Forex trading has become so popular in the past ten years because people see the potential of making money with it. Whether people are right and they can really make money with it or not, is a different discussion that I’ve covered in some other articles (e.g. here and here). This article is focused on two other important questions because many of those who are new to Forex think that Forex is a pyramid scheme. If this is your question also, make sure to read this short article carefully because it prevents you from having wrong impressions and taking wrong decisions.
Is Forex a Pyramid Scheme?
No, it is not. Forex has nothing to do with Pyramid scheme, although pyramid schemes are not always bad and illegal. Pyramid scheme is a network marketing system. It has nothing to do with Forex because Forex is buying and selling currencies against each other. As a Forex trader, you trade currencies, whereas in a pyramid scheme, you must refer and recruit to grow your team to earn commissions.
In Forex trading, you don’t deal with people. You just open a trading account with a broker. It is like a bank account that you deposit some money in it, and then you use your money to buy and sell. This is what Forex is all about. Therefore, it is completely different from pyramid schemes.
Although it has nothing to do with Forex, still I must emphasize that pyramid schemes are not always bad and illegal. They are just some marketing methods. It is just the way that some companies act that makes pyramid schemes illegal.