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Confessions of a Forex Broker

Posted 01-28-2009 at 07:07 PM by Cableboy
No, this is not my confession. It is a compendium of various conversations with forex brokers. Not the Interbank variety, but those who work in institutions that 'serve' the retail customers.

"I got into this business because I was told it was easy money. It is commission only, but there are so many rabbits out there, it is hard not to make money.

You see, my firm delivers what the punters want, namely a dream. A dream of quick profits by trading forex, foreign exchange. We even run adverts on the business TV channels, offering 500:1 leverage in 48 currency pairs. 500:1 leverage - ha! that is guaranteed to wipe the punters out in a very short space of time.

But there is no shortage of punters. They are lining up to give their money to us. We 'churn and burn', and there seems to be a never ending line of idiots.

Sure, we offer 'training' and charts, but you know the old saying 'Give a man enough rope and he will hang himself'. The chart thing is funny. One of the old guys says that in the 'old' days, they traded without charts and made money, but now everyone has to have a 'system' and there are hundreds of studies. No matter that they all give conflicting signals!

I think it is the pretty colors that does it. Like moths around a light bulb.

So, we teach them how to lose money under the guise of teaching them to make money. We tell them that they have to set stops and watch the charts. They get emotionally involved in the trade, mess around with the stops, run their losses and cut their profits.

It is plain that they are all dreamers. May as well buy a lottery ticket. Most of the customers get wiped within a week or so. They just panic and end up betting the shop. Those that are a little more savvy, we get them too. We just widen the spreads when there is news, or overnight, and stop them out. None of them has a clue how to set stops and limit orders Why? because we don't tell 'em and we are not likely to.

I don't know how we get away with this; it is a license to print money and the 'regulators' don't give a damn. Totally unregulated, that what it is.

Our owners are getting greedy, though and are introducing non-broker desks. Ha! just a more streamlined way of ripping off the clients. A lot of thanks I'll get when they close down the broker desk. I'll have to go on sales or customer support and listen to them whining about losses.

The latest 'wheeze' is automated trading. This is great because many of our customers sleep while the action in Europe is taking place. The trouble is, for some reason the 'scripts' don't always work and what is more, we can see exactly what is going to be triggered when and why.

Apart from that, we have introducing brokers driving the dummies into our business. These are people supposedly offering services, but actually they are just getting us custom for which we pay handsomely.

I can't see this business coming to an end. Sure, we have lots of punters who punt their life savings, but we also have people who have made it rich doing something else. These are the worst! I don't know how they originally made money, but they believe they are the greatest traders alive. They don't even stop when they could get out with some of their fortune intact! Well, easy come, easy go.

And those guys from the MidEast are the best. All that oil money. They think this is a casino! They place huge amounts on deposit with us. They think it is a segregated account - hahaha. Anyway, we earn big time on that too, plus the roll-overs.

Anyway, dropping a couple of million in a couple of hours is nothing to these guys. Well, caveat emptor is what I say!"
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