Forex is bad, trading should be banned, or how the market has changed over the last decade - part i

There are more and more articles and entries on the web that present a demagogic picture of the Forex market. Looking at such news briefly, it seems that it's hard to find a good word about the currency market, and everything is aimed at presenting it in a bad light at all costs. Unfortunately, the scale of manipulating some facts or understatements in order to arouse even greater sensation begins to dazzle the eyes. In a way it is understandable - news websites are based on shocking news and emotions - this is what attracts readers. However, it is worth looking at the whole thing objectively from the side and say how it is. It is hard to expect that a portal dedicated strictly to the Forex market will write badly about it. Nevertheless, when creating it, I will try to be completely objective, based on the experience gained over the last 10 years.

Loud problems but are the main ones?

Recently, we have been dealing mainly with two main topics - high-profile court cases with one of the Polish brokerage houses, where traders, as a result of a combination of certain events, fell into financial trouble, reaching debts (at the same time, the risks associated with the FX market and the possibility of achieving severe losses), as well as the dirty acts of "FX brokers", where it is almost directly indicated that this is one big scam. There are even extreme voices to ban Forex trading altogether (read: Belgium prohibits forex trading), because it brings more loss than good, despite the fact that no one has attempted to realistically define the scale of these phenomena. Therefore, looking at the high-profile affairs of franchisees with banks, it is enough to wait for the ban on mortgage loans. And it is precisely the serious problem in this confusion that begins to be dumping everyone in one bag.

This text is based on the private thoughts of the author based on his own, over 10-years of experience in trading on the Forex market.

The Swiss have mixed up, others are repenting

The first major problem is related to the events that took place on January 15, 2015, after the franc was released by the SNB. A unique situation, the only one in history that caused an earthquake on the currency market. Without going into details - conflicts of interest arose on the broker-client line, which in fact had already occurred many times before, but this time the extreme scale of the event also resulted in an equally extreme size of the conflict, even though it took place only in individual institutions. Due to the number of various internal factors that determined such and not other results, it could not be done "behind the scenes". And as it happens in such cases, everyone has their reasons, and ultimately the court decides the outcome of the dispute. We are still waiting for the outcome of cases, so until then it is difficult to officially say who is at fault.

"Lord, make your debut!"

The second high-profile aspect is the activity of FX brokers, or rather "pseudo-FX brokers", because they have little de facto in common with the foreign exchange market. This procedure was described on our website six months ago. For people not in the subject, I highly recommend reading this article.

WHY (DO NOT) INVEST IN DEBUTES OF COMPANIES WITH FOREX BROKERS?

Since then, I have the impression that it only grew stronger and its scale is growing, although it is comforting that people's awareness has also improved, which is clearly visible in the posts on forums and social networking sites. However, it can be assumed that since the practice itself continues, there are also other victims. I am able to answer up to 5 phone calls a day with offers regarding the "great investment offer". It's just that their number is certainly due to the fact that I have / had real accounts with about 100 Forex brokers from around the world. Nevertheless, the companies in question, as I mentioned earlier, do not have much in common with the Forex market, let alone regulated brokerage houses and reputable institutions that perform their services with due diligence and have been present on this market for years (although I have nothing to complain about against many new companies either).

Debut brokers are most often "pseudo-brokers" who have found their niche, ie they officially offer to trade on the FX market, but they do not focus on that at all. They prefer to hire 10 tele-sellers who will call the purchased customer base and simply stretch them for the "occasion", from which everyone will get a generous commission. They are usually (as they say about themselves) international financial institutions, most often Cypriots with British or Russian capital, but there are also bushes registered on the so-called "Islands of eternal happiness" in various parts of the world, where licenses for this type of activity are not needed. Not only that, some people create brands of 3-4 different brands at once and attack customers from different sides.

In addition to this misfortune are their partners - they are external companies that receive databases from the "broker" and their task is to attract a client to make a "super investment". Officially, the companies are not related by capital, and the partner himself does not conduct brokerage activities (at most sales), so no regulations or licenses apply to it (usually it is an ordinary LTD company). A massive offensive consisting of 3 brands, each with 2-3 partners and an extensive database, means that most traders will sooner or later receive a call from the "international brokerage house".

From the more well-known companies, which are actually brokers providing trading services on the Forex market and have entered into such a deal, I can name only three names. Three out of a hundred tested by me are not enough. Hardly 3% of the market is chaff for which everyone suffers. All FX brokers who, by a gray Kowalski (a person without much experience in investments) will go to one bag, because they read a sensational article about the fraudulent Forex market.

The problem is also the operation of regulatory institutions that do not react to the problem or do not have such a possibility (or ideas). The introduction of further restrictions applies precisely to those licensed brokerage houses that act ethically and with due diligence, and the whole chaff remains unpunished. The proceeding is in the best, yet it has little to do with the Forex market.