Forex scams, how to recognize them...

The first forex account I ever opened was back in 2005, it was a broker that gave some sort of a bonus with no strings attached, I found it on fatwallet.com, which is a website where people share all kinds of deals. So I opened my account got my $50 or so bonus, but I decided to look at the platform a bit since I had already been doing some stock trading. I had no idea what was going on, the price moves seemed very small, I had no idea how to guess where the price was going. So I closed my account without even placing one trade.

Later that year or maybe even a year later, my best friend started talking to me about forex, I told him about my experience, which was almost non existent, but he seemed to have found the "holy grail". He would tell me how he is looking at moving averages, when the price crosses the 50 EMA he would buy or sell depending on which direction the price was going, if the price action was going down and crossed the 50 EMA he would sell and vice versa. Later we found that this system doesn't work, and he wiped out his account. I think I learned from his mistake so I never wiped out my own account.

The reason I bring this up is I'm sure many people can relate to a story where someone wiped out their account. In a sense they by losing money they bought their first lesson. Some people will quit right there and then, others will keep going.

How to identify a scam? It's very simple and yet it could be a hard thing to do. My advice is when trying to judge if a system is a scam, assume it's a scam and let it prove itself to you. If a system is offering huge returns and has a one page website where you read all the information about how great it is and at the bottom you can purchase it, well that's a scam 99% of the time. If you're having a hard time finding how this system works, then maybe it doesn't work at all.
Let me tell you about a forex scam I avoided a few years ago. the company was called profinum.com, they were a new broker that was offering 0 pips spread, and no commissions. Right away I asked myself, how are they making money? There is no such a thing as 0 spreads with no commissions anywhere. I had a hard time finding where they're located, they're website was nothing great, simple site, there were the names of it's founders but that didn't tell me anything. If you're curious what a scam looks like go here http://web.archive.org/web/20070104163814/http://www.profinum.com/, that's a copy of the web site, saved in a web archive.

I'm always skeptical about forex signal services so I've been able to avoid many scams I've heard about. But others have fallen for them and have lost thousands of dollars.

So here are some signs of a possible scam:

1. Returns too good to be true.

2. System promises too much for too little money. If a system can give consistent profits of 10% or over per month or even 3%, then these guys are geniuses, not saying there are no geniuses but the good ones probably won't advertise

3. Beware of systems that advertise too much, if they're trying to get your attention too much then chances are they're good at marketing not at trading.

4. Google the system with the word scam after the name, if too many results come up and then stay away from it, like they say don't even touch it with a 10 foot pole

5. If it's a forex broker, make sure they're regulated, I wrote an article about that here

6. This is somewhat unrelated, but go on google and read free blogs like this one, before you spend $1000 on a system, there is tons of great information out there, by people like who have been around for at least a few years and have gone through ups and downs.

Good luck trading, and may you never get scammed