FX Quant: "Avoiding Fraud is Your Best Money Strategy"

It still never fails to amaze us that some traders and investors still think that fancy software, slick websites and big marketing operations make them money. We invite you to see the difference with us, and benefit from our experience and knowledge.

Below are some warnings and  excerpts, some  from the The United States Commodity Futures Trading Commission (CFTC):   

Stay away from companies that promise little or no financial risk and/or avoid any company that predicts or guarantees large profits with little or no financial risk. Be suspicious of companies that downplay risks or state that written risk disclosure statements are routine formalities imposed by the government. If in doubt, don't invest.


Avoid any company that predicts or guarantees large profits

Be extremely wary of companies that guarantee profits, or that tout extremely high performance. Some advertisements may claim that seasonal trends in the demand for certain commodities or well-known current events create an opportunity to make big money by trading in commodity futures and options. The advertisements and infomercials promise quick riches – such as turning $5,000 into $20,000 in just a few months – with predetermined risk. In many cases, those claims are false.


The following are examples of statements that either are or most likely are fraudulent: 

"We guarantee you will make at least a 30-40% rate of return within two months."

"Turn $300 into $30,000 in as little as 6 months trading Forex!"

"Make $5,000 per week, every week."


Be wary of sending or transferring cash on the Internet, by mail or otherwise

Be aware that if you transfer funds to  firms and NOT a counter party such as a bank  or regulated institution (Futures Commission Merchant - FCM) in YOUR NAME  it may be very difficult or impossible to recover your funds. Never send a check or a bank wire directly or indirectly to Lyncestis LLP, or to any Introducing Broker (IB), Referring Party (RP) or to any “representative”. If an IB or other “representative” requests that you send them trading funds in their personal or corporate name, please notify Lyncestis LLP immediately.


Stay away from opportunities that sound too good to be true 

Always remember that there is no such thing as a "free lunch". Getting your money back once it is gone can be difficult or impossible.


Promises of little or no financial risk. Be suspicious if the firm or individual says there is little risk. Be suspicious if someone tells you that a written risk disclosure statement is only a routine formality. Written risk disclosure statements are important to read thoroughly and understand.


Unsolicited telephone calls about investing. Be skeptical if someone you don’t know calls you about investment opportunities.


Currency scams targeting members of ethnic minorities. Some currency trading scams target potential customers in ethnic communities, particularly in the Russian, Chinese, and Indian immigrant communities, through advertisements in ethnic newspapers and television "infomercials". Commodity pool operators often solicit investments from friends, neighbors, co-workers and fellow religious or social group members by using their reputations in the community or their personal relationships. In many cases, however, the investment schemes turn out to be fraudulent, and investors lose their entire investment, in many cases as a result of outright theft. Individuals and firms that fraudulently solicit funds from investors for commodity futures and options trading are usually not registered with the CFTC. They may operate “Ponzi” schemes in which little or none of the money sent in by investors is ever invested as promised – in the commodity markets. Instead, the operator of the scam steals the funds, and creates the illusion of a successful business by using some of the money put in by later investors to pay phony “profits" to earlier investors. This tactic makes it appear to investors that the investment is actually making money, which in turn attracts additional investors. Be wary of such payouts if you do not fully understand the source of any purported profits.


Difficulty in getting the company’s performance track record. Get as much information as possible about the firm's or individual's performance record on behalf of other clients. You should be aware, however, that It may be difficult or impossible to do so, or to verify the information you receive. While firms and individuals are not required to provide this information, you should be wary of any person who is not willing to do so or who provides you with incomplete information. Remember that even if you do receive a glossy brochure or sophisticated-looking chart they may contain false information.


Difficulty in getting background information. Don’t deal with anyone who won’t give you their background. Check all information you do receive to be sure the company is and does exactly what it says it does. Ask for the background of the persons running or promoting the company. Do not rely solely on oral statements or promises from company employees. Many companies offering currency trading online do not display an address or any other information identifying their nationality on their website.