As an American living in the Philippines and working mostly for U.S. clients, the exchange rate has a very big impact in my life.  I’m not a Forex expert; quite the opposite.  While I was in the U.S., I lost between $500 and $1000 doing investing in Forex micro accounts. I was investing in the market just as the mortgage crisis was happening, so the timing played a small roll in my losses.  But some of my losses were unique enough that the Forex investment scam revealed itself.

So why is Forex investing a scam? With exchanges taking place across the globe, how could anyone manipulate it?  Of course, that was my initial thought, but then one day, I made a trade which revealed the truth. I made  a forex trade in a market which has little volume compared to the major players like USD/GBP. My trade was an open trade without any stop-loss because this was meant to be my last trade. I had lost enough money and the amount of money I had left in my account wasn’t enough to withdraw it so I made my “hail mary” (In football, a hail mary is a long pass at the end of the game to try to get a last minute touchdown).  The trading platform I was using was provided by the company I was investing with, and would automatically stop a trade at the point where you don’t have enough money in your account to cover the margin. I sat back to watch the trade, and what I saw next was unthinkable. In a single moment, the exchange rate for that currency dropped far below the market range, stopped exactly at the rate which would cause my margin call, and then returned to the original market range…all in a few seconds.

What??? I was enraged! I knew that someone stole from me, but I didn’t know who or how. I checked other charts around the internet, and this huge dip in the market value didn’t show in any other chart other than the platform I was trading on.  Knowing that the trading platform was behind it, I immediately filed a complaint with the SEC. While I never received a response from the SEC, it became obvious that the issue was looked into. A week later, all of the trading platforms were running on new data; the SEC resolution must have involved taking the illegal activity by my broker and legalized it by registering my investment loss as a currency trade. Either that or the broker, on knowing I made the SEC complaint, legalized the trade before the SEC could see it.  Keep in mind, I was doing micro-investing and in micro-forex accounts, actual trades are not made in most cases, your investment is simply balanced against opposing investments in most micro accounts.

So what does this mean? Can you imagine what the odds are that the entire world started trading the currency I invested in at exactly the rate which would cause me to lose all of my investment?  It is statistically impossible, which reveals the truth.  At some level of the Forex market, each trade can be seen. Even if you don’t set-up a stop-loss trade, one is registered for you at the point where your investment account is emptied. So when you make your investment, and a trader with access to this information makes a trade, they don’t need to make the trade at the market value, they have the opportunity to choose which trade to make, so if there is a trade outside of the market range, they can profit from it by taking all of your investment to allow them to make a profitable trade.

What this means is that it is practically impossible to make money using a Forex trading platform! The only way to make any money in the foreign exchange market is to actually convert your money to the other currency which guarantees that no one can steal your investment because you have the actual currency in your possession (or sitting in a bank account in that currency).

Well, now to the business at hand. What is going on with the USD/PHP exchange rate? I have been watching it now for over a year and I saw a pattern which is common to the market accept that this pattern exists on many scales from month to decade. My issue is that the exchange rate doesn’t make any sense. The U.S. dollar is currently strong so the USD/PHP exchange rate you would expect to be higher.When an economy is weak the currency becomes worth more, and when an economy is strong the currency is worth less. Now in the Philippines, the inflation rate is very high which should be causing the value of the Peso to decrease, but that is not happening. Inflation is caused when there is an excess of money in the market. The other thing which can cause the value of the currency to increase is a large amount of money leaving the country. Such as what happened to the USD during the mortgage crisis. How could the amount of money inside the country be increasing to cause inflation and the amount of money leaving the country also be increasing at the same time?

I have gone over the market hundreds of times and I can’t explain why the value of the PHP keeps increasing in relation to the USD. Then it occurred to me, what if there is a huge counterfeiting operation in the Philippines?  The Philippine government recently made some changes to their currency to make them more difficult to counterfeit so this idea isn’t so hard to believe.  Their economy experts have probably come to the same conclusion I have, there must be counterfeiting in a huge scale going on. Counterfeit money would increase the amount of money in the local economy and cause inflation. The counterfeiters are probably sending the money to offshore accounts to launder and protect it, this massive export of counterfeit money would cause the value of the PHP to artificially inflate.  While I don’t actually know this is going on, it is the only explanation I could come up with to explain this unusual economic situation.

And that’s all my theories, you can wake up now, lol.