How Not To Lose All Your Money With A Managed Forex Account
How Not To Lose All Your Money With A Managed Forex Account
by Pharaoh
Managed forex accounts present a decent opportunity for those who don’t have the time to learn how to trade forex or enough time to actually trade their own forex account to still make some profits from the forex market. They also open up investors to the triple threat of scam, incompetence, and bad brokers.
The first problem is that there are plenty of managed account scams out there. In some ways, these are much worse than forex broker scams or forex product scams. Managed account scammers usually try to get victims to invest as much money as possible, even their entire life savings. Sometimes they suggest taking out a mortgage on the victim’s house or securing other loans so that even more money can be invested. Falling for this kind of scam can ruin your entire life. As if this wasn’t bad enough, even a legitimate forex account manager can still wipe out your account through incompetence.
To avoid the most common managed account scams, you first must learn to differentiate between a normal managed forex account and a pooled account. In a normal managed forex account, the account is in your name, and the money goes from you to your forex broker. In a pooled account, you send your money to the account manager who is then supposed to pool the money from various clients into a trading account that the account manager controls.
Although there are legitimate pooled accounts under management, pooled accounts are MUCH more susceptible to fraud. Anyone with a computer can create fake account statements. With a pooled account, you can’t ever be sure where your money is. Many of these types of accounts guarantee a large monthly return on investment. There is no such thing as a true guaranteed high percentage return on investment in forex, and anyone offering one is 98% likely to be a fraud. The other 2% of the time, the person is merely an over-enthusiastic idiot. Either way, kiss your money goodbye.
But wait! You have a friend who invested and has been getting checks for the guaranteed 10% monthly return on their investment every month for over a year now. It must be legitimate.
I’m sorry, but what you’ve just described is almost guaranteed to be Ponzi scheme, named after the very infamous Charles Ponzi. It works like this: ...
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