Editor’s note: This article was first published in September 2010. Regulation of retail forex and CFD products in the EU has tightened since, for example with ESMA leverage restrictions from 2018.
Investing in forex these days is as simple as opening an account online and starting to trade right away, or else depositing your capital with a company that manages it for you and will fight to get a return on your money. However, the internet has lately been full of forex adverts, some of them promising returns that would alarm any forex expert. Spain’s National Securities Market Commission (CNMV) gives us some advice for avoiding an outright scam.
Whenever you come across an advert online for investing in forex that shows an extraordinary “guaranteed” return, always be suspicious.
Turning €100 into €10,000 is a return few brokers will ever achieve, and returns of 30% in a couple of weeks should also be treated with suspicion, since plenty of investors are racking their brains to get 8–15%.
The CNMV also warns about other online companies that, under the forex label, are outright scams: once you’ve given them your account or card number to make the investment, you’ve already become a victim.
The CNMV’s advice. Before investing with any online forex company, go to the website http://www.cnmv.es/ or call 902 149 200 to find out whether the firm is legally authorized to operate.
Note: We start from the premise that online forex investing is an honest and legal form of investment and that there are authorized, effectively run firms. Just make sure you invest your money with a firm that is fully authorized to operate.
Further reading
- Stop-loss orders to limit stock market losses
- Why the stock market is the most profitable investment
Featured image: Mark Hodson Photos, CC BY 2.0, via Flickr.
