Forex Trading Scams; TRADING RULES AND PROCEDURES
The internet is a Ground Zero for Forex trading scams in the 21st century.
Forex (meaning foreign exchange,” or FX) is the market in which currencies are traded. The Forex market is the largest, most liquid market in the world in terms of the total amount of cash traded. It includes all of the currencies in the world.
Forex is an example of a contract for difference (CFD). In any CFD, a seller agrees to pay to a buyer the difference between the current value of an asset. Its value at a specified time. In the event the difference will turn out to be negative, the buyer pays the seller. People, business and government can all be sellers or buyers.
SPOT VS. FORWARD TRADING
Forex transactions take place on either a “spot” (immediate) or a “forward” (later) basis. Spot is defined as two business days for most currency pairs but not counting weekends or legal holidays in the countries whose currencies are being traded. A forward trade can be scheduled by agreement at any time in the future other than a weekend or holiday. It takes into consideration the interest rate difference between the two traded currencies. Therefore, transactions that will grow more than a year later are relatively unusual but possible. In both cases, funds are exchanged not on the day of the transaction but rather on the settlement date.
Forex provides an option for every budget and every investor with a different appetite for risk taking, and transaction costs This is extremely low compared to other types of trading. The Forex market operates 24 hours a day, seven days a week and closing only for major national holidays. Information regarding Forex markets is always available and simple to understand. The global Forex market is huge, so no country, central bank or single investor can corner the market or rig prices for an extended period of time.
Time differences between major financial centers around the world can affect exchange rates. Individual traders, therefore are advised to use algorithms to protect the value of their investments while they are sleeping or not available. A small adjustment in the price of a contract may yield immediate and substantial losses in excess of the amount invested. Changes in the Forex market are usually small, unless they are leveraged through low margin deposits. The other party to the transaction may not have the intention or the ability to honor an agreement.
There is almost no government regulation, therefore investors have few or little protections. Traders may lose all of their investment in a matter of minutes and even before deducting brokerage commissions. This happens if they place a highly leveraged bets.
In the United States, there are no registered exchanges that offer CFDs to retail investors. If your trading company claims to be registered in the U.S, it’s a scam, in conclusion, most countries have banned Forex trading.
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