Is forex a pyramid scheme? We can understand the approach to this question if we are aware of what a pyramid scheme means. 

There’s never a dearth of MLM or Multi-Level Marketing companies showering trades like you with promises to help you earn passive income as a side hustle. MLMs promise you financial freedom on the most precarious grounds. You will have to exercise caution in making investments that doom from the word ‘go’. 

There have been times we have approached by friends/family members to sell us the golden opportunity to earn money by signing up for a program that teaches you the ways to income multiplication. 

These schemes rather forcefully compel you to enter an MLM scheme where, rather than concentrating on the reason for your joining – trading forex – the bulk of your time is spent in the recruitment of new members into the company, given that you incentivized by earning affiliate commission as per a pyramid structure. 

If forex is a pyramid scheme, how does the latter work? 

A recruiter sells a complacent victim the idea of Financial Freedom. There’s a grain of truth in the recruiter’s pitch that there’s tons of money to made in the forex market. Sometimes, those who win over convert their friends and family to the same ideal. 

Suc recruits are of necessity a dab hand at social media marketing/campaigning. These talents diverted to churning out compelling content and posts that sell the notion of Financial Freedom is great, convincing detail. The recruiter, too, had been recruited by someone else. 

Product purchase 

When joining a forex MLM company, you persuaded to purchase – trading videos and modules, trading signals offered by more seasoned traders, and other related products. You compelled to believe that the more products you buy, the higher your potential to become a successful trader. 

Upon product purchase, you added to your recruiter’s downline. The implication is that your recruiter receives a commission for drawing you into the system. Your recruiter also gets a commission when you recruit someone into your own downline. 

Some forex MLM companies provide memberships where you are awarded a rank, also providing the opportunity to grow your rank through recruiting more people into your downline. Now you remember that you joined forex to trade and not be a salesman. 

Forex losses

Research shows that a minuscule percentage of forex traders are profitable. Indeed, forex trading is difficult, and you should be ready to lose. Less than 10% of traders are seriously profitable. It’s a struggle for the rest. So don’t be taken in by those that claim forex trading is easy.   

The imbalance between recruiting and trading 

Following a series of successful trades, the recruiter realizes that adding members into their downline is more of a money-maker than trading has been. The attempt for even the recruited to form downlines of their own, thus moving up in rank and earning a higher income, displaces the idea of ‘trading.’ 

Money spent on products 

You will be pushed to buy more products to better your trading skills or to gift to your down lines in the bid to support their hustle to recruit more recruits. Following The growth of your downlines, you will have made money for these products to become affordable to you. There are even conferences whose sole concentration is the extension of the pyramid scheme. 

Forex a pyramid scheme: opaque earning mechanism 

Ascertain from the broker’s/MLM company’s website where your funds invested. If there’s a 

lack of details, you have a forex trading company that’s a pyramid scheme. 

Forex a pyramid scheme: easy income

You only need to check the company’s website to see if the correct details are available. For instance, if the company team members’ details are not clear from the website, that’s a red flag. Do not trust stats that not backed by confirmation links. 

Legal documents 

The entire set of legal documents has to be available on the website for your diligent perusal. If even a couple of vital documents are missing, insist on seeing them. Otherwise, abandon the Merchant of Lies. 

Bonuses in the multi-tiered affiliate programs

A multi-tiered affiliate program with bonuses is the tell-tale sign of forex as a pyramid scheme. The forex pyramid in such a pretender to genuine forex trading is visible in the following scheme: your direct affiliates, or level 1;  participants invited by your affiliates, or level 2; uses invited by your affiliates’ partners, or level 3. 

Is forex a pyramid scheme? : guidelines 

The following guide may help ascertain the nature and lawfulness of a marketing scheme. If doubts nag you, you should seek legal advice before joining or participating in a scheme.

• Is there a signing up fee?
  
  Pyramid selling schemes frequently have start-up fees that will not reimbursed for purchasing commercially viable goods or services because most earnings introduce others to the scheme.

• Does the prospectus indicate fantastic earnings (for instance, “make $100,000 a month legally”)?
  
  Promoters making fantastic claims risk breaking the law.You have to seek expert consultation if the answer is yes to either of the above questions.

• Do participants realize commissions mainly from selling products or services, or are financial bonanzas largely contingent upon recruiting others into the scheme?
  
  Pyramid schemes mainly center on creating rewards for those members who recruit others.

• Do the products proffer a real income-earning opportunity through sales?
  
  A legitimate scheme has products for which a ready market exists.

• Is the number of products that have to be purchased or ordered by the participants commercially pragmatic?
  
  Legitimate businesses demand that participants buy/ order only as much stock as they can positively expect to sell.

• Does the prospectus offer boons such as “it’s easy to sign up new distributors” or “a life of happiness and prosperity”? 

Such statements must be read with attention as they may make fantastic promises that hide the amount of hard work and risk associated with realizing such goals.

• Does the portfolio contain testimonials from people who are hard to identify (for instance, “RS of Waterloo writes…”)?

People giving testimonials may not wish to identify for rationales of privacy. However, inappreciable may raise suspicions about whether the testimonials are bona fide. There is usually no way for consumers to check even if they are. Therefore, references to testimonials should be read with this caveat in mind.

• Do the artifices offer ongoing training and sales support? Scam-free multi-level marketing businesses have an entrenched interest in guaranteeing that participants are well trained and supported.

Conclusion 

There are several commonsensical approaches that could keep you safe from being drawn into forex as a pyramid scheme. Rather than acting on hearsay, you ought to go for some advice. 

You should avoid artifices that give assurance of a guaranteed income. Consider always if the products on whose basis the ploys’ runs’ are real or not. Be aware of forex as a pyramid scheme. When your family and friends’ circle try to talk you into joining them in investing in a forex pyramid scheme, they might be clueless as to the scheme’s shady nature. InvestBy is a much safer bet.