RUSSIANS FALL FOR INTERNET FOREX

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(RIA Novosti political commentator Yana Yurova)

Investment in the foreign currency exchange market (FOREX) is a relatively new fad for Russia. Although it is held only on the Internet, the rules of the game are as tough as in an ordinary casino. You lose - you pay.

Traps are set even in metro cars, which are spattered with advertisements inviting people to "invest in international currencies on the Internet." Almost anyone can afford to access this market, because the minimal lot costs merely 1,000 rubles.

Those who take the bait get detailed information about the international Forex market. It was formed in the 1970s, when most countries switched from fixed exchange rates to floating rates, thereby creating an environment for speculation. You can buy or sell the currency of any country on this market, and the daily turnover averages $1-3 trillion.

However, you will never be told that the new Russian game has nothing to do with the international market. This is a kind of pseudo-market, virtual reality. The only thing real here is money. The human tragedy of losing your property is also only too real.

So what is Russian Forex? The rules resemble a sweepstake, where nothing depends on the player. The point is that deals are made off-market. Every bank or financial company trading on the exchange posts its quotation. This information is obtained through systems such as Reuters, Bloomsberg and others, and the charts are then used in the Internet Forex game. Players, or bidders, are supposed to watch the quotations and make deals with each other.

You can play the game virtually around the clock from Monday 3 a.m. to Friday midnight. The most popular currencies on the virtual exchange are the US dollar (USD), euro (EUR), Japanese yen (JPY), Swiss franc (CHF) and British pound sterling (GBR). The currencies are grouped in pairs, where the first one is a commodity and the other one is a means of payment. The most demanded exchanges are EUR/USD, GBR/USD and USD/JPY, with quotations fluctuating sharper than in other pairs. At one moment of the day exchange rates rise, at another fall, which means some players won, others lose, the latter being the most frequent outcome for those playing against skilful brokers. Experts estimate about 90% of beginners lose at the start. However, there are no statistics for individual traders' results on Forex.

Brokers seek "new money" for the market. Both banks and various non-credit organizations, such as dealing centers and bookmaker's offices, provide intermediary services for individuals. This is a profitable trick for banks, as they only deal with large sums. A client must present a minimum of $1000 to conclude an agreement with a bank and open an account. As the minimal lot in a major game is $100,000, the bank offers the client a loan a hundred times higher than his deposit. The bank is not risking anything, because a broker working on behalf of the bank follows the game closely and does not let the player lose more than he has in his deposit. Moreover, the bank takes a commission of $50 from the client.

An unsuspecting client will not escape the trap of dealing centers either. Offshore companies set up most of them. In this case, the client does not know the contractor, transferring his money to the account of an offshore broker at a foreign bank (about $300). The danger of fraud is quite obvious, but many Russians see the light only after they have lost money.

Finally, the most widespread and the most available way to play is through a bookmaker's office. A thousand rubles is enough to start the game. There are about ten bookmaker's networks operating in Russia that offer punters the chance to play Forex. Bookmakers are authorized by the State Sports Committee to set up and run gambling establishments. Everything is as simple as ABC. You do not need any agreements. All you need to know is the rules of the game. No loans are offered, and there is no bidding per se. The game is based on a bet with the bookmaker on the exchange rates of some or other currency. The results of two deals, selling and buying, show the outcome of the game. Judging by the possible losses, this may be the most humane version of all. However, it is also the most widespread one due to its availability.

No matter which version of the game is better or worse, all of them are designed to hook as many potential investors as possible, with no chance of return at that. People believe in legends about fantastic wins and want to become millionaires immediately. They are told that it is easy to acquire the skills of a trader and are offered a special course (which costs a mere $150-250).

However, this heavily promoted game is even harder to win than blackjack. It would be enough to mention that there is no official controlling body on the Forex market to regulate legal relations between the broker and the client. If a conflict situation emerges, it is impossible for the client to prove that a deal was done. The player certainly does not hold any aces.

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