Despite their huge claims for profit and minimization of the risks involved, many Forex brokers consistently lose money for their customers as they mistime the market, while accruing millions in trading commissions and other fees. The brokers also misrepresent their “abysmal” performance. Scams like this are becoming increasingly common over the past few years as the U.S. dollar has steadily declined against the Euro, providing what seemed like a sure one way bet.

Unlike stock markets, where anyone can gain an edge by researching an overlooked company, foreign exchange leaves small investors at a distinct trading disadvantage. There are relatively few major currencies, and their movements are studied very closely by major players with deep pockets. Many trillions changes hands every day in Forex Markets, and there’s hardly a pause in trading from Monday morning in Asia through Friday evening in North America. And unlike the stock market, there are no trading halts when prices move too quickly.

Part of the reason that Forex Trading is so attractive to scamsters is the general lack of regulatory oversight. In both the cash and futures markets, it’s possible to make big bets on currencies by putting a small amount of money down. Most forex brokers allow clients to deposit a small portion, or margin, of the currency value of their overall position. This can multiply profits, but it also means you can quickly lose more than the amount you originally invested.

This leverage can catch newbies off guard. It can also be exploited by unscrupulous brokers who misrepresent price action to make margin calls. If you’re still determined to trade directly in the forex markets, you should take some precautions.