Complaints & Guidance

Investor Alert

May 25, 2007

Foreign Currency Trading Is Not For Novices: Securities regulator warns investors about the risks

Winnipeg, - In an investor watch released today, the Manitoba Securities Commission (MSC)  is warning investors that foreign exchange or FOREX trading - in which one nation's currency is traded for another in hopes of profits from the differences in the exchange rate between the two currencies - is a complex and volatile practice that requires expert knowledge and experience to be successful.

"Foreign currency trading is not for inexperienced, everyday investors," said Doug Brown, Director of Legal and Enforcement at the MSC. "Manitobans who are considering trading in this type of investment should be aware that there can be risks and pitfalls associated with this type of investment. Careful consideration of the investment may help them avoid losing their money."

Before investing in the FOREX market, be aware:

  1. It is complex and volatile - it takes expert knowledge to track and understand the many variables that affect currency exchange rates. Without this knowledge, investors are likely to lose their money.
  2. Trading on margin can increase losses - the more money borrowed to invest in the FOREX market, the higher the risk of losing the investment quickly.
  3. FOREX scams are on the rise - the promise of high returns with low risk in the FOREX market is a red flag that the opportunity may be a scam.

In addition, the MSC  wants investors to know that the seminars and software programs they see advertised about how easy it is to get into foreign currency trading cannot replace the need for research and expert knowledge. In fact, investors should note that many of the products and services advertised bear warnings about the risks of this type of investing and are careful to cite the limitations of their product.

The MSC's investor watch details how people can find a qualified person to help them if they are interested in this type of investing. It also gives investors red flags to watch for to avoid FOREX scams such as:

  • Guaranteed high returns with little or no risks
  • Promises or claims to be able to profit like experts
  • Offshore investments that are tax free

Investors can find the MSC investor watch at

The MSC urges investors to call its Investigation department at 1-800-655-5244 about any suspicious investment opportunity to find out what they can do.


Ainsley Cunningham, Education and Information Coordinator
The Manitoba Securities Commission
(204) 945-4733