The Ontario Securities Commission has issued a warning to investors on the risks of currency trading and foreign exchange trading. The regulator says playing the FOREX market is only for those that can afford to take the risk. It also warns investors that they could become the victims of fraud.
In a new release, the OSC notes that the inexperienced public may be solicited through newspapers, radio, television and the Internet to trade currency, buy software or to sign up for trading courses. The ads promise that these programs will make you a winner, but the fine print provides a more accurate picture of what you can more likely expect.
The regulator says the ads fail to provide investors with such information as:
- While there may be no commissions, the company makes its money on the “spread” between the buy and sell quotes, which impacts your profits
- Software looks at past performance to identify trends in currency trading. These trends are the basis for predicting if the currency’s value will increase or decrease. As helpful as the software or a trading course might be, profits can’t be guaranteed.
- Foreign exchange trading is dominated by large international banks with highly trained staff, access to the best technology, and million dollar trading accounts. It is extremely difficult to consistently beat these professionals at their own game.
The OSC reminds investors to check out the fine print to confirm what the software or course actually gives you, and about the risk involved in the foreign exchange market. It says the disclaimer text contradicts the ad’s claims.