The foreign exchange market (FOREX)
The Autorité des marchés financiers ("AMF") is raising awareness among Quebeckers about the risks of investing in the foreign exchange market (FOREX).
What is the foreign exchange market (FOREX)?
FOREX (an abbreviation for foreign exchange) is a market where currencies are traded. Investors, including banks and pension funds, negotiate contracts in which they agree to exchange a specific quantity of one currency for another currency. Investors profit if they are able to properly predict in which direction the exchange rate between the two currencies will fluctuate.
Investors who trade on the FOREX market generally use an Internet platform. The platform is often operated by a broker or by a provider on behalf of a broker.
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What are the risks?
Beware of enticing promises!
Become a FOREX pro in under a month!
Open a no-risk account!
The easiest way in the world to make money safely!
Get rich from the comfort of your own home!
This is the most lucrative market in the world!
Even if people on the Internet and in the social media sometimes praise the merits of the foreign exchange market, it is complex, volatile and very risky.
The value of currencies can be influenced by political or economic events, the weather and a number of other factors. Those who invest on FOREX must have the time and knowledge to analyze a slew of information of all types, from a multitude of sources.
Some strategies used on the foreign exchange market are complex. One of these, called leveraging, in which the investor trades with borrowed money, is risky. An investor who uses this strategy must repay the amount borrowed, whether or not the investment has been profitable. In fact, the investor could lose more than his initial investment if the foreign exchange market does not react according to his forecasts.
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How can you protect yourself against fraud on the foreign exchange market?
Don't believe ads that sing the praises of sure-fire methods, software or costly training seminars. These ads offer to turn you into an expert and quickly make you rich. The FOREX market is not meant for every investor and if someone tells you otherwise, beware.
As with any other kind of investment, be particularly wary if you are guaranteed high returns without any risk.
The AMF routinely issues investor warnings against unregistered companies that solicit Québec investors to invest on FOREX. Always check that the individual or company suggesting that you invest on FOREX is registered with the AMF to sell this type of product. If you have any doubts, contact an agent at our Information Centre. If you receive this kind of offer or if you are solicited by a company that is not registered with the AMF, we invite you to report it
There is no such thing as a high return without risk.
Thinking about investing in the foreign exchange market?
Before proceeding, you should fully understand FOREX and its characteristics and risks. Make sure this market is appropriate for you, by reviewing your personal finances. Set your limits. What amount would you be willing to lose?
Make sure you are dealing with an investment dealer who is registered with the AMF.
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