Most of the markets are trying to provide as much transparency as possible, so that investors feel calm at the time of leaving their money. In today’s financial world, old theories that not so long ago remained buried in memory have come to gain currency again . For example, the Fibonacci theory is widely used in the forex market and so far has worked very well for those who have been encouraged to use it. The ponzi scheme is also one of the strategies used in the forex market. Who is Ponzi? What is this scheme about?
Charles Ponzi, was born in Parma, Italy in 1877, he migrated to Boston at the age of 21 in 1903 and died in a hospital in Rio de Janeiro, in Brazil in 1949 in total poverty. During the 20’s Charles Ponzi received from his native Italy a letter that included some IRC stamps (with prepaid postage). When he changed them to dollar he noticed that there was a difference in his favour that reported him a few cents for each.
Ponzi note that the coupon that he had received from Italy had been bought in Spain and found that the reason of this was that the price in Spain was exceptionally low due to the weakness of the currency. At that time this had cost in pesetas an equivalent of 1 dollar cent, was this way that Ponzi note this equation served him to perceive Americans stamps for a 6 cents value.
The ponzi scheme layed the foundations of what nowadays is the fundamental scheme of the forex market where the gain is obtained by the difference between the quotation of a currency and another. The possibility of buying currency pairs in the forex market offers security the investor and allows him to speculate about the future quotation of two currencies and not one enabling get rid of one if this one falls and buy another if it re valuates.