Source: Instagram, directforexsignals.co.uk

Being willing to give new things a try, I decided to try and market Cash Chronicles via social media as opposed to other blogs recently. I decided to do this via the social media app Instagram (IG), since I spend so much time on their in my personal account. In the month or so the Cash Chronicles account has been active, I have managed to learn some interesting things about social media marketing in this time, even if it hasn’t really resulted in more readers. About only 10 people have actually clicked through the link in my IG bio to look at the website out of about 400 which are currently following me.Oh well, hey at least it’s 10 more readers than I had before right?

One tactic I picked up from watching some of my favorite Gary Vee videos is to leave 9 comments on each of the top photos or video under hash tags relevant to the theme of your page. For me that means leaving comments under hashtags like #finance, #economics, #entrepreneurship and #mensfashion. This was among other tactics such as making your pictures more of a uniform format as well as interacting heavily with your audience.

The longer I was on, the more I started to notice a pattern in the type of posts that would fall under the hashtags of anything that was related to money and finance, and that was forex.

Being familiar with what forex trading is, I thought that was a bit strange. Forex is short for foreign exchange and describes those traders who trade on the daily volatility of the world’s major currencies in relation to each other.

The more liquid the currency is (meaning easily exchangeable) the smaller the daily changes in its price, and hence the lower volatility in terms of price. Take for example the least volatile exchange rate: the US Dollar to Euro. These represent two huge economies which have trillions changing hands daily. The daily difference in price for forex traders is represented in “PIPS” which stands for Point in Percentage. This represents a single digit move in the fourth decimal place of a forex quote, or a movement of 0.0001. Why so small? Because forex is moved in HUGE quantities. Traders talk in terms of blocks or “lots”. A standard lot is 100,000 worth of the base currency while a “mini” lot represents 10,000 units. I will just speak on the smaller folks who may be able to talk mini lots, where a 1 PIP movement represents $1 (0.0001 x 10,000).

To get an idea of what you can make with a mini lot, I found an answer on Quora relating to the average daily range last year of the Euro to the US Dollar, which ranged from about 30 to 70 PIPS.

Source: Quora

In mini lot terms, that means about 30 to 70 dollars a day, and that’s if you are 100% right every day.

Not the most exciting stuff, you would potentially need a ton of leverage or a huge amount of starting capital, not to mention knowing what you are doing, to make money trading forex. But you wouldn’t know that if you looked at IG. What you’re more likely to see is stuff like this:

IG: Profitwithus

Or this:

IG: Ivosfx

These folks have been able to build up some impressive followings on IG. Many have been able to amass tens of thousands of followers to have them take their “courses” on FX trading or send them daily “signals” on what currency pairs to trade. All these followers alone could be potentially lucrative from a marketing perspective, which further deepened my skepticism.

What’s Going on Here?

Could there be some traders that trade their own capital, employ leverage and have a consistent strategy that nets them so much money that they don’t have to work for anyone? Absolutely. Are they flaunting it all of IG? Possibly.

The forex hashtag has 5.6 million posts on IG. Are there millions of these traders that want you to get rich too and and out of the kindness of their heart, and a few bucks, are just willing to show you how? Hardly likely.

Being that my page is finance related, when I started my IG page, I was soon being hit by bot messages from forex “traders” that were looking to engage with me. At first I was annoyed with their obvious fishing schemes, but as I started to get the idea for writing a post about this phenomenon, I decided to engage one of them so I could see if this was really the scam I thought it was, or if these young kids seemed to be onto something I had completely overlooked in over a decade in the financial industry.

Testing the Waters

My test case, who I will call “Bob”, claimed he was from California and was a forex expert. I will post our conversation below hiding his identity to save him the embarrassment.

The first sign Bob had no clue what he was talking about is he traded in USD or US Dollars. I think we all trade in USD everyday if we live here Bob. Usually when people message me, I ask how I can assist each them in marketing and learn more about their target audience, however my somewhat sophisticated answer was meant to make him go away, (which he did) but I reengaged him a day later and started to feign interest.

$30,000 a week sounds nice, if alarm bells are not going off right then and there, then I don’t know what to tell you. But I wanted to get to the hook, when was he going to ask me for money? Bob continues:

At this point, I almost ruined it again with simple logic:

Ok Bob didn’t get thrown off, he is still engaged. I want to see how much he asks me to start with though.

Blah, blah, Bob get to the point.

So let’s see, a 275% return per week. That equals a return of 7.073e29% return annually. Literally by the end of the year, $400 would turn into more money than exists in the entire world. Doubtful yet?

It’s also interesting how 50% more principal also seems to only bring me 13% more return, but anyway, back to the scam.

Bob also claimed that he worked for Saxo Bank, which I had never heard of. After I did some investigation, it turns out that Saxo Bank is a Danish bank popular with independent traders due to it’s low cost trading platform. Maybe Bob was a licensed broker or financial adviser, which require series 7 and 65 licenses to advise retail customers on FX products and operates under Saxo Bank’s broker dealer license in the United States?

Luckily the Financial Industry Regulatory Authority or FINRA, offers a broker check for just such a thing. A quick look at their verification website indeed showed that Saxo Bank had no license to operate in the US.

Source: FINRA

Also, the fact that Bob used the Swiss flag emoji instead of the Danish one had me thinking this may just be a parody account at this point.

The Take Away

All jokes aside, in one of my recent posts I asked the question, why do smart people fall for financial scams? The answer is that people take advantage of those that find themselves down on their luck and in a desperate situation. In the past, that was often older people over 55, but now it seems in the attention hungry, insta rich culture of the young, has made some predisposed to those predatory swindlers that have been around since the beginning of time, to sell you the latest dream.

The envy and desire to be like celebrities such as the Kardashian clan and the pressure to “hit it big” in fast paced industries like those of Silicon Valley have created a sense in many young people that they need to make millions now or it will pass them by. Combine that with the instant gratification (or envy) of social media and it creates a desperation that belies the patience and hard work it once took to build a successful business.

This isn’t a complaint about those that did it that way. My one month of building my 400 followers pales in comparison to those that have garnered tens of thousands in the same period and quickly monetized it. The market rewards the fads sometimes and I am a slow burner. It took me a long time to feel comfortable with that. However if I can help those that could potentially get sucked into such schemes in hopes of getting rich quick, to take a step back and question things that may be a little too good to be true, then the satisfaction from that is worth the followers or readers I lose. Keep your eyes open out there.

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