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And now the VOA Learning English program, Words and Their Stories.

When you work hard for your money, you do not want to lose it. And if you invest your hard-earned money, you want to see great returns. But if youre looking to invest money, be careful!

We have an expression: If a deal is too good to be true, it probably is.

There are many ways to be tricked out of your money. There are frauds, schemes, scams and cons carried out by fraudsters, schemers, scammers and con artists.

Two types of rip-offs that are good to know are pyramid schemes and Ponzi schemes.

First, lets talk about pyramid schemes. It may sound like they started in ancient Egypt. But they did not. A pyramid scheme is a dishonest and usually illegal business in which the money of later investors is used to pay the people who invested first.

The fraudsters behind a pyramid scheme make their marketing scheme look real with many types of products or services. However, pyramid schemers simply use money coming in from new investors to pay off early stage investors.

When they cant raise enough money from new investors to pay earlier ones, the pyramid scheme falls apart. As it comes crashing down, many people can lose lots of money.

A Ponzi scheme is similar, but also different.

In both Ponzi and pyramid schemes, existing investors are paid by the money of new investors. But there is a big difference between a Ponzi and pyramid scheme.

In a Ponzi scheme participants believe they are actually earning returns from their investment. In a pyramid scheme, participants are aware that they are earning money by finding new participants. They become part of the scheme.

A Ponzi scheme is an investment trick.

Ponzi scheme is named after Charles Ponzi. In the 1920s, Charles Ponzi tricked thousands of people into investing in a postage stamp scheme.

At the time of his scheme, the annual interest rate for bank accounts was five percent. Ponzi promised investors a high return -- 50 percent -- in a very short amount of time. However, there were no investments. There were no honest returns. Ponzi used incoming funds from new investors to pay the returns to the earlier investors.

A man named Bernie Madoff ran the largest and longest-running Ponzi scheme in the United States. The website BusinessInsider.com says Madoff made off with about $20 billion of investors funds.

One reason Madoff was able to fly under the radar for so long is because he was very well-known and trusted in the financial industry. He started his own investment firm in 1960 and helped start the Nasdaq stock market.

But no matter how financially smart you are, a Ponzi scheme can only work if the clients keep their money in the scheme.

Madoffs world came crashing down when his clients demanded to be paid about $7 billion and Madoff had only $200 - $300 million.

In 2009, Madoff pleaded guilty to running a Ponzi scheme and stealing $17.5 billion from investors. He is serving a 150-year sentence in prison. But that is cold comfort to the thousands of investors, some of whom lost their entire life savings.

So consider yourself warned! If an investment scheme sounds too good to be true, it is.

Im Anna Matteo.

Anna Matteo wrote this story for VOA Learning English. Ashley Thompson was the editor. The song at the end is Take the Money and Run by The Steve Miller Band.

About the Author

Elliott Wave Financial Service

Trading forex, futures or futures options carries a high level of risk, and may not be suitable for all investors. The possibility exists that you could lose some or all of your initial investment; therefore you should not invest money that you cannot afford to lose. Our website and the information provided here should not be relied upon as a substitute for extensive independent research before making your investment decisions.

In no event will we be liable for any loss or damage on your account in connection with, the use of our products.

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.

ADVISORY WARNING: FOREXLIVE(TM) provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospects individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FOREXLIVE(TM) specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE(TM) expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

The Foreign Exchange Market is a great way for people to invest their money. It is also called the binary market. It is where people go to trade currency from countries around the world. If you have never traded on the binary market you might think that it is very difficult and, therefore overwhelming. It is actually not that difficult though it does have its own complexities. This article helps illuminate how you can get into the market to invest with confidence.

For starters, you need to start with the right type of account. Binary brokers have customized their accounts to meet different levels of traders from the new novice to the professional trader. Leverage ratios and the associated risk differ based upon the suitability to different levels of traders. So that means you need to get the right kind of account to make sure that profitable experience becomes yours.

Avoid becoming a Pollyanna of the markets. You do not want to throw good money after bad money by believing that if I just wait long enough it will turn around. Instead of something does not feel right pull out of the market and sell. You need to have a good logical reasoning or analysis and research that supports your rationale for being in the market and assuming a particular position will benefit you.

If you think only proofreaders need to double-check their numbers and information, you are wrong. Before you execute any trade make sure that you double check yourself. Everyone makes a careless mistake from time to time and these can actually cost you a lot of money. You do not want to make an unfavorable trade because he just failed to check information a second time.

Binary trading is done in currency pairs. Yet, it is important to understand that single currencies have their own weaknesses and strengths. If a currency is falling against another particular currency find out why it is falling. Sometimes there is just a weakness against one currency but that is not reflected against all other currencies. It may be weak across the board which means that the currency is weak all over the world against every other currency. Understanding a currencys strength makes it easier to pick currency pairs for trading purposes.

An account that has less than $25,000 is a small account in the binary market. But for most people that will represent a lot of money. If you are not wealthy you will not be able to trade at a level that is as high as a hedge fund or as an institutional investor. Just make sure that you limit your losses by only trading as much as 2% of your account into any single trade. That way, if you take a big hit, it will not ruin your ability to trade.

Make sure that you learn from your mistakes in the binary market. Understand why you made a loss and make sure that you understand how to prevent it in the future. Even go so far to figure out if and how you could have profited from your mistakes by learning and executing differently in the future.

Always have a good exit strategy from the markets for when it switches in its trend. If you do not have this when you begin to lose money it will be out of control. This is a secondary strategy to your overall primary strategy. When you have both types of strategies and place it means that you always make more money and lose less of your profits.

You know yourself best and know how much risk you can tolerate. For instance, you need to know whether you can take on heavier risk and more aggressive or if you are more sensitive to losing mine. Most people cannot tolerate huge losses because it scares them off.

Save your money and do not invest in trading robots are other programs. They are scams. They take your money but they do not deliver results. If robots were able to trade then big banks and institutions would be using those and not actual professional traders to make decisions.

If you are short on cash or do not have a lot to invest in the market then look for the best deals on your brokerage accounts. However if you do not have a lot of money to put toward a brokerage on you may not get all the services that a brokerage can offer.

The foreign exchange market is a good way to invest money. It is used for trading currency in pairs, which is why it is also called the Binary market. Use the information presented here to start trading currency.