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The Forex Paradox - Is Forex a net loser?
The Forex market is the largest in the world and the least understood. Since the late 90's, traders and asset managers have flocked to it as an alternative to trade, compared to other common markets (Stocks, Bonds, Futures).
But due to the fact that the market is decentralized, and unregulated, it also attracted a large amount of fraud, on many levels. First, there was outright theft by groups such as the one led by Trevor Cook ($190 Million Ponzi scheme). Then there were sham brokers, in the most extreme case, like One World Forex, that simply didn't bother clearing client orders and used client funds to finance lavish lifestyles and a movie that was never released featuring Busta Rhymes. Those in the new growing retail market on both sides of the dealing desk developed a special bond going through a unique experience that just wasn't possible in other markets.
It was said that this was a retail problem, that serious institutional Forex was not aparty to such nonsense. But now the world's largest investment banks are under investigation by the Department of Justice for Forex market rigging. This includes names such as Goldman Sachs, Lloyds of London, JP Morgan Chase, Barclays, Citigroup, just to name a few (the full list of names has not been released).
It was always a question that Forex outsiders would ask, why the big banks didn't get into retail Forex trading. Now we know that not only were some banks charging 7% (700 pip) spread on deliverable transactions, they were 'banging the close' and had basically a near complete control over the price. So why would they take any risk?
But one of the most overlooked news stories is that of FX Concepts, known as the Rolls Royce of Forex funds, being the first in the business and eventually the largest FX hedge fund.
Less than a year before his currency-trading shop filed for
bankruptcy, FX Concepts founder John Taylor personally guaranteed a
chunk of the debt his firm owes to its largest creditor.
Asset Management Finance, a Credit Suisse unit that has invested
in a number of prominent hedge fund-management firms in the past decade,
provided $40 million of debt financing to FX Concepts via two
revenue-sharing agreements in 2006 and 2010. But in December 2012, as
opportunities in the currency market continued to fade and redemptions
mounted, Taylor was forced to renegotiate the financing package. The
Credit Suisse unit agreed to defer eight quarterly revenue-sharing
payments in exchange for Taylor’s personal guarantee for those
obligations. As of Oct. 17, when the firm filed for Chapter 11, FX
Concepts owed Asset Management Finance $34.4 million, with Taylor on the
hook for $5 million of the total. “AMF is going to clearly try to get money out of John,” a source said. “By any stretch of the imagination, it’s not there.”The terms of the refinancing deal with Asset Management Finance,
spelled out in recent court documents, suggest FX Concepts was in even
worse shape than previously understood. The fact that Taylor had to
personally guarantee his firm’s obligations underscores a dramatic
decline for a business that for years was the world’s largest
currency-fund operator, with more than $12 billion of assets. As
recently as the first quarter, FX Concepts had $1 billion under
management.
When traders would debate "is anyone making money in FX" - proponents of Forex investing and trading would point to FX Concepts as an example as a group that was continually successful. For years they had multiple products that continued to acheive above average returns in the mysterious FX market. Until now. Not only is FX Concepts shutting down, creditors are going after the founder who pledged personal guarantees on capital when performance started struggling.
Certainly not every Forex trader or strategy loses, but with the losses incurred by FX Concepts, we should rethink our approach to trading Forex.
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Leverage X50 can suck it.
No worries... just see this video BELOW: JIM CRAMER'S TERRIBLE STOCK PICKS--MUST SEE!
https://www.youtube.com/watch?v=Lhwplunz7-I
Ask "Fuc to Market".
FX is supposed to be a zero-sum game ... ain't it?
Daily forex trader... glean pips daily -consistent and conservative. In and out. The remora will survive. The only market getting right to the f*cking point -straight cash. Why deal anywhere else. Of course it is worthless paper fiat but still buys tangible goods so I'm going with that, for consensus is what consensus is. No use sitting on the sideline sucking the golden thumb. The future my boy is not the boogyman. Unless you're afraid right now.
daily trader here too. Use a combination of sentiment indicators (contrarian since most traders lose) from fxcm, breakout (swing) signals from piphut.com and good old fashioned price action analysis. Been profitable since 2011. The nice thing about forex is that instead of having to know the ins and outs of hundreds of companies you just need to specialize in a few currencies.
I got to give you guys credit for something I lost a few thou on...and i fucking hate losing money.Whats the secret?
The secret is to be realistic. If you cant manage that, then the secret is not to walk away... the secret is to run away. The trouble with being realistic is that it tinkers with peoples hope and expectations, hence they obviously never get around to it.
Hedge your bets buddy, walk away, there's no shame in it...take it from me, FX put me through a major shitstorm. Danger danger, high voltage! Its a bitter man that wakes up and realises he's been chasing bits of fluff around Willy Wonka's Wanker Factory.
Have a punt certainly, but dont be arrogant enough to assume you deserve anything. In the long run, it'll be the hardest money you ever made.
Forex is a gamble where the house always wins in the long run. At least if you do leveraged bets, and otherwise this will earn you no money. Only enter this game for a short time with no leverage if you need to exchange one currency for another.
wow one world made zero hedge, Charls must be grining from ear to ear.
Net Loser? Nah. We all WANT to be carry traders. Who wants to get rich in six months when you can do it in 34 years? N!
I was given a week to close all my trades with FX Solutions, who randomly decided to no longer do retail brokering - Coincedentally a week before Abenomics set the carry-trade on fire earlier this year.
Other that, no major slippage, no experience with bucket-shop or communication issues, or any other experiences resembling that which is cited in this article. Not that that doesn't happened, but I guess I've avoided it. Be careful trading FX is my best advice.
Deutche Bank should be on that list....they screwed me for about 2k when they closed their NY shop and quit answering calls. (2010)