Top 5 Ways The Forex Industry Has Earned A Bad Reputation
Yes, we are really going to try to start this conversation. No, this is not the reason why you should avoid Forex or consider scams as a potential customer. These are very real dilemmas that tarnish the image of the industry and undermine the activities that take place. Forex marginalization has been a problem for brokers trying to promote their services and a stigma has also been applied to traders. Who bears most of the responsibility for the industry’s downward spiral? Hint, hint: it’s everyone involved.
5. Brokers who push for deposits in any way
Yes, the economy is in bad shape and companies will go the extra mile to make sure the money is in their coffers. Excuse the ridiculously low minimum deposits? Excuse sales calls after a few days of using a demo? Excuse reckless cash-back and leverage proposals?
If it appears that the Forex industry has taken some advice from the casino gaming industry, you are probably quite observant. Casinos and poker sites use rakeback bonuses, rewards, and VIP points to build loyalty and use deposit bonuses to help you get in. Forex firms that act like casinos tarnish the reputation of the industry and the operations that are being carried out. Bad deeds by brokers make action in the world’s most liquid and active market seem insignificant and silly.
Deposits at ridiculously low levels are also a problem, $ 1 deposits are dumb. On the other hand, any broker taking deposits of less than $ 250 should really leave you scratching your head. Forex is not a trip to the racetrack, the racino, the slot machines, or the lottery! People should negotiate an amount that they are comfortable negotiating with, but they would take trading action seriously.
By acting like casinos, brokers are diminishing the credibility of the forex market.
4. Signal boosters running wild
The snake oil sellers of the Forex industry are ready to serve you their holy grail developed by “brilliant” minds who have tested trends for the last 15 years that will guarantee you a% profit or percentage profit above a certain point. . This is just silly, there are no guarantees on the market. Even fixed income securities have to be rated to guarantee repayment of company / sovereign / municipal debt.
The websites of most signal mongers are disgusting and spam via forums and Twitter. They take advantage of those who are losing money to buy their services. If their signals were that good, they wouldn’t need to distribute them to the public for everyone to use at a price.
If someone had signal software that worked 80% of the time and made 20% profit, would they really make the effort to distribute it at a price? No, the user would trade based on this information and would do so at levels of leverage that they feel comfortable with and would not share this valuable information. They would get rich in a short period of time and the world would not know about signal software. Is signal software as good as algorithmic trading software developed by quants for banks and hedge funds? Probably far from that. Yes, banks lose money in operations even with high frequency operations.
There is no magic elixir, sorry.
3. The current form of demo trading
Do you have $ 100,000 to invest in Forex? Okay, do you have $ 50,000? All right, how about $ 25,000? Well, Forex brokerages, believe it! Or so it seems … Could it be that these ridiculous demo amounts are set to create unrealistic expectations in traders’ heads so that they can trade in a real environment thinking that they can reach such high levels on their own?
Or … Perhaps brokers think that by offering something that is so unrealistic that its demo is only for those who are simply interested in learning and experiencing trading software? Perhaps the only realistic brokerage experience they can provide comes at a cost and is designed that way.
The other explanation is that they may not have many good ideas for driving and retaining customers.
2. Forex scams
The unfortunate thing about Forex is that warehouse stores, scammers, boiler rooms, and brokers trading against your clientele is much more common than you might think. These companies and the individuals who run these companies are leading the industry into a ditch. Regulations are on the rise and startups with alternative visions have to raise huge amounts of capital just to compete in certain markets where attracting customers is uncertain in itself.
Forex scams make the industry look murky and unseemly, when in reality it is an alternative trading market for those who don’t want to track 5,000 different companies. It’s a lot like Las Vegas during the 1950s and it tarnishes everyone involved. It hurts to reach a new clientele because they have probably heard a horror story about how someone lost a large amount of money or their identity to a Forex scammer.
Those running these sketchy operations looking to scam or harm their clientele must close down and pay the customers back.
1. The merchants themselves
From pie-in-the-sky dreams of getting rich quick due to exorbitant leverage to not taking the time to choose brokers correctly or not being ready to go live trading in the first place. The traders themselves give the industry a bad name because they fail at a remarkable rate of 65.01% (second quarter 2013 in the United States).
The scare tactic used by many is that 95% of traders lose their money, but the facts don’t really back it up. The so-called smart marketers keep repeating this nonsense as if it were the truth of the gospel, but the reality is that it is a lie. More traders are successful than is being talked about in forums, forums, and seminars. 65% failure rate is average, you will see failure rates range from 54% to 78% depending on the broker. It’s not that surprising that brokers that attract users with ridiculously low deposits have higher rates of non-return.
The problem is that most traders are completely uninformed and when they communicate with each other and potential traders, they give bad information. This is detrimental to the industry.
Continuing to perpetuate the problems plaguing the industry will eventually end currency retail in most of the world and that would be a shame.