Forex Scams

The CFTC has brought charges against a Northern California Forex money manager for committing fraud against his clients. The money manager claims he had never had a losing year, when his actual trading records revealed consistent losses year over year.  He also seems to have mysteriously misplaced a majority of customers’ deposits, taking a page out of the Bernie Madoff method of creative money management. You can read about it on Forex Magnates.

I hate to be self-serving here, but I must. If his clients required him to register on Currensee (as a free service, I might add), these customers would have seen his real results, including win/loss P&L, trade-by-trade recaps, etc. on a daily basis, along with a detailed comparison of his business against the other traders on the Currensee platform.

This charlatan would have been exposed and some of the $4.3 million might not have been lost.  It is time to demand transparency in Forex from all people that offer to manage your money!!

=====

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

-------

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

6 Comments

I equate retail Forex trading to growing up in today’s world. Think about it. You’re 17 or 18 years old. You grow up on the internet. The new Internet. Not the AOL, you’ve got mail, under construction, dial-up Internet. The new, open source, 2.0 social web where you can connect with friends all over the world, sharing pictures, ideas and information from any coffee shop or handheld device. Online Forex trading has the personality of a 17-year-old, but has been stuck in the grey pinstriped suit of a middle-aged guy.

I did time at all the big banks and brokers back when there was no such thing as retail Forex trading. The big guys only cared about the institutional money. That’s where all the currency bean-counting happened. It wasn’t about how many pips a trade made – it was all about hedging, managing risk and speculating. Who’s counting individual pips when you’re trading billions of dollars each day? They had sprawling trading desks staffed with phones and Bloomberg terminals and wing-tipped shoe wearing guys in suspenders. We all know how that ended up.

Fast forward to the 21st century. There was a crash. And a burn. People were looking for a new way to make a dollar. Cynical about the stock market and eager to try their hand at something new, online Forex trading came onto the scene. Retail brokers scrambled to add it on to their “other asset classes” offering and tried to make a go of it. In the background, business types all over the world started to see the opportunity to build Forex trading systems that any ordinary trader could use. As these online brokers started to crop up, so did the social web. Now, anyone could learn about Forex. Even your average Joe.

In a recent blog post on The Next Web social media blog, Ayelet Noff says:

“….Just as the advent of the internet has removed the physical barrier to Forex, social media is steadily removing the perceptual barrier, and all accompanying stigmatisms to boot. The ability to collaborate trading strategies and market predictions while tapping the overall global knowledge base, are all advantages social media is bringing to the table for online trading firms. Social media established the infrastructure necessary for a truly global online Forex community that could eventually lead to a virtual collective trading block, matching (and potentially dwarfing) the trading power and influence of those major institutions we mentioned earlier, when it comes to driving market shift.”

It’s really about the old versus the new. The old Forex market was closed, isolated and scam-infested. It was a 1-to-1 trading experience between a trader and a broker. The new Forex market is all about embracing the larger social trend to foster trust, transparency, community and knowledge-sharing between many Forex traders and many Forex businesses. Brokers, online communities, news and education websites are all here to serve the millions of Forex traders who wake up every day ready to trade.

The social dish is the Forex game-changer. Imagine the possibilities when you start as a social financial services company, rather than trying to bolt on a bunch of social features to your big old corporate infrastructure. Just try to get that approved by Compliance. The face of Forex has come a long way, baby, and feels more like “the 25 to 35 year old male with long hair, jeans, and some extra cash to burn on the side (thanks for that quote, Ayelet).” Some guys have all the fun.

=====

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

-------

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

When I would catch my kids in a little white lie like when they borrowed the car without telling me or they stayed out all night and didn’t call, they simply told me that if they had told me the truth I would have said NO!  I really wish I had had the choice…

That is a little bit how I feel when I see the “back tested” in a demo account Forex trading systems I see all over the Internet.  Maybe I am a sucker but when there is a beautiful girl on twitter telling me I can make 1000 a pips a day why do I keep clicking through?  Maybe I am hoping for some transparency - some real honest indication of performance metrics that are real and authentic. So in the interest of transparency Currensee style, here is a chart direct from the Currensee platform that shows my actual performance by Currensee pair over the last month.

Dave's performance chart.  Good thing he has a day job.

What does this chart tell you other than the fact that I should stick to my day job of running social Forex trading networks?  It tells you is that if you are going to buy a trading system or have someone trade for you, or accept anyone’s advice look for charts like this and others like this can be backed up with REAL live trading data from real live trading accounts.  That’s transparency, not the old Forex sleight of hand!

======

Be sure to read the full risk disclosure before trading Forex.  Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

-------

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

4 Comments

A friend referred me to this video on CNN where a TV host is trying to convince a caller that his parents are being taken in by  financial scam after someone offered them to double their money every month by trading Forex. The financial world in general and the Forex space in particular is very appealing to people's weaker impulses when they hope to achieve the dream of making money without working.  It's a lot like those express diets that attract the people who want to lose weight without breaking a sweat.

So here is a little shot of reality: Professional traders in banks or other funds usually go through at least one year of training before they are allowed to touch the bank’s or its clients' money. So don’t expect to master the domain in a shorter or even similar time frame. A very high return from any sustainable investment activity is never over 3% a month, which annualized is about 42% and also means that you are doubling your money every two years - which is beyond excellent return.

Assuming you need $100k a year to live you would need to trade with a $250k Forex account.  If you want to get to a $250k account and you are starting with a $10k account, it will take you nine years to get there, assuming nine years of consistently high returns.  Anyone else who says differently is either lying or trying to sell you something. Maybe both.

A good rule of thumb in life and in Forex markets is that if something sounds too good to be true, it probably is.

======

Be sure to read the full risk disclosure before trading Forex.  Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

-------

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.