We’re all very familiar with the term “pyramid scheme”.
I mean, it’s not exactly hard to imagine a system that makes money by convincing people to buy into it…
… and make them think it’s an easy way to make money.
It’s a very popular scam, and I know a lot of people are sceptical about it.
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.
So let’s start with this.
Is Forex A Pyramid Scheme?
I was researching the term “forex scam” and came across a lot of people who had been duped into a “pyramid scheme”.
I decided to check out how this term was being used to describe forex trading.
Forex is a market in which currency pairs trade against each other, like US Dollars and Euro’s, UK Pounds and Euro’s, etc.
The best way to think of it is that you can buy “Euro’s” with your US Dollars, and you can sell your Euros for your Dollars.
If you are reading this, then you are doing a good job in due diligence before taking action.
(A great trait to have when investing!)
Let me be clear:
Forex is not a pyramid scheme.
There are unfortunately pyramid scheme scams that are using Forex as a way to promote fast returns, luxury lifestyles and getting richer than your wildest dreams.
These scam artists look to use Forex and their education/strategies/signals to entice people in, then once inside they will tell them to unlock more benefits they must recruit more people.
Pyramid schemes come in many industries, health and nutrition are popular ones too.
However, making money online is the most aggressive form and preys on individuals seeking a better financial outcome.
I am very sorry to say that you can lose your money if you fall into the pyramid scheme.
Pyramid schemes are the fastest way of losing your money.
In fact, most people lose their entire savings so you should always stay away from pyramid schemes.
So, what exactly is a pyramid scheme?
It’s a business model that encourages salespeople to recruit other salespeople and get them to do the same.
This is done by offering incentives such as bonuses, commissions, and training.
In return for recruiting, the salespeople are rewarded with a commission for every person they recruit.
You may be wondering how this differs from a traditional business model.
Well, here’s the thing.
In most cases, the money that the salespeople make is not their own.
Instead, they receive it from the people who have recruited them.
In other words, they are earning a commission from the people they were trying to recruit.
There are several reasons that people join a pyramid scheme.
Some of the reasons include that they want to earn money faster than they can at a traditional job or some people think they have some special skill, knowledge, or ability that other people don’t.
They may also be interested in starting their own businesses but are not sure where to start.
Others just want to have more control over their life and spend more time with their family.
They see a way out of their problems by joining these programs.
People who are looking for ways to make easy money without having to put in much effort can easily get sucked into these types of schemes.
Again, I must iterate that pyramid schemes and forex scams leverage the asset to scam you, just like someone telling you they have a like-new car with low mileage, but instead they’ve rolled back the mileage to appear legit.
The car is the leverage and the low mileage is the scam to get a greater value from you than it’s worth.
You don’t need to join communities or get help from people that seem more interested in you signing up with them instead of helping you.
You can learn everything you need online and for free nowadays.
Why People Think Forex Is A Pyramid Scheme
One reason why many people think forex is a pyramid scheme is that it is a lot like the other multi-level marketing companies out there.
If you’ve ever heard of Amway or Herbalife (who restructured the business after an FTC claim) before, you know that many people are turned off by these businesses.
The same goes for forex.
People who are wary of these types of companies are often wary of forex too.
In a pyramid scheme you never learn about the product you joined for, you learn how to promote the company to your friends and family.
Because the forex market is seen as a lucrative opportunity, you can trade 24 hours a day and you “don’t” need much capital to start with – it’s seen as a great vehicle for many wannabe traders to change their financial situation.
The fact is that the forex market, at one point, was flooded by these scams left MANY people with a bad taste in trading the asset.
Which is understandable.
This image has scarred and tainted the image of forex even in 2023, as people think it’s a scam.
When in reality, forex is just the cash and coins they hold in their hands and use to purchase goods and services all over the world, every single day.
How To Avoid Becoming A Victim To Forex Scams
Forex scams are one of the oldest and most popular ways for dishonest individuals to steal money from unsuspecting investors.
Since the market for foreign currency trading is global and unregulated, many people who are looking for an easy way to make quick money take advantage of these opportunities.
Unfortunately, the lack of regulation also means that there are numerous ways for scammers to steal money from forex traders and trick them into believing they are making money when they are actually losing money.
- Be careful with trading signal providers – they use demo accounts to fake their trades. With these accounts, they open 10-30+ buy trades and the same amount as sell trades, wait until enough profit has been achieved then they will close them. Then show all the winners they had in a row to give potential buyers a false sense of success.
- Be careful of people who are trying to get you to recruit your friends before receiving any training.
- Make sure that the people you are dealing with are regulated.
These are just some of the tips you can follow to avoid such forex scams, but as technology develops – so do the scams – just like at all the bitcoin scams that have happened over the past 5 years!
Conclusion: Is Forex A Pyramid Scheme?
After reading this article, you’ll have learned everything you need to know about Forex and whether or not it’s a pyramid scheme.
Now, it’s over to you:
Which part of the article did you find the most helpful?
Let me know on social media.
Also, if you want to learn how to get started in Forex trading, you can check out some of our other articles below.