Please keep your hard earned money away from scammers like today’s market makers.
I am talking about those “brokers” that ask you to open an account, put your money in, offer you leverage and leave you exposed to market by asking you to top up or else they stop your deal.
If you want to do equivalent safer forex yourself here is how:
open an account with a reputable bank or a reputable money transfer business that:
Allows you open online accounts in multiple currencies.
Offers official exchange rates (narrow spreads)
No leverage. You can just invest what you afford
Not exposed to market (the currency is in effect under your pillow)
No nightly fees
You can make use of same forex principles as usual.
Estimate example:
You changed £10,000 to USD at 1.3 so you have $13,000
you closed at 1.2 and so you get £10,833
Hence ~ 8% per decimal change.
There is a small fee per transaction (not per night as those scamming brokers).
No anxiety whatever happens to rates. If rate goes against you just wait.
that depends on the currency-pair and relative interest-rates of the underlying, surely? sometimes those scamming brokers have to pay the swap-fee into your account, rather than the other way round, don’t they?
how long would you wait before closing a trade and taking a loss? or would you never close in loss but wait for ever while your account-balance continues to reduce, hoping against hope for a dramatic reversal? that would just be trading with no stop-loss, wouldn’t it?
If you used a reputable broker you would likewise benefit from the rise in the GBP/USD exchange rate but leveraged. And your capital deposited might be better protected with a regulated broker than with a money transfer business.
I have no idea who regulates money transfer firms or how strongly regulated they are - I couldn’t even name such a firm - maube you know something about their regulations?
Same applies to market makers. The two are identical here. What I am saying is there is equivalent trading without risk of leverage, exposure and daily charges.
These market makers are throwing bait on everyone to end up in major losses. That is what leverage means exactly. Even regulated ones are just limited in that bait.
Making quick large profit is very tempting to anyone but that equally means quick large losses. You can see how then the large profit translates to large loss and it gets in one way system, no reverse.
Banking cannot be more profitable than trading because the account has no leverage.
Buying currency to keep in the bank is not easier than going long on a currency pair and there is still a risk of loss, so picking winning trades is no easier.
We still need to understand whether money transfer businesses are as well regulated as UK, EU or US forex brokers.
I agree - unregulated brokers should not be trusted - but the answer to that danger is not give up the game.
Also, I strongly disagree with your header! yes, there are 95% losers in forex and only 5% winners, but that 5% is winning all the money that those 95% are loosing! people who can not outsmart those 95%, always blame the brokers, face the reality, boy.
if you mean swap-free accounts, they more than make up for that with wider spreads - they’re not a good deal at all, unless you need one for religious purposes
if only!!!
i’m afraid the the reality is that the counterparty market-makers who are pretending to be brokers take almost all of it
(the alleged 5% making a steady profit is also a huge exaggeration, as anyone with any experience of working in the industry will tell you, but that’s a completely different discussion for a different thread!!)
It’s not out of these two options: 1) You didn’t make money from trading and lost your money, or 2) You’re trying to manipulate something. If we look at things that way, we’d say we’re all losers, and only those in control are winners. But the truth is, people who actually make money and trade for a living won’t say brokers are the winners. I agree with @OpheliaReyes It’s not about 95% - 5%. Those who can’t outsmart others will complain and say it’s all a game and that everyone is being fooled, and so on.
The example with 10.000 units and the price difference of pretty 10 cents (1.20 > 1.30) is another style. It takes very long time. You must pay out 10.000 units same as in the bank and hold it maybe for months for maybe 8%? Is that 10.000 unit all what you afford to invest? Or you think 10 separate 10.000 units position?
The leveraged forex and cfd markets with the so called brokers are huge and the leverage is the main cause of about 75% fails. What we do is not trading but betting on derivative options, and finally the difference of the two options will be accounted between the “trader” and the “broker” who is a dealer.
Anyhow, this is a difficult game (not gambling) if someone wants to be profitable continuously without going insane.
I don’t know, how other people’s judgements (or sure infos) are right about the real data. Many use robots but I have never heard about real experiences, only nice profit lines are shown. I’m sure robots can make some consistent profit. I like manual trading.
The final question is your expectation of the yearly profit and how many time you want to hang on it. In my opinion (this is for day traders) a weekly 2% (constant cumulative) increase is good and not an impossible performance. Let’s say this is the average, then after 20 weeks the profit is 1,02^20 = 48.6%.
In case of 2.5% per week the result is >63%.
Experienced swing or position traders are pleased to tell about the possible truth.
This is not the same as the 10.000 units 1.2000>1.3000 example through months, and uncertain waiting.
Here some math and life, an example. Any instrument has a movement up and down as the hours, days, weeks are passing by. There are LEVELS where or around the price i.e. the market calms down, barely changes but rather choppy. Usually every week there are more than 5 price actions.
Let’s say the usual and useful price actions are 0.5-0.8% change. If you catch net 0.3-0.5% of that and the leverage is only 4x and not 100 or something horroristic… your real profit will be 4x0.3-0.5 so you have 1,2 -2,0% on one trade. If you lose, the loss should be max/max the half theat is more than 2:1 RR.
The final question is that: what is the Win/Loss ratio. If someone is disciplined and don’t want to trade every time anything, doing the big boy, as you see 2% per week without stressing too much is not impossible.
About the 95 (or 75)% losers. Never forget that small traders are 90% of the participants, but only the 10% of the volume traded by them. Isn’t it possible, that the winning minority is fully aware of that we do not trading just playing with market makers, then finally the 15% who were waiting for the real big dogs’ the smart money appears, and they just flowing surfing together with the 90% of volume?
I don’t know Kadhiem what position sizes thinks about but the 10.000 is really a very small amount. The minimum is 50-100K for one order on the int’l market. This is through a bank with high spread ok on spot price. It is impossible and would not worth to open and close quickly few thousands of majors intraday or within a week. It is good for buy or sell real 100.000-500.000 if someone has this amount only to forex (few transactions per year?). Forex is a huge market, but a tiny part in serious portfolios.
Its’s tru there are many brokers, but it’s enough to have look at their offers and ads. On the othe hand, there are at least 20 who are correct. You can check their customer complaints on the forexpiecearmy. E.g. my (regulated) acceptable low cost broker has only problems with non-reliable countries’ clients. This is not the broker’s fault.
Nice post.
This takes me back a number of decades when I was assigned overseas in a tax free jurisdiction with poor global communications, and all my direct salary was going into a Swiss bank account (in those days that was easy to set up). It was also in the days before personal computers were available to the masses and certainly before the www.
I used to listen to the BBC World Service at around midnight locally (after New York close). I convinced my wife that it would be a good idea to buy GBP, sell USD, then wait for an exchange rate differential, then reverse the transactions. At the time, annual interest in GBP was 12% and in USD was 10%. In particular, high volatility was with the Danish Krone and other smaller European currencies before the Euro.
Well the market started to get more and more volatile, and I did not understand that. One day our private banker called me and said “why are you trading currencies without leverage? We are willing to lend you five times your deposit funds”. I was quite young and impressionable. After a few evenings going through that with my wife (who had a short career in commodities trading - wheat, tea, rice, sugar) we decided to take the bank up on their offer Within a few weeks we had our first successful trade and cashed out with a profit of $18K. We thought we had found Xanadu. Not a week later, another trade went against us and we lost $22K in a day. That was a sobering experience that set me on a path to needing to understand trading risk.
I never looked back. I think everyone needs that kind of experience in life, so I like your post.
For any other observer, that is why forum members recommend doing this with a dummy account before you blow your brains out. But I can attest to the fact that losing $10K on a dummy account is nothing like losing $10K in real life. The first doesn’t mess with your brain. But the second one does - big time. LOL
plenty of people “can”, but why on earth would they want to do that rather than side-stepping all the spot forex problems and actually trading something real like forex futures instead?! it’s a no brainer - the futures move almost pip-for-pip (tick-for-tick) the same, so it’s almost identical, really
the advantages are:-
your broker is on your side, never against you, and wants you to win
it’s a transparent market where every broker always has exactly the same prices, because prices are not set by the broker but by a real market
regulation is much better and safer and funds better protected
there’s effectively no spread and commissions are lower
