Is Forex a Pyramid Scheme or Has Nothing to Do With It?

It has nothing to do with Forex because Forex is buying and selling currencies against each other. As a Forex trader, you trade currencies, whereas in a pyramid scheme, you must refer and recruit to grow your team to earn commissions. The forex MLM firm will encourage traders to purchase more forex products to improve their forex trading, attract recruits or gift those who are also recruited. Many traders who have a large down the line are making some profit, so the company will convince them to spend more.

is forex a pyramid scheme

These companies target new Forex traders who are eager to make huge profits in the Forex sector. You can spot a real forex company because they will be regulated in a respected financial center such as Switzerland or the United is forex a pyramid scheme Kingdom . After reading this article, you’ll have learned everything you need to know about Forex and whether or not it’s a pyramid scheme. Once you’re knee-deep into the forex world, you’ll meet a lot of fellow traders.

Is forex trading profitable, and how can a broker make money?

Previously, the retail bank and investment companies were the main players. They conducted most of the Forex trading for their investors.

is forex a pyramid scheme

The investors decide to solely focus on recruiting new investors and getting a commission. The new investors form a pyramid, and the recruiter makes more profits. A study has proven that 80% of traders quit Forex trading after two years of active trading. Forex trading is not easy, it takes a lot of patience, and you need to be ready to encounter some loss. A study has shown that about 5-10 % of traders make a good income. You can always sign up with a Forex broker or purchase your broker.

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Forex works by pitting the value of one currency against another, creating currency pairs. The most popular is the euro vs. the U.S. dollar, labeled as EUR/USD. Write to us at and our broker experts will answer your questions. Fees, minimum deposit requirements, withdrawal, account opening, research tools and more. We use over 50,000 data points and a consistent, fact-based methodology.

  • They do this by promising they’ll handle everything for you.
  • The lack of these things makes it less likely that they are authentic.
  • If you are a beginner trader who is looking for a trustworthy broker, we recommend seeing our list of top-rated brokers for newbies to the foreign exchange market.
  • The victims were told their cash would be used to trade in Forex markets, and they showed victims’ fake accounts grew from $4,000 to over $26,000 in less than a year.
  • Make sure to watch the video to learn how to sport an easy income forex pyramid scheme.
  • However, some traders treat options trading as a quick source of income and become too confident.

Many things can positively or negatively affect the price of a currency. These factors include natural disasters, political news, and an upcoming election. Make sure that the people you are dealing with are regulated. Be careful of people who are trying to get you to recruit your friends before receiving any training.


If you see a promise of high returns, and specifically about guaranteed, consistent percentage returns, you’re likely looking at a pyramid scheme. Similarly to MLM, pyramid schemes also recruit people to sell products or services. However, pyramid schemes are fraudulent schemes, disguised as is forex a pyramid scheme an MLM strategy. Only a few individuals make money, and when no new people can be recruited, the scheme falls apart and most of the promoters, except the top ones lose their money. A pyramid scheme is a kind of illegal investment scam that depends on a hierarchical network marketing model.

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So if someone pledges you too little or too bad a very big reverse, it’s not Probably, It is a Real Scam. There are many real forex managers who trade clients for money and set one percent and one percent of profits to do so.

Edward Kendy is a CEO and the head of forex brokers research at with 17 years of experience in personal finance and veteran forex trader. However, some people have been burned by this trading style and are keen to challenge its legitimacy by calling it a forex pyramid scheme. Forex is the abbreviated version of the foreign exchange market. This is a global marketplace for trading and exchanging different national currencies. By trading volume, it’s considered the largest market in the world and is used mainly by large government institutions. This is mainly because it allows for direct currency exchange, making international trade much easier. MLM offers the opportunity to become involved in a system for distributing products to consumers.

There are several reasons that people join a pyramid scheme. I am very sorry to say that you can lose your money if you fall into the pyramid scheme. I decided to check out how this term was being used to describe forex trading. In this post, I want to take a look at exactly why forex isn’t a pyramid scheme and what you can do to protect yourself from it. We know that most beginners have a hard time finding legit brokers and guides to start trading.

At BrokerChooser, we consider clarity and transparency as core values. BrokerChooser is free to use for everyone, but earns a commission from some of its partners with no additional cost to you . For a tailored recommendation, check out our broker finder tool. Answer a few simple questions and get a list of the most relevant brokers. But Many new faces of this Investment Domain, want to know Is Forex a Pyramid Scheme?

Any company you sign up with should have available contacts for communication. Most of these pyramid schemes only provide an email and a form to fill.

When going into a Forex trade, keep your emotions in check. Like when they lose funds they quickly want to recover by lunging into the next trade. They do these without proper analysis and these could lead to more loss of funds. The “spot deal” is the value of the exchange rate at which two currency groups are bought and sold at. Check online forums and listings of registered investment companies and registered investment managers. Typically these will be available from the regulator of the stock market in your country.