What is a HYIP,
and how can I avoid it?
If you have never heard of the word HYIP, and consider yourself an investor, you may need to recheck your educational strategy. You may read many books, and practice trading with a large number of the
If you have never heard of the word HYIP, and consider yourself an investor, you may need to recheck your educational strategy. You may read many books, and practice trading with a large number of the forex demos out there, but unless you make sure that you are also up-to-date with the developments in the world of forex fraud, you're running a significant risk of suffering botched plans, and ruined dreams. The High-Yield Iinvestment Program, of course, is one of the most noxious types of forex scams popular with the numerous fraudsters in the forex business. Our purpose is to introduce you to this subject in this brief article.
A HYIP, or high-yield investment program, is an investment offer that promises irrationally high returns over a short time. The returns in question may be as high as 100 percent quarterly, and the figures will usually depend on the reporting period of this investment, rather than any actual calculation or investment strategy on the part of the managers, if they can be termed such. The purpose is to get you excited with bombastic, unreal, yet convincing claims of rapid enrichment at little to no risk. Typically a façade of investment activity will be maintained, while in the background the fraudsters are engaging in a Ponzi scheme with horrendous consequences for the gullible investors.
HYIPs need not always be illegal. If a manager does not mind ruining his business, he can couch his claims in some kind of legalese that makes him more or less safe against claims later in court, while in the meantime pocketing the commissions and fees from his customers, even as his trades generate massive losses. As long as a clear representation of the risks involved in trading are made to clients, there is nothing illegal about blowing up people's money.
What you, as an investor, need to keep in mind is that a manager of a high-yield investment program is nothing more than a marketing specialist. He knows nothing about economics, finance, or trading, and the sophisticated air of financial competence he assumes is only a ruse. But he does know well about marketing techniques, and unlike in a legitimate business, he uses them, often quite efficiently, to advertise services and products that do not exist.
The best way of avoiding them is keeping your common sense intact as you consider forex brokers or managers. Focus on the quality of the
the financial strength of the broker, and its history. Discard extravagant claims: if the fraudster is that good at trading, he’d be enjoying his successes on an island, or be teaching courses to professionals, not peddling the Holy Grail to unsuspecting novices.
Why not read another article about the Hyip Fraud?