Forex trading is becoming a household term since the popularity surged on social media during the last few years. With the increase in popularity comes the increase of opportunists trying to make quick money from forex, without ever having to take the risks that forex traders usually do. This is where MLM schemes come into the equation… Is forex a multi level marketing business? Let’s find out now…
Forex is not a Multilevel Marketing scheme. In fact, the foreign exchange markets have around 6 trillion in transactional volume daily and are highly regulated. However, many MLM scams operate within the industry and you must be careful when choosing a retail trading group to join or learn from.
Is Forex A MLM (Multi Level Marketing)?
Over the last few years, there have been a huge amount of new traders coming into the industry. This is mainly through large social media accounts and celebrities posting about making quick money through forex trading. Although very unethical and untrue, the positive from those posts are the amount of new traders! The negative being the fact that new traders are incredibly easy to scam.
Firstly, let’s look at the definition of a multi level marketing scheme. A MLM is a business model or marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s downline, and can provide multiple levels of compensation.
In short, in an MLM you are paid to recruit people to sign up under you. You then need to teach those recruits to recruit further people to the business. This couldn’t be further from reality with forex.
In legitimate forex trading, there is no one to recruit. You are very solitary, it’s literally just you and the markets. Done properly, you don’t even need to speak with anyone whilst trading forex, let alone recruit traders into an MLM forex scam .
If someone is trying to recruit you, or sign you up to some type of trading group, you need to question their motives. If they are trying to make money from bringing new traders on board, chances are it’s a scam! Forex is a multi trillion dollar business dominated by institutions and hedge funds, not a multi level marketing scheme!
How To Avoid A Forex MLM
There are a few signs to look out for when you’re new to the industry that may help you avoid a forex MLM scam…
Trying To Sell You A Get Rich Quick Method
The most common denominator in all forex MLM scams is the fact they try to tell you how easy forex trading is and how much money you can make. The reality is that forex is a very hard business to be successful in if you have no experience, just ask yourself how many of these people actually make money from this?
Around 90% of forex traders lose money so if they are promising you wealth with little effort, please know that this is a scam. Successful forex traders have dedicated their lives to this for many years – you cannot make millions overnight from forex trading.
High Pressure Sales Tactics
Another sign that should ring alarm bells is high pressure sales tactics. This could be over the phone or even direct messaging on social media. If they are trying to push you into making a decision quickly, they are most likely trying to get you to sign up for something that will cost you money or make them money.
No Free Education / Confusing Sales Material
Another sign is poor quality education, or no education at all. There is no formal education required in the forex industry but if someone is offering to teach you how to trade, have a close look at the quality of their website. If there is not good educational material from a trusted education provider, then chances are it’s not worth your time or money.
Promising You Fixed Returns
The forex market is so volatile, there is no way to estimate monthly or yearly returns. This is another sign that you need to look out for. If someone tells you they have a way of controlling the market or the returns they can generate, walk away quickly – this is a scam!
This is very common with scammers that sell algorithms that can generate X percentage per month. It’s impossible to get the same monthly returns month on month!
Rewarding You For Promoting The Company And Generating Business
The MLM business model revolves around every ‘trader’ recruiting more traders, then teaching those ‘traders’ how to recruit. If this is the business model you are seeing, it’s a scam.
Anything that is making you push their services or pay to receive leads / sales, steer well clear!
What’s The Difference Between a Forex Education Program and a Forex MLM?
Just because the large majority of forex education schemes are a scam, doesn’t mean that they all are. The key is finding high quality forex education either for free, or for fairly cheap from someone that has a proven MyFxBook track record.
The difference between a good forex education program and an MLM type scheme is the way it’s marketed. Look for solid marketing via the internet, social media advertising or even word of mouth marketing that can highlight whether or not an organization could be trusted to deliver on what they promised.
Don’t fall into the trap of thinking that a mentor or educator can make you profitable – they cannot! It honestly takes years to learn to trade forex, with a mentor or no mentor.
The best port of call is to learn to trade forex for free. There are so many good resources online like YouTube and Babypips that you can utilise. If you’re very much set on a paid course, then feel free to checkout this list of the best forex trading education courses.
In Summary – Is Forex a Multi Level Marketing Scam?
In conclusion, forex trading is not a multi level marketing scam. There are many good reputable forex education companies out there (although some more than others) but if you’re seeing potential for huge wealth with very little effort, steer well clear. This is more likely to be an MLM scheme that will cost you money or make you nothing.
Have you ever been scammed in the forex industry? Let me know in the comments below…