brokers. I don't sell advertising to forex brokers; I'm not engaged in
any sort of introducing broker role with a single forex broker. So I
can afford to tell you the truth about forex brokers.
I've seen firsthand some extremely troubling statistics of the failure
rates of forex traders. There's a number that's floating around the
industry. It's 95 percent! Can you believe it? Upwards of 95 percent,
plus or minus a few percent, of forex traders fail. That's an
astonishing figure.
There are many reasons why so many forex traders fail. It's partly due
to the misconception that forex trading is easy, that the forex market
is like an ATM, just sitting there waiting for you to withdraw money.
If you have any experience at all trading forex, you know this is flat
out wrong!
These misconceptions stem from the vast amounts of marketing online
and in print, marketing that is pushing trading systems, buy and sell
signals, and forex "education". This marketing comes from system
designers, portals, but even a lot of the forex brokers. There's
definitely a land grab going on in the forex industry, one that
started about five years ago and has since accelerated. Retail forex
trading will continue to grow like crazy in the coming years, judging
by the recent entrance into the space by some big time Wall Street
banks.
A lot of the retail forex brokers have taken a "churn 'em and burn
'em" attitude towards their customers. These brokers want to gather as
many new accounts as possible and as quickly as possible. The
mentality among many of these forex brokers is very much short-term,
focusing on generating quick commissions and profits for themselves.
This attitude has, in part, led to a tremendous failure rate among
individual forex traders.
There's something even more sinister that contributes to the failure
of so many individual forex traders. It's the bucket shop operating
tactics that many forex brokers employ. Some forex brokers actually
trade against their clients. Can you believe it? A lot of forex
traders complain about having stops mysteriously hit only to see the
market go right back to where it was trading. It's called running
stops, which many of today's forex brokers do to their own clients!
The reason that some of the bucket shop brokers have been able to get
away with this practice is because the spot forex market is loosely
regulated at best, and not regulated at all at worst. Regulation of
spot forex trading varies from country to country but, for the most
part, it's not regulated. This has led to a lot of fraud and the
deceptive marketing and tactics that many forex brokers use on their
unsuspecting clients.
The good news is that there are more reputable and honest forex
businesses rising to the top, including brokers. Moreover, some
regulation is coming to the market in the near-term, which should help
to stem some of the predatory tactics employed by forex brokers.
Still, it's extremely important for you, the individual forex trader,
to carefully research your broker before trading real money. There are
some really good forex brokers out there, especially those that offer
an ECN-like service that essentially matches orders and provides
liquidity via the interbank market.
Another step you can take to protect yourself is to avoid the
overactive, hyper trading that so many system vendors and online forex
"education" providers promote. Day trading the forex market is an
incredibly expensive and, for the most part, futile attempt at making
money. Moreover, it increases your risk of a bucket shop broker
trading against you.
A better, smarter approach is to take advantage of the forex market
for one of its biggest benefits: big, long-lasting trends. There are
huge moves in the forex market every year, trends that are relatively
easy to identify and trade with the right knowledge. You can make a
lot of money over the long-term riding these trends in currency pairs
if you know what you're doing. By using a common sense approach to
identifying these trends, trading the right position size, and staying
diversified, you can minimize the risks of a bucket shop forex broker
taking advantage of you. Most importantly, you can realize the
wonderful benefits of the forex market in their fullest.
Make Money from the Stock Market No Matter How Bad the Economy Gets:
http://tradeprosys.blogfun.org/
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