Your friend, the one that started trading Forex, just made a Facebook posting touting the fact that they are making money in their sleep. They throw down the gauntlet to you:
Are you working for your money, or is your money working for you?It’s a valid question. Here we are working hard for our money, and the only thing it wants to do is play hide and seek — minus the seek.
If you are lucky then that Facebook post would be the end of it. However, if you’re like me, then you have probably heard about Forex far too many times to count since the start of the pandemic. In fact, I’ll even assume that your dear friend has asked you to join their trading team.
Regardless, Forex trading has seemed to have brought unlimited riches to some and absolute ruin to others. As a result, the question on everyone’s mind is whether it’s a scam, or not.
As you may know, there is nothing scammy about Forex trading itself. In fact, the Forex market is the biggest trading market in the world, with a daily worldwide trading volume of over $5.1 trillion. This is compared to just $84 billion in the stock market.
With that being said, forex-based scams are a dime a dozen. These scams capitalize on the mystery surrounding forex trading and the ease of copy and paste.
In this little article I will quickly look at 4 common scams and the biggest name in forex trading education, IM Academy.
Common Scams
Signal Seller Scam
This type of scam involves a company or individual who offers a system, that claims to be able to spot market opportunities that will make anyone wealthy. They beat their chest to the drum of their longstanding experience and technical skill. The signal seller also carries glowing testimony from people, who vouch for the vast success that the system proposed has earned for them.
All you need to do is pay the signal seller a certain amount of money, to have access to the flurry of trading secrets.
Most times signal sellers will just collect the money and then vanish. Occasionally, some will surprise you with a good trade to perpetuate the scam for a little while longer.
Robot Sellers
Sitting on the back of algorithmic trading, these scams claim to own a trading bot that can automate trades and earn you wealth while you sleep.
While algorithmic trading is very real and highly profitable, there is much testing that is involved to make sure that a trading bot is not just gambling. Solid research is required before investing in one of these approaches.
Forex Ponzi Schemes
A Ponzi scheme is a special type of a pyramid scheme.
The way how they work is by taking money from newer investors and giving it to older investors.
In particular, you might have a forex scam that is proposing guaranteed returns of 10% on your investment. The 10% you receive however, does not come from trading at all! It is just the subscription fee from newer investors.
The problem is that no actual investments are being made. Eventually the system can collapse if the scheme is unable to continually get investors. On the other hand, the scammer may receive a visit from the white-collar crime unit. Most likely though, the scammer will probably just disappear with everyone’s money.
Overpriced Training and Education
Be wary of programs with the promise of guaranteed results. These programs are often ridiculously priced and often unable to deliver on their promises. Indeed, training programs can help with speeding along the initial process, but they are hardly worth some of the ridiculous amounts that are out there.
Tons of information is available on Udemy at $20 per course, YouTube videos, and podcasts. Many websites also offer demo accounts where you can practice without risk.
IM Academy
Perhaps the most popular entity in forex trading, IM Academy is actually a multilevel marketing company which sells educational products and tools in forex trading.
I’m not particularly a fan of IM Academy even though my quarrel with them is largely speculative.
Is it legal?
IM Academy is definitely legal as of 2019, after its rebranding.
It’s predecessor iMarketsLive ran into trouble in several territories, due to its lack of authorization to provide financial services. Additionally, the financial authorities in Belgium banned iMarketsLive completely because they found that it exhibited the characteristics of a pyramid scheme.
Since the rebranding, the increased focus on selling educational products has legitimized IM Academy.
Can You Make Money From it?
Recruitment
You won’t make money from recruiting.
Below is an income disclosure statement from 2018, the only one of its kind as the academy conveniently found a way to stop releasing them.
IML Income Disclosure
From here we can see that 96% of people were only able to make an average of less than $1,376 in a year. Imagine what that average would be if we took out the high of $39,189.
If you look closer, you will see that 87% of people never make it to platinum 150. This means they would probably have had to pay the full subscription fee for that entire year.
Trading
It is unlikely you will make money trading based on course material, but there is a chance with the copy trading tools.
Platinum membership for IM Academy goes for $225 per month. Indeed, with the referral system you can get this membership for free with two direct referrals. I find this to be a hefty entrance fee. Even if you were to refer two persons in order to get a free subscription, your first referrals are likely to be close friends or family. If you are costing a friend $US225 for a subscription…is it really free?
The best hope for IM Academy is its copy trading tools. Again, you need to either be paying the expensive educational subscription fee, or have the necessary referrals to be able to access these tools.
Regardless, I am quite bothered by the lack of hard evidence to support the testimonies of how good the tools work. Even more so, I struggle to understand the need for further recruitment. If I have a successful passive income stream that simply consists of me copy and pasting trades, why would I then chase down further subscribers for peanuts?
When I look at the common types of forex scams, I don’t see much difference in IM Academy. However, concrete financial evidence simply does not exist regarding this organization, so I will have to settle for the widely variable individual experiences to judge the effectiveness of its trading tools.
All I can say is don’t bother to try recruiting more than 3 people, learn as quickly as you can and be cautious in the trades you copy.
Conclusion
These days everybody is in need of second- and third-income streams. Furthermore, with most of us stuck at home all day, the internet might be the only option to find that stream. However, with an industry as lucrative and mysterious as the forex market, one must exercise caution. As with anything a little skepticism goes a long way.
Remember, if it sounds too good to be true, it probably is.