Is forex a scam – pyramid scheme?
How and why forex was created?
- Transfer function. Importers and exporters became market participants. Thus, conversion (and transactions) became much faster. As a result, it boosted their business and economy. To keep it simple, forex is an instrument for global (international) trade.
- Regulatory function (monetary policy). Thus, another important function is regulatory. Central banks got an opportunity to influence their currency and control its supply. It is one of the tools for central banks to support the economy.
- The primary means by which the Central Bank performs this is through intervention and open market transactions. In other words, the Central bank acts to promote economic growth while trying to curb any inflationary effects.
- Credit function. The foreign exchange market provides short-term credit to the importers so as to facilitate the smooth flow of goods and services from country to country.
- Speculative function. As you see it is all about the global economy and international trade, not about retail traders like me and you. Speculative function appeared much later.
As you understand forex is not a scam itself. It is a legit, global market where the world’s currencies are traded. Moreover, forex performs important economic functions. And, the absolutely other question is if you can make money there or if your broker is trusted. But come on, guys, it’s another story. Broker doesn’t mean forex. Definitely, stocks and futures have many benefits in comparison to forex, as these markets are centralized.
Is Forex a scam or a legit market? by Inna Rosputnia
Wishing you a great week!
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