A startling statistic, released by the CFTC, is that the average trader will lose around $15,000. Keep in mind that this is the average individual trader, not the average corporation. A lot of this money is probably lost because traders are falling for some kind of scam.

According to Michael Dunn of the CFTC’s Forex Outreach and Education Task Force, the amount of damaged caused by forex scams is so vast that it’s “incalculable.” While the Commodity Futures Trading Commission, or CFTC, and the North American Securities Administrators Association, or NASAA, work to find and eliminate scams, they are still out there.

The truth is, the forex market is extremely complex. It’s important for traders–especially new traders–to understand that the market does not create wealth. Anytime you’re up, someone else is down. For every dollar you win, it’s a dollar that someone else has lost.

To keep you from becoming a statistic, let’s review the common forex scams:

Fake Forex Brokers:
Scam artists will sometimes trick traders into believing that they are legitimate brokers. Most of the time, these scams seem very legitimate. These brokers will trick traders into investing their money, but will never actually invest it in the market.

Unfortunately, these scams are both common and extremely costly. In 2003, the Oregon Department of Consumer and Business Services and the CFTC shut down a broker that had scammed traders out of $40 million. While this is an extreme example, similar scams still occur today.

To avoid scams, make sure that brokerage firms are registered with the right regulator agencies before investing. Don’t ever trade with a firm that isn’t registered, regardless of whatever promises they make. Scam artists tend to make unattainable promises and then pressure traders into investing. If you have a bad feeling about a firm, stay away.

Ineffective Forex Robots:
A forex robot is a program that will detect trends in the market and then enter and exit trades accordingly. To most traders, this sounds great. A good robot will significantly reduce the amount of work a trader has to put in watching the market on their own.

Unfortunately, a lot of these programs are either ineffective or promise unrealistic results. No forex robot is going to make you a fortune overnight. Any company that promises this is lying.

Expensive “Get Rich Quick” Trading Strategies or Guides:
The market is too volatile for any one “get rich quick” scheme to work for every trader. Companies that sell trading strategies that sound too good to be true usually are. There is so much free information out there that, most of the time, it’s unnecessary to pay for someone else’s trading strategy.

As a final note, please keep in mind that this information is not meant to deter traders from investing in the forex market. The market can be profitable. You wouldn’t hear so many success stories unless someone was making money.

The point is to do your homework before investing. Research a broker before choosing one to trade with, and don’t ever purchase a robot before doing twice as much research. Make the effort to keep your money safe. If you have to lose money in the market, it’s better to lose it making a few bad trades than to fall for an expensive scam. After all, bad trades are nothing but important lessons that you can use on your way to success.