How do I spot a scam
It can be very hard to spot a well executed scam. Luckily for us this is seldom the case. Most scams are not very well executed and built to fool the easiest marks out there. The internet have given scammers access to hundred of millions potential victims. This have made them focus on those among us that are easiest to scam. Why use the time and resources needed to create a good scam when you can reach the same results with minimal effort by targeting easier marks. I am sure that almost all of us have received a Nigerian letter and wondered how anyone can fall for that crap. But people do fall for it and the scammers target the low hanging fruit first. This does not mean that all scams are easy to spot but a very high percentage of them are. Here are a few things you should be aware of to avoid scams.
- Unsolicited financial advise: Unsolicited financial advise is almost always a scam of some sort. This is true regardless of whether they contact you through email, regular mail or phone. Financial scammers that call you up can be very convincing and it is best to hang up on them directly before they can trick you.
- Emails asking for help from a friend that is abroad: Make sure it really came from your friend and that they really are in trouble in the country in question before you offer to help. Try calling them even if they say they lost their phone in the emails.
- Be aware of financial products sold to you by friends. Especially friends that normally aren’t interested in investments. The opportunity they are promoting is usually a pyramid scheme even if your friend is adamant that it isn’t. (She/he likely think it isn’t since she/ he has fallen for it.). Politely decline to invest.
- Be ware of investment opportunities posted on message boards, classified sites etc.
How can I protect myself from scams
The best way to protect yourself from being scammed is to use common sense. If something seems to good to be true than it likely is. Especially if it is secret or time sensitive. Two ways scammers trick you to act without thinking it through. Stay away from shady transactions where you are promised to make a lot of money by helping with something immoral or illegal.
There is an old saying that says: You can not con an honest man. And there is a lot of truth in that. As long as you do not try to get something for nothing (much for little) the you are unlikely to get scammed. Scammers bank on the fact that your greed is going to win over your saner self.
Are binary options a scam?
No. Binary options are not a scam but there has been a number of fraudulent brokers that have given the industry a bad name. These brokers have mostly been closed down but it is still a very good idea to be careful and make sure you choose a honest regulated broker before you deposit any money. Always read what other have to say about a broker before you register with them and never trust a review that is too positive about a broker. An honest review tends to tell you both the good and the bad about a broker.
It is important that you understand that the brokers makes money when you lose money and they lose money when you make money. You do not trade against a 3rd part options underwriter. The broker is the underwriter.
Is CFD trading a Scam?
No CFD trading is not a scam but it is a type of high risk trading. You always risk to lose more money than you invested. You should never trade CFD:s unless you understand how they work and can afford to lose money if a trade doesn’t go as planned.
Is Forex trading a scam?
No. Forex trading is not a scam. The Forex market is in fact the largest market in the world and countless big banks and financial institutions trade for trillions on the market each day. Forex is however a type of very high risk trading and you risk losing a lot of money. Most traders should avoid FOREX trading unless they are 100% sure they have the skill necessary to make money.
The FOREX market attracts a lot of scammers and there area number of scam brokers and services out there. Make sure to always research any broker or service you want to use before you register to avoid getting scammed.
How to spot pyramid schemes
Pyramid schemes are normally very easy to spot if you don’t stare yourself blind at the prospect of big profits. A pyramid scheme is a scheme where there need to be an inflow of new members for the old members to make money. This works for a while and it can be very profitable to get in on a pyramid scheme early but eventually everything crashes. You need to get your money and profits out of the system before this happens to make any money.
Many pyramid schemes gives you stocks, points or something else that is traded on a private market. These point, stocks or cryptocoins are there to give you the illusion that you get something real for your contribution and to give you the illusion that you are making money when you see the value of these points/ stocks going up on the private market. Your points/stocks are not worth anything until you sold them and gotten the money.
Now you know what a pyramid scheme is and can more easily spot one. Things you should look out for.
- Guaranteed returns. Often very high.
- A private market to trade the shares instead of a public market.
- You can earn more money by recruiting more people.
- You get examples based on how many you recruit and how many they recruit in turn.
- You make money simply from recruiting others. You do not need to sell anything.
Common scams that you should know about
Below you will find some common scams that you should know about.
- Financial adviser scam – In this scam you get an email predicting that a certain stock is going to go up, after it does you receive a second email with a second prediction. This prediction will also come through. You will keep getting free prediction until you one day get an email saying that you have received x free stock tips. If you want to keep getting them you have to pay a certain amount of money. The scam is to get you to pay for a worthless service. They can not predict stock. What they have done is this. They started wit a large database and sent emails predicting different outcomes to different people. Half of which have been wrong. You simple happen to be par of the lucky (or unhappy) subset that have received all correct recommendations. This scam has become very easy to pull of thanks to internet. (earlier you had to send real letters) and it is very common.
- The help a friend scam: Hackers high jack the email account of a person and then they send an email to all contacts asking for help. They usually say that they are abroad and that they have been robbed. They ask someone to send money through western union so they can get home. Once home they will repay the money. They steal any money that you do send. This scam is easy to fall for. If you get an email like this you should try to confirm through a third part if the person in question is abroad and if they have indeed been robbed. In 9 cases out of 10 that isn’t true.