If You Are About to Trade

Always Follow these Basic Principles

  • As this is “risk capital,” you should be able to lose all of it and still be financially secure
  • Check to make sure you have your risk disclosure documents
  • Determine if you will rely on advice from a broker or make your own trading decisions
  • Understand your financial obligations in commodity futures and option contracts
  • Understand fraudsters exist and steal money from unsuspecting investors and traders
  • Contact CFTC quickly if you have a problem or question

Ways Fraudsters Try to Beat You

  • Downplay the importance of the disclosure statement
  • Tell you to borrow money to invest
  • Guarantee profit or boast about past performance
  • Promise profits due to "predictable" seasonal or market cycles
  • Make “can’t miss claims” based on the impact of current news events
  • Try to lead you to believe that you can profit from information already made known to the public

Ways to Beat the Fraudster

  • Check to see if they have a Broker Registration Status and Background Information
  • Use National Futures Association’s Background Affiliation Status Information Center (BASIC) online or call 800.621.3570
  • Learn their persuasion tactics:
  • "Phantom Riches"—dangling the prospect of wealth, enticing you with something you want but can't have
    "This gold deal is guaranteed to rise double what your current investments are doing."
  • "Source Credibility"—trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience
    "Believe me, as a 10-year senior vice president at this firm, I would never sell something that doesn't produce."
  • "Social Consensus"—leading you to believe that other savvy people have already invested
    "This is how Bob down the street from you got his start. I know it's a lot of money, but I'm in and so is half our club. It's worth every dime."
  • "Reciprocity"—offering to do a small favor for you in return for a big favor
    "Did you like the tie we sent with the information packet? Good. I'll tell you what, I’ll give you a break on my normal commission if you buy now, half off."
  • "Scarcity"—creating a false sense of urgency by claiming limited supply
    "There are only two units left and the Asian market is about to open, so I'd sign today."

If you have questions, are aware of suspicious activities, or believe you have been defrauded, please contact the CFTC quickly. Call the CFTC at 866.366.2382 or file a tip or complaint.