Before getting into the grey areas and clearly illegal stuff I promised, it's appropriate to lay out some basic realities about foreign currency, or FOREX, trading.
In short, FOREX trading is being marketed to individual investors like the malt liquor of the financial world.
Successfully trading foreign currencies requires a lot of highly specialized knowledge and capital. The arena is full of big players--international banking groups, hedge funds, and governments and their treasuries. Not the place for most individual investors.
But several things happened to make it very easy to market to those who should stick to mutual funds, or maybe even savings accounts.
Thanks to the fall of the Russian Ruble and the appreciation of the Euro, it became easy to market directional currency trading--the kind where you buy and hope to hell the price keeps going the way you want it to. However, investors still get their faces ripped off in these scenarios, and it's even worse when folks use leverage--borrow money via margin--and attempt to make money in the short term.
And the rise of internet trading platforms has taken place concurrently with internet-based marketing designed to harvest cash through ill-advised use of any number of online trading platforms.
And while FOREX used to require a big down payment, it's now possible to open a $250 "mini" account with a lot of leverage, so you can lose more than you had in the first place.
Now this is all the legal, above-board stuff. Wait'll you see what happens when you add in some good, old fashioned snake oil. I mentioned the phony fakir in a previous post--the futures trading guru who had no talent except in convincing people to believe he had talent.
Multi-million dollar FOREX scandals coming up . . . . .
Image from essays & effluvia.
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