I got this awesome question from someone today and I wanted to share it with you:
“Nearly everyone I read seems to do Forex trading exclusively. Huge liquid market, institutions can’t manipulate, trends persist better, yada, yada. I don’t get the fascination. Just wondering what your take is?”
Here is my response…
To be honest it is total crap.
The reason Forex is so big at the moment is that educators and brokers make an absolute killing on every single retail client they get. The average lifespan of a retail forex account is ~3 months (before they have lost everything or given up with losses)…this info came from a broker!
Guess who gets all the money?
The Broker gets it in the form of spreads!
Yep – That is pretty much how they feel when you open a new Forex account!!!
The margins are so high so they can afford to spend a shitload of money marketing it. One of the biggest ways to get new clients is to incentivize trading educators to introduce new retail clients. The educator introduces the client to the broker and then gets a share of the spread that client earns for the broker (like up to 60% of the spread!)
The trouble with this model is that it drives the educator to teach clients to use high leverage and trade very frequently because that generates the biggest commissions and kickbacks to the educator (never mind this will cause the retail trader to blow up their account). Thus every man and their dog who has a forex website is also an introducer to FX brokers and talks about short term trading and the advantages of leverage.
It is a sess-pool!!! (that is Australian for a stinky stagnant pond of filth)
Also – it is just not as cheap as they make out. just 3 pips spread they say…what they don’t say is that 3 pips leveraged 200:1 actually ends up being more expensive than stock trading!!!!!
I like stocks and I only trade instruments that are traded on a regulated exchange
Comment below…what do you think? Did you realize this was happening in the market?
PS. You can (of course) make money trading forex…but you won’t make money unless you trade with a profitable mechanical trading system and sensible risk control…Perhaps that sounds familiar???
PPS. I don’t act as an introducer for any broker because I think as a trading educator I have a moral obligation to help traders become independent rather than to take the easy route to making money off their account.
PPS. Want to learn more – Join my FREE Enlightened Stock Trading Community Group on Facebook
Your thoughts on investing are notable, I’m going to send many of my readers to your web site.
That’s great – thank you for your support!
Founder – Enlightened Stock Trading
I’m just amazed with your thoughtful approach, why don’t we link up some time.
That sounds great – always happy to discuss trading. Reach out to me on Facebook 🙂
Founder – Enlightened Stock Trading
This blog was… how do I say it? Relevant!! Finally I have found something which helped me.
Fantastic – Thanks for your comment. I am glad you found the post helpful!
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Thank you so much! I am glad you found my post valuable and look forward to seeing you on the site again 🙂
Really great information, thanks for the share and insights! I will recommend this to my friends for sure.
Glad you enjoyed the post – thanks for the comment!!
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Always a massive fan of linking to bloggers that I love but dont get a whole lot of link really like from.
Usually posts some pretty fascinating stuff like this. If you are new to this site.
Glad you are enjoying it – thanks for the support!
I have been trading for over 20 years now and I don’t know one professional retail fx trader. They all just work for big banks.
Anyone promoting fx is usually an MLM scammer or has a course they are trying to sell that will get you no further than reading a few pages from babypips.
I absolutely agree! I just don’t think ordinary retail traders can compete with the information, contacts and trading costs that the banks have. While I am sure there are profitable retail FX traders around, I do think it is a very hard game to win and as a systematic trader you don’t have to play the hard games, there are much easier markets to find systematic edges on.
Your comment on MLM scammers is real – For the life of me I can’t understand how anyone would believe that joining an MLM would make them a profitable trader. MLM and trading DO NOT MIX and it can not be anything but a scam… I say this every time someone mentions a trading MLM – Guaranteed it is a scam!
Thanks again for taking the time to comment, I love your site by the way – very refreshing! If anyone is wondering whether different trading Gurus are for real then it is worth checking out https://sharetrading.guru/ as there is some good information on there… sadly there are some dubious ‘educators’ around.