The foreign exchange market which most call forex in itself is not a scam. However, like almost every business out there, you’ll find the bad guys. Being the biggest market on the planet with a daily turnover of $4 trillion (as of 2014), you can tell this is a huge maret. This makes it even more attractive to con artists because there, of course, are many new traders who have heard about the potential of trading forex, and so these scammers sure would like to take advantage of them.
This has made it seem like trading forex is a scam. In fact, there are more bad guys than good in this market and when it comes to losers, about 90% of traders lose their investments. But if one makes informed decisions, the foreign exchange market can be really good. People are making thousands of dollars trading forex. Forex is almost a zero-sum game (if you don’t count spreads, which is the commission you pay to a broker). While you’re losing, someone else is winning. Being on the winning side is the tough part but it’s possible to be there if time is taken to know how to tread these waters.
Another thing to note is the fact that Forex has little (if any) supervisory entity regulating its actions. Most brokers are not regulated and can do what they like with your money. But still there are a couple of decent brokers around that you can safely bet that they won’t mess you up. Now at this stage, people might call the whole game a scam because chances are that most traders will lose their money. And this happens because we as individual traders are actually betting against very high profiled, professional traders in big banks that the value of some currency may go up or down). And you know what the average outcome of this will be for an inexperienced trader, they lose, they go home weeping and conclude; “Forex is a scam”.
My common advice usually is not to trade any amount of money you’re not willing to lose. That doesn’t mean starting a trading account with $100. Don’t waste your time, you’ll lose it and even if you don’t lose and play very well, with aggressive risk management strategies, your profits will be insignificant.
To be on the winning side, wise traders project a monthly profit of 5% while the foolish ones expect returns of 50% in one week. Now these people will for sure call forex trading a scam. And there are lots of them! Your reading this post is influenced by them.
Get some education, practice a lot and start something that could probably be a profession for you.