I met a hedge fund manager last night who lectured me that FX trading is a scam and that there’s no way retail traders can beat the professionals and you’ll never make money from it. I have heard this before from other people who work within banks who view it as a cowboy market and it’s basically gambling. It totally deflated me. Are they right? If so, why? Of not, why?
I wonder if this hedge fund manager friend of yours has traded FX in the past. You should ask. Might give you a better idea of why he thinks what he thinks.
But FX trading is making a bet. Is the market going up or down. If you think this “bet” is like the “bets” you make when you gamble, then there you have it.
Is it a scam? I don’t believe that. Can you get scammed by people and businesses in the industry. Yes. There’s a scam section in this forum sharing endless stories of scams. Brokers, signal services, investors, educators, product and services vendors - scams are everywhere. Be careful and do your research.
But FX trading affords you the opportunity to educate yourself, through sites like this, mentors online or in person, trading firms, online trading groups, prop firms, all sorts of educators. I truly believe you get out what you put in.
But the most important question, is it possible to make meaningful profits? Yes and no. It depends on your definition of meaningful. And it’s super difficult and time consuming for most beginner traders to make it quickly or at all. Impossible, no. But the odds are stacked against you, if you’re not willing to invest time in learning. The barriers to enter the FX markets are super low, which is an appeal. But that could also be why you hear about so many unsuccessful trader stories. They went live to quickly. They came without enough capital to get started. They didn’t spend any time learning at all.
Are you ready to commit?
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It is possible to win at trading but you have to apply adequate skills and knowledge in order to shift the probabilities in your favour.
It is like betting on the result of a football game or a boxing match. It is not like roulette. The fact that most traders lose does not affect what trading is.
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Hi and welcome to Babypips forum.
Your friend may have been trying, in his own way, to tell you that the banks pay millions of pounds for infrastructure and educated people who they teach how to manipulate the market to take out all the wannabee traders’ funds. On the other hand, people say that the banks have no interest in taking peanuts from monkeys.
I watched this video about 12 months ago and it caused me to watch about 100 more from the same guy, and that experience resulted in me creating a 90 page Forex trading plan that is still work in progress.
Enjoy
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It is possible to win in Forex trading. But I need to know how to plan and work. Many retail traders are making money if there were scams then why are they consistently profitable. We are following the same platform that professional traders see. That is why there is no scope for scams here.
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The issue I have with these theories of price manipulation is that the bias of traders stated is not reflected by live sentiment data. These theories always take as a starting point that in a consistent uptrend, the majority of private retail traders are long.
Usually, when price is in a consistent uptrend, we are seeing the reverse, they are mostly short.
We are usually seeing live broker client sentiment data indicating the majority of clients with open positions in uptrends are short. The converse also applies - when price is in a consistent downtrend, the majority of clients with open positions are long.
So I have to be sceptical from the very start.
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hi Emily T,
what did you expect him to say ? “its easy money” with minimum of effort and time
Not exactly brand new stiff - but a different slant 
Ok - interesting enough to follow your path for a while and take a look at some of his other stuff .
Aye it’s called ‘the Gamblers Fallacy or ‘the Monte Carlo Fallacy’ - same thing - toss a fair coin 3 times and it comes up heads and therefore the chances perceived are that tails must be due’.
Inwardly we all do it in many different ways - anyways the story in the Monte Carlo casino 1913 is interesting.
A C&P from reddit ;
in 1913, at the Monte Carlo Casino, a roulette ball fell on black 26 times in a row. Gamblers under the influence of what is called the Gambler’s Fallacy, or the Monte Carlo Fallacy, lost millions betting on red.
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No definitely not, I’m well aware that it’s hard and not many people make it. But there’s a big difference between that and being duped by a con artist (which is what he was essentially saying FX was)
I remember a works Xmas Party some years ago (nearly 20) when I worked with some Paddys - we were playing a game where you can bet on the next coin to fall from a stack held in someone’s fist - We had 6 or so Heads - And I remember saying to a Countryman of yours - “I’ve got £300 says that next coin will be a tail” 
Since we had long since moved on from “table stakes” - I had quite a bit of coaxing to do to gather in the Cheques from the previous participants ! But to their credit - every one paid up !
From my point of view, retail traders don’t use the same brokers than banks and these brokers seem to be more transparent with organisations/banks than with a single person (easier to target, etc.).
Retail traders usually start with a “small” account (less than $10 000) and also have less (more limited) flexible strategies than banks.
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It’s was nt a very profound comment from big shot hedge fund manager " That retail FX trading is a scam "was it ? Maybe he was just trying to be impressive who knows
This is interesting. But I would tend to think the opposite, that a banks strategy would be much more mechanical (less flexible) than that of a retailer’s.
Or maybe I’ve misunderstood what you’re saying?
Its quite logical that someone who is not a private retail trader should look at the 95 or 96 or 97% failure rate of new traders and conclude that this is not random, therefore it must be designed, therefore it must be designed by the industry. Logical, but wrong.
I made a strategy once that made me lose money just because I didn’t have enough margin to keep my trade opened…from Friday afternoon to the next Monday.
I was “live-demo trading” with about $100… 
I made a post about some issues I met with this strategy on babypips here .
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I dont agree to this, forex trading can never be a scam, it is a way of getting more and more. Moreover might be your banker friend do not want to accept that there can be a other way to turn things up for living 
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“I dont agree to this, forex trading can NEVER be a scam”…
==> Forex bucket shops are brokerage firms that have “questionable” trading practices such as unusually frequent price misquotes or requotes, slippage only favorable to the broker, and stop hunting.
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Agree, there is no harm going for other reliable sources of income if you have knowledge and experience.
It’s not a scam but it is heavily weighted in the favour of the big banks as they have the education and resources compared to the majority of retail traders.