Margin trading can make you responsible for losses that greatly exceed the dollar amount you deposited.

Many currency traders ask customers to give them money, which they sometimes refer to as "margin," often sums in the range of $1,000 to $5,000. However, those amounts, which are relatively small in the currency markets, actually control far larger dollar amounts of trading, a fact that often is poorly explained to customers.

Don't trade on margin unless you fully understand what you are doing and are prepared to accept losses that exceed the margin amounts you paid. 

• Forex Scams
  Generally speaking, foreign currency futures and options contracts may be traded legally on an exchange or board of trade that has been approved by the CFTC.

• Forex Fraud
  Have you been solicited to trade foreign currency contracts (also known as "forex")?

• Understanding Legitimate Foreign Currency Operations
  Generally speaking, foreign currency futures and options contracts may be traded legally on an exchange or board of trade that has been approved by the CFTC.

• Stay Away From Opportunities That Sound Too Good to Be True
  Get-rich-quick schemes, including those involving foreign currency trading, tend to be frauds.

• Avoid Any Company that Predicts or Guarantees Large Profits
  Be extremely wary of companies that guarantee profits, or that tout extremely high performance. In many cases, those claims are false.

• Stay Away From Companies That Promise 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.

• Don't Trade on Margin Unless You Understand What It Means
  Margin trading can make you responsible for losses that greatly exceed the dollar amount you deposited.

• Question Firms That Claim To Trade in the "Interbank Market
  Be wary of firms that claim that you can or should trade in the "interbank market," or that they will do so on your behalf.

• Be Wary of Sending or Transferring Cash on the Internet, By Mail
  Be especially alert to the dangers of trading on-line; it is very easy to transfer funds on-line, but often can be impossible to get a refund.

• Currency Scams Often Target Members of Ethnic Minorities
  Some currency trading scams target potential customers in ethnic communities, particularly persons in the Russian, Chinese and Indian immigrant communities, through advertisements in ethnic newspapers and television "infomercials".

• Warning Signs Of Commodity "Come-Ons"
  If you are solicited by a company to purchase commodities, watch for the warning signs listed below:

• More Information and Contacts
  Questions concerning this advisory may be addressed to the CFTC's Office of Public Affairs at (202) 418-5080.

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