By Heidi Badenock
Over the past five years or so we have seen an increase in use of the term ‘forex’ in our day to day lives and operations. We all have colleagues, friends and family members who have been trading religiously. But what is forex?
Forex is short for ‘foreign exchange’ and refers to the exchange of foreign currency i.e. currency that is not local. The concept of forex as understood in the context of this piece is that of the trading of foreign currencies on an exchange market.
From the outset it must be said that there is nothing wrong with trading foreign currency. Trading whether it be stock, gold, currencies etc. are all legitimate investment tools which have been used to build wealth and diversify income portfolios for many years prior to this recent upsurge.
The existing difficulty with many of the forex trading ventures is that these enterprises take trading from outside of the existing scope of the simple buying and selling of foreign currencies and adds a multilevel marketing element to the structure.
Multilevel marketing is where persons are asked to encourage others to join the enterprise with the promise of commissions for new members and discounts for on ‘subscription fees’ by giving the identifier of the recruiter.
These schemes often promise large returns based on recruitment and often profess to be some wonder drug to a person’s financial situation. You may have heard it before, “sign up and you can quit your day job” or “I no longer work a 9-5 since I joined”, “I paid off all my debts within the first six months of joining”. Many require that you pay a fee upfront to “learn the skills, be part of master classes, and learn how to trade from top traders” etc.
Do you know that there are YouTube videos that are available FOR FREE that show you how to leverage your stock and give tips on trading strategies? There are also books on best trading practices and tips from trained financial advisors with extensive knowledge and experience.
In these schemes the persons who truly benefit are the founders (the top level) who make profits through these ‘training’ fees while returning very little to the initial investor, which makes it a very lucrative venture for them but not so much to the average person.
Many companies have been incorporated throughout the Caribbean claiming to be regulated for Forex trading, causing unsuspecting individuals to invest sometimes their life savings. Many persons have lost everything because of these companies and have no redress because the said companies have no local presence and after they fulfil their purpose (scamming) they close-up shop and move on to the next vulnerable jurisdiction.I say this to say, there is generally no quick legal fix to financial freedom or success (unless you are an avid lottery player). Diversifying your income portfolio through trading (forex or otherwise) is a good way to see returns. You must however be wary of the many ‘get rich quick’ schemes that float around the internet and your communities. Use the resources available to you to get more information and if necessary, contact a qualified financial advisor