Yes, we are really going to try to start this conversation. No, for this reason you should not avoid Forex or consider scams as potential clients. These are the real dilemmas that tarnish the image of art and diminish the activities that take place. Forex alignment has been a problem for brokers promoting their services and has also been a stigma for traders. Who is responsible for the downward spiral of the industry? Hint, hint: everyone involved.
5. Brokers are pushing for deposits in any fashion
Yes, the economy is in bad shape and businesses have to go the extra mile to make sure they have money in their coffers. Does it ridiculously excuse the minimum deposit? Does it excuse the sales call a few days after using a demo? Does it justify reckless cash back and leverage offers?
If the forex industry seems to have taken some tips from the casino gaming industry, you are probably more cautious than that. Casino and poker sites use rackback bonuses, comps and VIP points to build loyalty and they use deposit bonuses to get you to the door. Forex firms act like casinos to tarnish the reputation of the industry and the businesses that are going on. The weak performance of the brokers makes the move in the world’s most liquid and active market trivial and foolish.
Even ridiculously low level deposits are a problem, the $ 1 deposit is stupid. Then again, any broker taking a deposit below $ 250 will really make your head spin. Forex Horse Track, Resino, No Slot Machine Travel, No Lottery! People should trade in such a way that they feel comfortable but they will take trading steps seriously.
By acting like a casino, brokers are undermining the credibility of the foreign exchange market.
4. Signal pushers running wild
The Snake Oil sellers in the forex industry are ready to serve their holy grail developed by their “bright” minds who have tested the trends over the last 15 years which will guarantee you a% profit or winning percentage above a certain point. It’s just plain stupid, there’s no guarantee in the market. Even the company / sovereign / municipality will have to rate certain income securities to ensure repayment of the loan.
Websites are dirty for most signal pushers and they spam from forums and Twitter. They prey on those who are losing money so they can buy their services. If their signals were so good, there was no need to distribute them to the public for use at their price.
If someone has a signal software that works 80% of the time and locks at 20% profit, can they really try to distribute it at a price? No, users will trade based on this information and at the leverage level they will feel comfortable and will not share this valuable information. They will become rich in a short time and the world will not know about signal software. To what extent is signal software as good as algorithmic trading software for banks and hedge funds? Probably far from it. Yes, banks lose money in business even through high frequency trading.
There is no magic nectar, sorry.
3. Current form of demo trading
Do you have 100,000 to trade in Forex? Okay, do you have 50,000? Okay, what about 25,000? Okay, there’s forex brokerage – you believe it! Or so it seems … Could it be that these ridiculous demo quantities have been placed on the minds of traders to create unrealistic expectations so that they can trade in a real environment thinking that they can reach such a high level on their own?
Or … maybe brokers think they offer something that is so unrealistic that their demos are only for those who are interested in learning and gaining experience in trading software? Maybe the only realistic brokerage experience they can provide comes at a cost and is designed that way.
Another explanation might be that they don’t have a very good idea for driving and holding clients.
2. Forex scandal
The unfortunate thing about Forex is that bucket shops, scam artists, boiler rooms and brokers who trade against their clients are much more common than you think. These companies and the people who run them are throwing industry into the abyss. Regulations are evolving, and startups with alternative perspectives need to raise huge amounts of capital just to compete in specific markets where customers drive themselves are uncertain.
Forex scams make the industry seem shady and unpleasant, when in reality it is an alternative trading market for those who do not want to track 5,000 different companies. In the 1950s it was a lot like Las Vegas and it stigmatized everyone involved. It hurts to reach new clients because they’ve probably heard a horrible story about how someone lost a lot of money or their identity to a forex scam artist.
Those who run these sketchy operations should stop them from tearing or hitting their clients and clients should get their money back.
1. The traders themselves
From the dream of getting rich quick due to excessive leverage to not taking the time to choose the right broker to getting ready for live trading. Traders themselves discredit the industry because they failed at an outstanding clip of 65.01% (2nd quarter 2013 in the US).
The fear tactic used by many is that 95% of traders lose their money, but the facts do not actually support it. The so-called shrewd merchants talk nonsense as if the gospel is true, but the reality is that it is false. Businesses are more successful than what is talked about in message boards, forums and seminars. 65% failure rate is average, you will see failure rate from 54% to 78% depending on the broker. Not surprisingly, brokers attract users with ridiculously low deposits and have a high nonprofit rate.
The problem is that most traders are completely ignorant and give bad information when they interact with each other and with potential traders. It is detrimental to the industry.
Sustaining the problems that plague the industry will eventually put an end to retail trade in most parts of the world, and it will be a shame.