There are many booming businesses in the world today, which allows companies like Forex to develop their pyramid schemes. They reel you in with promises to make easy, passive income. This is why it’s essential that you learn how to spot a Forex pyramid scheme and avoid falling into the trap.

There are several tactics Forex uses to lure their victims:

  • Grooming: They will act like your best friend
  • Training: They will make you an expert on the product
  • Conferences: Join the events to hear how people have made $100,000 in a couple of months

If it sounds too good to be true, it usually is.

In this article, we will take you through the Forex pyramid scheme, in-depth. We will help you learn how to recognize the red flags to avoid falling into one of these traps. Knowledge is power, especially when it comes to scams!

How To Spot a Forex Scheme

Pyramid schemes, which are similar to Multi-Level-Marketing schemes, though different, encourage participants to spend their time recruiting new members into the organization. Somehow, the focus is never on improving your Forex trading results.

However, to motivate you to focus on finding new members, you will be offered incentives and commission under a structure closely resembling a pyramid.  

Living the Dream With Forex

Once a Forex Pyramid scheme has targeted you, you’ll be encouraged to imagine how you can transform your life by earning vast amounts of money. It doesn’t matter if you have experience! 

You’ll be able to: 

  • Leave your job
  • Tell your boss what you really think
  • Start planning your dream vacations 

The financial security you’ve always wanted is within reach! Who wouldn’t be intrigued by that?

You must Think Critically in These Situations

If what the Forex pyramid representative claimed was true, why is the person who wants to sign you up trying so hard to get you onboard? How come they are not focused on generating their own amazing income by trading?

Once a Forex pyramid recruiter has you in his or her sights, there are a number of standard steps they are trained to follow. Keep in mind that their success depends on you joining the company, not on you making any money.

Watch Out For Scams Within The Forex Company

Forex trading is subject to multiple scams. Many of these are sophisticated and convincing. Forex is often presented as an easy, effortless way to make huge profits without any need to understand the complex way that markets work.

While this may be the outcome in a few cases, it is more likely to lead to major financial losses. 10% – 20% Forex pyramid or multi-level marketing companies don’t want you to understand this.

 In the same way as gambling, you may have a few early wins, which increase your confidence and motivate you to take ever larger risks, but there are zero guarantees that this trend will continue in the future. As with gambling, the golden rule is never to play with more than you can afford to lose. 

Types of Traders in Forex

A trader is anyone who buys and sells on financial markets. There are 3 main types:

  • They could be working for a financial institution, such as a bank, investment company, or a hedge fund.
  • Alternatively, they could be operating as an independent trader, and it is these traders who specialize in Forex, who are commonly targeted by pyramid/MML schemes. 
  • The total newcomer to forex trading, who is actively looking for a way to generate additional income and believes trading could be an option. This is by far the favorite target of a Forex scheme recruiter. 

Forex Manipulation Tactics To Draw You In

As with every pyramid scheme, Forex has a set of manipulation tactics you need to be aware of to keep yourself from falling victim to it. 

Manipulation Tactic: Forex’s Initiated Grooming

To gradually wear you down, the recruiter will continue to sell you the idea that you can make easy money via Forex trading. This is not always a lie: dedicated and skilled traders who understand the markets’ volatility can make profits. But these are not inexperienced amateursand they tend to be backed by resources that allow them to ride out the inevitable losses they’ll experience.

Your recruiter needs to bring new people into the system, and some will even try to convince family and friends to join them. Again, this may be done with the best of intentions, as at the start, the recruiter will be encouraged to believe in the reality of what they are promising. Their genuine belief that they are helping you is what makes them so convincing, and therefore hard to turn down. 

When there are no personal contacts available to recruit, they will revert to posting on social media about their amazing life of freedom. They start posting offers for others to take the opportunity to learn how to gain entry into the financial utopia they’ve discovered.

Manipulation Tactic: Getting Sold On Forex’s Product

One of the obvious objections people make when being encouraged to join a Forex scheme is that they have no relevant knowledge or experience. Here comes the response – when you join, the company will provide you with:

  • Training sessions
  • Videos
  • Events and Conferences

All the information you need to put you on the road to success! 

The only catch – you have to buy these and similar products at inflated prices. (And no, you can’t just use other study methods or free online resources). It’s essential that you’re made to believe that you will increase your chances of trading successfully by purchasing more products from the company. 

What Should You Do in This Circumstance?

Understand that when your recruiter convinces you to buy a product, you become part of his ‘downline.’ This means he earns a commission for bringing you into the base of the pyramid. 

When you, in turn, recruit someone else and they buy the company’s products, they become part of your ‘downline.’ Both you, and the person who recruited you, and the person who recruited your recruiter, and so on, will receive a commission on your downline’s purchases.  

Manipulation Tactic: Forex Prepares You for The Financial Losses 

A tiny percentage of forex traders actually make profits. 80% Consider that 5-10%

It can’t be overstated that forex trading is not easy, and you must be prepared to lose money and ride out those losses. Even the best traders have periods of losses. 

Gamblers Beware

A typical pattern for amateurs is to make a profit on one trade, and then lose it on the next. In this way, unless you are really skilled, it is no different from gambling. And it can be just as addictive, as you keep trying to recoup your losses with just one more trade. 

If you know you tend to make impulsive or reckless financial decisions in the hope of the big win, be extra cautious about risking your family’s financial future. 

Manipulation Tactic: Try to Recoup your Losses

Once a recruiter experiences a series of financial losses from their Forex trading, they typically realize that a more secure way to earn money is by recruiting new members into the organization. 

Now the early innocence has been lost, and real conflict of interest emerges. Their focus turns to source recruits who, in turn, will need to recruit their own downlines to recoup their trading losses. Although pyramid schemes are no longer legal, the resulting organizational structure from these practices looks very much like – well –a pyramid. 

Manipulation Tactic: Re-investing in products

Over time, the company will keep encouraging you to buy more products. These can be to:

Improve your trading skills. (If you were any good, surely, you’d be making a profit by now. Maybe more knowledge will be the key to success).

  • Give as gifts to impress and motivate potential new recruits.
  • Support your downlines to help them sign up recruits

If you’ve been reasonably successful at recruiting new members to grow your downlines, you will have earned some money from product sales. So now, you can afford to give it back to the company, or, as they would call it, ‘re-invest.’

The Conference Fever is a Red Flag You May Be Part of a Pyramid Scheme

One of the most effective tools used by these companies in the conference, usually in person but sometimes hosted virtually. Held in a fever-pitched atmosphere, spokespeople from the higher levels of the pyramid will offer tales of incredible success to motivate the crowd. They will advise you that only losers give up, and you really don’t want to be a loser, do you? They represent the dream you once thought would become a reality for you. 

So, you’ll probably keep paying for further seminars and conferences and training sessions. However, as you do this, your chances of becoming a successful forex trader keep receding ever further into the distance. 

The Real Nature of The Forex Business

Is the nature of the business starting to become clear? The true objective is to sell ‘training’ products, not to generate profits by Forex trading. The training products consist of:

  • Udemy Courses
  • Beginner’s kits you can buy.
  • Books
  • Sometimes the kits will include ‘free currency.’

Many Forex pyramid/MLM companies have a system of ranks, as in the military. You increase your rank according to the number of people you recruit into your downline. The higher rank you are, the more you will earn from the people in your downline. And the more people above you will earn as well.

Pyramid Schemes vs. Multi-Level Marketing

Some people think that pyramid schemes and multi-level marketing companies are the same things. However, this is not true. There are several differences between the two. The main difference is that a pyramid scheme typically focuses on recruiting new people for profit, while MLM companies focus on high-quality customer service and products. 

What Exactly is a Pyramid Scheme?

Pyramid schemes are illegal in many US states and starting or participating in one can be considered a criminal offense. If someone is caught involved in a pyramid scheme, it is punishable by up to a $5,000 fine and 4 years in prison. 

They are essentially a fraudulent way of generating a profit by recruiting ‘investors.’ At each level of the pyramid, there are more investors.

The few investors at the top of the pyramid need a large number of investors at lower levels to generate enough profit to pay those who joined early investors. 

Pyramid schemes sometimes involve the sale of a product, service, or distribution rights to give a legitimate business appearance. But those sales will always be less significant than the recruitment of new ‘investors.’  

The most important point to note is that, sooner or later, pyramid schemes always fail as the number of recruits is limited, so the model is unsustainable. 

How Does Multi-Level Marketing Differ From A Pyramid Scheme?

This is a method of selling products or services directly to consumers via a network of distributors or salespeople. These operate in a structure which resembles a pyramid. 

Multi-level marketing companies can sometimes be compared to pyramid schemes. However, multi-level marketing is based on two key factors: products and service quality. Hard work will result in more sales, so the recruitment of new investors is of secondary importance. The commission is earned on product sales and on the sales of others he or she has recruited.

On the other hand, Pyramid schemes use products to or services to hide their real aim of collecting money from bottom-level investors to pay those at the top levels. 

Pyramid Scheme Teams Refuse to Buy Back Products

In pyramid schemes, new investors often have to pay for the right to enter, sell products, and bring others into the pyramid. Rewards are not related to the sale of products or services. 

The products or services the investor has to buy will often be unsalable, but they can’t be returned or be refunded. 

A genuine multi-level marketing company will re-purchase any unsold products, though often at less than the original price paid. 

Why Do Pyramid Schemes Always Fail? 

Pyramid schemes will always fail because their sustainability is based on the recruitment of ever more investors. 

All pyramid schemes collapse in the end when the supply of recruits runs out. Only a few at the top of the pyramid make money.

Multi-level marketing companies, on the other hand, can survive indefinitely. Although recruiting new members is at the heart of the marketing model, genuine multi-level marketing companies sell real products or services, and recruits are unlikely to experience massive losses.

Why are People Attracted to Pyramid Schemes?

As all pyramid schemes fail in the end, why are people attracted to them? There are 3 basic reasons, and these all apply to those who invest in Forex trading schemes.

Greed, or the lure of easy riches. In reality, only a few, near the top of the pyramid, make money, and the people toward the bottom of the pyramid make huge losses. 

They believe they are joining some kind of ‘investment club’ where they will be assisted in making a profit and protected from loss. In reality, they bear all losses from their attempts to trade Forex, themselves.

They believe they are buying a genuine product or service. This is often because they already have a personal relationship with the recruiter.

How Can You Avoid Being Defrauded? 

Now we have clarified the difference between a pyramid scheme and a legitimate MLM; it should be easier to spot if you’ve been targeted as a potential recruit. However, some additional strategies to adopt to help you avoid being recruited into a pyramid-type scheme could end with you losing more than you can afford.

  • Strive to Understand the Company You Become Involved With
  • Understand what the company does
  • Seek independent advice
  • Get it in writing
  • Check social media
  • Check customer reviews
  • Check out the competitors.
  • Speak to potential colleagues
  • Know exactly what you’re buying
  • Don’t mix business with friendship.

Forex is a Legitimate Trading Market

Forex is a global foreign exchange market for trading currencies. Based on the determined foreign exchange rate for a particular currency, you will then:

  • Buy
  • Sell
  • Exchange

All of this is done at the current price or the determined price. You would buy a currency while selling another, simultaneously. The profit comes from speculating on the direction a currency will take in the future. If the currency you chose to purchase value increases, you will make a profit. However, if it decreases, you will lose your money. 

Forex is not a scheme in and of itself. It is a very legitimate company, although it has a lot of risks. You could become involved, but you would need to pay attention to the people you become involved with. A real leader will tell you to spend smart. A pyramid scheme leader will tell you to throw all your assets into your ‘company.’ 

FOREX is an abbreviation used to refer to Foreign Exchange Markets. Basically, it refers to the rate of exchange between currencies. For instance, the American Dollar can be compared against the Euro, etc. In fact, the value of any two currencies can be compared against each other.

In the same way as stock and shares, exchange rates constantly fluctuate, and currencies can gain or lose value, almost on a second by second basis. Forex trading is different from buying and selling shares in a number of ways, including:

  • It operates on a 24-hour basis from 5 pm EST Sunday to 5 pm EST Friday, and close on weekends
  • Exchange rates fluctuate due to multiple factors: political, macro-economic, even climatic.
  • Overall, forex trading volumes are greater than those on stock markets.
  • Central banks play a significant role in FOREX markets as they exercise control over the money supply, interest rates, and inflation. 

Pros and Cons of Forex Trading  


It’s easy to enter and exit a position (i.e., make a trade) in any of the world’s main currencies.

Forex operates 24 hours a day, 5 days per week, so you can trade whenever you like. The main Forex trading centers are:

  • New York
  • London
  • Paris
  • Frankfurt
  • Tokyo
  • Singapore
  • Hong Kong
  • Sydney

Depending on the time zone, trading is always ‘live.’

It is possible to enter the Forex markets and start trading with just a small amount of capital.


The use of leverage means that you control a large position by investing only a small amount of your own money. The result is that you can make a large profit on a small investment, but when you lose, you lose a larger amount than you invested. Large amounts of leverage increase the risk of losses or even total wipe-out.

It’s essential to have an understanding of basic economics. There are key indicators you’ll need to interpret as these impact currency values. You’ll need to keep up with the political and economic situation of the countries whose currencies you’re dealing with. You’ll need to understand how they’re affected by global events. Without this, you’ll be trading ‘blind.’ 

How to Trade Forex Without Becoming Involved in a Scheme

Now you’re aware of the danger of Forex recruitment schemes and know how to avoid them. But you’re still intrigued by the idea of trying your hand at Forex trading. Here are some tips on getting started and finding out whether it is something you could do successfully.

Don’t Give Up Your Day Job

While you’re learning how to trade, it’s important to maintain your financial stability, so that if it doesn’t go well, or you decide it’s not something you want to do long-term, you haven’t damaged your financial prospects.

Test Your Abilities

Some online platforms, such as or[19], offer a free trial.

You are given imaginary funds, often around $10,000, and you use these to trade in real-time just as if they were real. You’ll be able to follow the profits and losses you make. Give yourself a month to ‘play’ and, in the end, assess your performance. 

This could help you decide whether Forex trading is for you or not. And if you lose, you’ve actually lost nothing and learned a valuable lesson.

Just keep in mind that it’s easy to take risks with and lose money that’s not real. However, it will feel very different when you start to see your own, hard-earned money disappearing before your very eyes.

Every platform will remind you that past performance does not guarantee future results: make sure you heed their warning and keep that in mind!

Do Your Research

Investigate the major automated trading platforms and choose one which you find user-friendly. Make sure to compare their commissions, as these add up over time.       

Learn the basics before you start: check out all resources and training videos on YouTube, and the tutorials which many of the main trading platforms provide

Set Your Budget

Set yourself a strict limit to how much you can afford to invest, or potentially to lose while you’re investigating. Although some platforms insist you deposit a minimum amount to enter, you can start trading with as little as $10, so there’s no need to take a big risk until you’re sure about what you’re doing. 

Choose Your Currency Pairs

A currency pair is the quote of an exchange rate between two currencies. You essentially buy one of the currencies, while the other is sold. The most profitable one is USD/JPY in Forex.

As a new trader, it’s best to focus on one or two specific currency pairs, so you don’t need to monitor your trades 24 hours a day. It’s easier to keep up to date with economic and political indicators in a limited number of countries.  

Choosing the US dollar against other major currencies will make it easier to follow and reduce risk. For example:


If you only have a limited time to trade each day, it may be best to limit yourself to USD/EUR. This pair has the highest trading volume, and performance information is readily available. 

Be Disciplined

There are two kinds of pain: the pain of discipline or the pain of regret. This is so true of Forex trading. Staying cool-headed and trading only in your chosen trading currency are the attributes of a successful part-time forex trader.

When you make a profit, take the gain you’d targeted. Don’t leave it, waiting, and hoping it will increase. When you’re losing, close the trade and cut your losses instead of hoping it will turn around.

Whether, in the end, you are able to make a profit from Forex trading or not, at least you will know that you haven’t been sucked into a Forex scam, which will inevitably drain your funds and your morale.