In a recent post by Tim Worstall on Forbes dated 8/18/2012, the author clearly outlined the most important lesson to be learned from the Zeek Rewards debacle which the SEC ruled as another Ponzi Scheme and promptly closed it. In his dissertation, Worstall preached the age old investment adage which most investors often forget – ‘If an investment is too good to be true, it probably is.’
Worstall pointed out that any claim of high profit with low risks is almost always impossible and that something is bound to go wrong. Sadly, such claims still flutter unabated in every nook and cranny of the retail forex market feeding on the susceptibility of individual retail forex investors to get rich quick schemes.
It is not uncommon for foreign currency exchange traders to come across various dubious offers such as forex robots that will automatically harvest forex profits while you sleep, or mechanical trading systems that will automatically place high probability trades for you and maximize profits. But before you fall prey to such “too good to be true” scams or rather schemes, it may help to reflect on what Tim Worstall had to say about this.
In his article, Worstall asks why in the world would anyone claiming he can turn lead into gold still look for investors. It really does not make sense. Just as it does not make sense for people who purportedly have developed forex robots that are guaranteed to rake in trading profits sell these applications to the public. To follow Worstall’s advice, when you come across such stupendous claims, it is better to turn around and look somewhere else where you can have better opportunities to invest your money.
Throughout the whole history of the forex market, it has been and still is plagued with Ponzi Schemes and other get-rich-quick scams. And this is basically because the majority of individual retail forex traders are actually attracted to dip their fingers on foreign currency trading in the hope of making a fortune fast. And when their initial attempts at forex trading are unsuccessful, they become gullible and take on anything and everything as long as they come with plausible promises of forex salvation. Their susceptibility to such schemes is borne out of desperation after stringing successive losses. Instead of learning from past trading mistakes, they often tap their natural gambling instincts and take any chance that comes their way to recoup their losses – even if the chance happens to be a scam or a Ponzi scheme.
This is why despite the numerous scams that have been exposed and uncovered in the past, and despite the fact that hundreds of perpetrators have been prosecuted, schemers still find new ways to dupe innocent investors of their hard earned cash. Scams and Ponzi schemes will continue to sprout out every now and then for as long as there are gullible individual investors who know no better than to believe ‘that if it is too good to be true, it probably is’.