Recently I read an article on Reuters about the SEC (Securities and Exchange Commission) warning traders about the risks involved on retail Forex. Amongst other things, they warned about:
Brokers Fraud
Yes, there are some fraudulent Forex brokers who only want your money, they will execute your stop losses even when the market does not reach your SL level, they won’t send you the money you withdrawn from your trading capital, they won’t execute your take profit orders even when the market passed that level, etc. But there is one simple solution to this problem: don’t open an account with a Forex that is not regulated.
When a broker is regulated allows investors to dispute any resolution such as stop hunting, etc. increasing the investors protection. So we just need to make sure we open our trading account with a regulated broker, with good support capital and with good reputation.
Leverage and realistic expectations
The other day I got contacted by a trader, who wanted me to teach him how to make 100% on a monthly basis. He said “it’s per month eh, not per day or week... I’m not asking something unrealistic here”.
I explained to him it is impossible to achieve like that and he replied, “Well, I better take my business somewhere else”.
Let’s see what happens, just for fun... If a trader starts with US$250 of trading capital (some brokers allow you to open an account with that amount of money) and consistently achieves 100%, on a monthly basis.
Some traders are attracted to the Forex market because of sales ads around the web/tv showing how easy is to make money on the Forex market, and of course most of them never mention the risks involved.
- The higher levels of leverage, and
- Fraud/lack of a central clearinghouse (Brokers fraud)
Brokers Fraud
Yes, there are some fraudulent Forex brokers who only want your money, they will execute your stop losses even when the market does not reach your SL level, they won’t send you the money you withdrawn from your trading capital, they won’t execute your take profit orders even when the market passed that level, etc. But there is one simple solution to this problem: don’t open an account with a Forex that is not regulated.
When a broker is regulated allows investors to dispute any resolution such as stop hunting, etc. increasing the investors protection. So we just need to make sure we open our trading account with a regulated broker, with good support capital and with good reputation.
Leverage and realistic expectations
The other day I got contacted by a trader, who wanted me to teach him how to make 100% on a monthly basis. He said “it’s per month eh, not per day or week... I’m not asking something unrealistic here”.
I explained to him it is impossible to achieve like that and he replied, “Well, I better take my business somewhere else”.
Let’s see what happens, just for fun... If a trader starts with US$250 of trading capital (some brokers allow you to open an account with that amount of money) and consistently achieves 100%, on a monthly basis.
Some traders are attracted to the Forex market because of sales ads around the web/tv showing how easy is to make money on the Forex market, and of course most of them never mention the risks involved.
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