he had traded only $2 million, all of which he had lost in the market. The real return on investment was provided by his Ponziesque use of $3.7 million, which he had recycled to clients. The vast majority of the remaining sum was used to finance his extravagant life style and his purchase of the "Learn: Forex school", which he had used as a source of recruitment for his business.

For the purpose of this article, we’re most interested in the Ponzi distribution model of the HYIP scheme. The most important lesson that a prospective trader will derive from the above is that it is not a good idea to evaluate a forex scheme even on the base of the investment returns: Unless there is first-hand knowledge of the trading practices or a considerable degree of transparency about the firm itself, there is no guarantee that a track record of purported profits in a HYIP is based on actual profits that can be spent safely by an investor. Indeed, we come back to our main principle which we discussed a couple of paragraphs above: Do not believe in anything unless you can duplicate the claimed performance by applying the same methods yourself. Do not believe in anything that you do not understand. Do not risk your savings on the basis of what you’re told by friends or family, unless you are convinced that you know what you are doing.

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Fixed Currency Regimes: Exploiting pegged currencies for profit

Real Source: http://www.forexfraud.com/forex-articles/pegged-currencies.html

Trading a fixed currency is one of the low risk high reward ways of profiting in the forex market. Although it is not that popular among traders, a seasoned trader with good analytical skills can pocket very large profits with this method in short time provided that he is patient and only takes those opportunities which suit his expectations.

What is a pegged currency?

A pegged currency is a monetary unit the value of which is fixed to that of another. By choosing this path, the central bank of the pegging nation is abandoning monetary independence. Since any difference between the interest rates of the pegged currency and the controlling currency would be exploited by arbitrageurs distorting the exchange rate, the pegging central bank has no choice but to mirror the monetary policies of the other.

Pegged currencies are maintained by central banks at a fixed rate. In many cases, pegs are introduced following political or economic turmoil, and the rate is usually determined by historical factors. However, unless the capital account is closed (which means that the private sector cannot exchange currencies and buy and sell assets internationally), there will be small fluctuations around the aimed fixed rate as declared by the central bank. Traders of pegged currencies profit from these fluctuations by betting, in most cases, that the peg will hold.

Why does a nation maintain a fixed currency regime?

In most cases the purpose is controlling inflation. Since government traditions in emerging markets are weak, political incentives for inflating the money supply strong, and the independence of monetary authorities is limited, or non-existent, inflation can become rampant and uncontrollable by the traditional method of raising the interest rates. As the public expects prices to go up, and press for higher wages in return, firms raise prices, and a feedback loop based on the psychological attitude of market participants can last indefinitely, doing massive harm to the economic health of a nation.

Usually, the government which created the inflationary phase is unwilling to solve the problem, and as it gets replaced at elections, the new government is handed over a situation which demands radical solutions. One of these radical solutions is the currency peg that we’re discussing in this article; by instituting it, the government is making a clear, irreversible, and reliable commitment to keeping any growth of money supply beyond that of the controlling central bank limited by the actual inflow of foreign currency into the nation through external activities. In other words, the printing presses of the pegging nation will be used only as often as that of the controlling nation which is often a developed world country with a credible and well-established policy.

Sometimes central banks and governments introduce pegs in preparation for a monetary union. Since the currency of the pegging nation will be abolished in time, it is beneficial to allow the public to get used to the new unit of value by maintaining a peg, while the new regulations and institutions are being built. The ERM (European Exchange Rate Mechanism) which preceded the launch of the Euro, or the present Danish peg, are examples of this kind of regime.

It is also possible that a peg be maintained for purely political reasons, with only limited economic justifications. In the case of the Gulf Arab States, and their much publicized, and criticized dollar pegs, the main benefit is the political and military support of the U.S. These nations have a sufficiently favorable current account position to build up considerable forex reserves, and as they are not exporters, they do not need to maintain a low exchange rate to help their trade income. Although the dollar peg is useful for controlling inflation sometimes, at other times the monetary policy of the U.S. can be highly inflationary, negating this benefit. But as the Gulf States mainly seek the political benefits of maintaining their pegs, this issue is mostly ignored by them.

Pegs can also be introduced temporarily in response to currency crises, without any relationship to inflation. Usually such regimes are removed in time. HK and Malaysia, for example, both introduced a fixed currency regime in response to the massive speculative attack during the Asian crisis of 1998.

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Islamic Forex Trading

Real Story: http://theforexstar.com/islamic-forex-trading/islamic-forex-trading/

In the world of Forex trading there is much to learn about currency exchange. In the world of Islamic Forex Trading, there are a lot more things to be considered than just the exchange of currency or precious metals. Until recently Forex trading was not being done in the Islamic world. This was mainly due to the fact that “Shariah Law” forbids many of the Forex standards.

In Islamic Forex Trading, there are no trades allowed that cannot be completed at the time of the trade. For example you cannot make a trade that will take six months to complete. You are only allowed to purchase foreign currency for the current trade value. If you make a profit you must be charged interest on it.

When trading for gold you must also trade with something of equal value. The same is true for trading silver or less precious metals.

Islamic Forex Trading accounts are set up to create a swap free account. This means that no swaps will be accounted to positions overnight. These accounts are set up for customers who believe that swaps are contrary to their religious beliefs.

The Islamic Forex Trading accounts do not receive or pay overnight interest or carry on positions in accordance with their religion. There are zero up-front commissions and no additional charges on these accounts.

In the Islamic Forex Trading account the interest payments on account balances is waived. Instead of swaps, the account will be charged a service charge on each lot left on the currency trade.

Forex traders have found a way for persons with Islamic beliefs to participate in the fast growing Forex market. The majority of Islam fundamentalists agree that Forex trading can comply with Sharia only if it is spot trading and doesn’t involve earning any overnight interest on the account. As long as the trading doesn’t involve Riba (unlawful gain) it is considered to be legal in the Muslim world.

Forex is basically trading one currency for another. Some Islamic scholars tend towards the thought that since there is a lot of volatility and speculation, it should not be permissible under Islamic law. It is compared to day trading which is not allowed under any circumstance in the Islamic world. You are not allowed to sell what you do not have in your possession. Therefore, you cannot purchase what you cannot take immediate possession of. This eliminates the speculative aspect of regular Forex trading.

You must take into account that some experts in Islamic law will interpret the laws differently and that you must be very careful to follow your beliefs very strictly to avoid being unlawful in your business ventures. Find a knowledgeable Islamic Forex Trading advisor to help you get started. They must be aware of all the rules on profits and loss. A great deal of experience would be helpful and you should check the credentials of the person you want to work with. When you are a little more experienced in the business end, you will be more comfortable with your Forex trading.

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Trading A Market Which Is Always On The Move

Real Source: http://learningforextradingonline.com/forex-articles/trading-in-a-market-which-is-always-on-the-move.html

It is of curse this movement which provides the opportunity to make money buying and selling global currencies, but it can also make it difficult to decide when to open a trade, close a trade or simply stay out of the market altogether.

Probably the greatest problem with the fast moving foreign currency market however is that it plays on our natural sense of greed and this can present traders with a very real danger.

We all like to make a profit, but what level of profit is acceptable? If you are in a trade which is showing a profit of $2,000 should you close your position and take your profit or hang on in there for $2,500? You are trading to make money and so, when the market is moving in your favor, it is only natural to want to ride the wave all the way to the beach. The difficulty however often lies in knowing when you have hit the beach and in not waiting for the undertow to start dragging you back out to sea again. Once the undertow catches you it can drag you back out to sea again very quickly.

Most Forex traders enter foreign currency trading with a clear picture in their mind's eye of just what they intend to do with all the money they are going to make and that is no bad thing. It is extremely important for you to have a goal, as well as a plan of action to allow you to reach that goal, and it certainly helps if you create a visual image in your mind of something concrete you are aiming for.

The problem however is that you could well find that you are tempted to try to reach your goal sooner than you had planned or that you create a bigger and better goal as you go along, allowing your natural tendency towards greed creep in and to start taking control of your trading.

Another commonly seen problem is that of failing to understand that it is not money which drives the market.

Think about this for a minute. It doesn't matter if you have $10,000 or $100,000 in your trading account because whatever sum you're looking at it is not going to make the slightest difference to the way in which the market moves. By the same token, it doesn't matter if you are looking at a $750 profit or a $750 loss in an open trading position because this again will not make any difference at all as far as the market rising or falling is concerned.

The fact that you are doing well in a trade and have made a profit of $750 does not mean that this profit will turn into $900 or $1,000 if you wait a bit longer. It is of course human nature to find yourself caught up in your 'winning streak' and to convince yourself that there is more profit to come.

It is also human nature to find that, having already lost $750 in an open trade, you will try to convince yourself that things will turn around if you keep your nerve and just hold on a little longer.

It is essential that you set a goal and have a plan to reach that goal but your trading decisions must be based on what is happening in the market and not on your goal.

Money should have no influence on whether or not you enter or exit a trade, or stay out of the market altogether, and these decisions should be based solely on what your analysis of the market tell you.

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Forex Traders Need To Be Objective

Real Source: http://learningforextradingonline.com/forex-articles/forex-traders-need-to-be-objective.html

A difficult lesson for Forex traders to learn is that within the currency market almost anything can happen at any time.

Because new traders spend a considerable amount of time learning the mechanics of the market and focusing their attention on finding a method for predicting movements in the market, it is only natural that they also come to believe that there are rules which govern the movement of the market. This is not the case and this catches many traders out.

Forex traders use a number of tools to judge when the time is right to open or to close a position, but the majority of traders will also have one particular tool which is their favorite and which they will rely on more than any other. So, once they have opened a position, they will watch their favorite indicator and base their trading decisions to a large extent on what this single indicator tells them.

This is fine until this indicator begins to tell them one thing while the other indicators are telling them something else. They are now in an open position and their favorite tool is telling them for example to hold that position while everything else is indicating that they should close their position and get out of the market. More often than not the trader will hold his ground and will end up in a losing trade.

The problem is quite simply that the trader has created an expectation in his own mind about the market and is not looking at the market objectively. He is using his favorite tool to reinforce this expectation rather than stepping back and looking at the wider picture. He is also probably being encouraged in this view by the thought that he must be right and by the profit in this trade which is being forecast by his favorite indicator. He is in effect seeing the money rather than the market.

The foreign currency market is, by its very nature, unpredictable and, were it not so, the market would soon collapse as we all made a profit on every trade we opened. Of course there are numerous tools to help us to predict the direction of the market and thankfully they do a pretty good job most of the time. Occasionally however even the best of tools in the hands of the best traders come up against an unexpected turn in the market.

Getting it wrong is a feature of Forex trading and traders need to learn to accept losses as an inevitable part of foreign currency trading. More importantly traders need to learn how to avoid getting into a position where they can be proved right or wrong. To do this you need to understand and accept that the market has a will of its own and have to remain objective and follow market movements, rather than try to get the market to go in the direction you want it to, if you are going to succeed

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Forex? What is it, anyway?

Original Source: forex-directory

The market

The currency trading (FOREX) market is the biggest and the fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars, which is 100 times greater than the NASDAQ daily turnover. (click here to read full market background by Easy-Forex™).

Markets are places to trade goods. The same goes with FOREX. The Forex goods (or merchandise) are the currencies of various countries. You buy Euro, paying with US dollars, or you sell Japanese Yens for Canadian dollars. That's all.

How does one profit in Forex?

Very simple and obvious: buy cheap and sell for more! The profit is generated from the fluctuations (changes) in the currency exchange market.

The nice thing about the FOREX market, is that regular daily fluctuations, say - around 1%, are multiplied by 100! (in general, Easy-Forex™ offers trading ratios from 1:50 to 1:200). If, for example, the exchange rate of "your" pair of currencies increased by 0.6% in the last 4 hours, your profit will be 60% on your investment! Such can happen in one business day, or in a few hours, even minutes.

Moreover, you cannot lose more than your "margin"! You may profit unlimited amounts, but you never lose more than what you initially risked and invested.

You can implement your choice (the pair of currencies, the volume amount) under any direction to which the market is moving, and yet make profit. It does not matter whether the exchange rate is going up or down: you can always decide to buy Euro and sell dollar, or vice versa - buy dollar and sell Euro. You don't have to physically possess certain currencies in order to perform "buy" or "sell" with them.

How do I start?

Register (Easy-Forex™ offers the simplest and quickest registration process, no obligation); deposit your first trading "margin" amount (credit cards are welcome, only by Easy-Forex™); start trading.

It can't be simpler or easier than that. Need help? We'll provide you with 1-on-1 training and service, as much as necessary (Easy-Forex™ offers real people service, live, in your own language).

How do I trade Forex?

You select the pair of currencies with which you wish to make a Forex deal. You determine the volume (the amount of the deal). You deposit the "margin" (collateral needed to facilitate the deal. Usually - only a very small portion of the whole deal, say: 1% or 1:100).

Before you finally activate the deal, you can still "freeze" it for a few seconds. That enables you to either change the terms, or accept it as is, or altogether regret the whole idea. The "freeze" feature is a unique service by Easy-Forex™.

When your Forex deal is running (you hold an "open position"), you can monitor its status and check scenarios online, whenever you wish. You may change some terms in the deal, or close it (and cash the profit, if any, or minimize the loss, if any). Moreover, Easy-Forex™ lets you determine a "take-profit" rate, with which the deal will close automatically for you, when and if such rate occurs in the market. Meaning: you do not have to stay near your computer when you hold open positions.

Want to know more? Want to get on-line training? Register here (simple, quick, no obligation), we'll be glad to guide you, every step of the way.

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Forex options

Original source: forexrealm

Forex options have a lot in common with the stock market business. They are more reliable in limiting risks and raising profit during market trading. An investor can choose between two main options, the first of which is traditional. It lets the buyer the right purchase currency at preconcerted price and time but doesn't make him do that. If a trader seizes the opportunity of Forex options and during the agreed time the currency being bought appreciates, the trader can sell this currency with advantage. Forex options give investors another tool which helps to minimize losses and to raise profits, they are extremely popular at periods of economic reporting. But if the currency underrates the loses of a trader they pay the premium for this option.

The second type of Forex options is called SPOT (Single Payment Options Trading). This type depends on the Forex trader; it is a forecast from the trader on what they predict is going to happen in the Forex market. If the trader is successful possible profit can be unlimited and if the SPOT is unsuccessful the trader loses only the premium.

Transactions in options on FOREX are extremely risky. The options' sellers and purchasers should get acquainted with the type of option which they intend to trade and the connected risks with it. It's worth figuring out the extent to which the value of the options must go up for the position to stay beneficial, taking into consideration all transaction costs and, of course, the premium.

The options' buyer may either offset or exercise the options or let the options expire. The exercise of an option results in a cash settlement or in the purchaser getting or giving the basic interest. If the options you bought expire worthless, you lose the investment which consists of the option premium. If the option is on a leveraged position, the buyer receives a FOREX open position with associated margin responsibilities. You should remember that transaction costs on FOREX are usually zero with no commission. If you intend to buy deep-out-of-the-money options, you should realize that the chance of getting profit from such options is usually rather far-off.

As a rule, selling, "granting" or "writing" an option is more risky than buying options. The seller may uphold a loss in excess of that amount even though there's a fixed premium level acquainted by the seller. The seller is responsible for an extra-margin to keep the position at the same level if the market moves unsuccessfully. The seller also meets a risk of the buyer using the option and the seller will have to either settle the option in cash, to get or deliver the basic interest. If the option is "covered" by the seller of a corresponding position in the basic interest or a future or another option the risk may be less. If the option is on a leveraged position the seller receives an open FOREX position with associated margin responsibilities. If the option isn't covered the risk of loss is unlimited.

In some authorities brokers let postponed payment of the option premium, bringing the purchaser to responsibility for margin payments isn't more then the premium amount. It's still possible that the buyer loses the premium and transaction costs. The buyer is liable for any unpaid premium which is already overdue when the option is exercised or expires. The stock market is often associated with options; still the foreign exchange (FOREX) market also lets trade these sole derivatives. Retail traders many opportunities to minimize risk and increase profit thanks to options.

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