Why does forex have a bad rep? | Currency Futures


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Why does forex have a bad rep?

  #38 (permalink)

Noblesville, IN
 
Trading Experience: Advanced
Platform: TOS, MT4,Multicharts
Broker/Data: CQG, Thinkorswim, Oanda
Favorite Futures: ES, currency futures,GC
 
masterchanger's Avatar
 
Posts: 12 since Aug 2011
Thanks: 26 given, 11 received

Broker problems

If you know how to trade then forex isn't a bad market.
If you don't know how to trade some forex brokers can take the opposite side of your trade as a business model decision, pocketing your loss.

If your profitable they will pass your order through to their liquidity providers.

Most major forex brokers( think FXCM, Gain Capital and others) have had complaints that are discoverable via Google and have to to with cheating customers with widening spreads numerous requotes. (it's the traders job to know when spreads may widen and to decide if trading during those times is advantageous) and asymmetrical slippage( you pay slippage and if you would have received positive slippage they didn't credit you with that and keep some of all of the profit the profit.) that setting is as simple as setting the spread paid by one trader versus another trader.

Then there are the poorly run, capital anemic brokers who fail to honor withdrawals and go bankrupt taking the traders account with them(trading accounts are essentially unsecured loans/deposits to the broker(who can use the funds for operational expenses etc) and do not have any favorable priority in the case of broker insolvency-theUK has a $50,000 limit and insurance on accounts and the USA has no such protection, since most forex broker do not have segregated accounts traders are unlikely to get funds back. I think that the NFA and CFTC has done a good job of requiring brokers to have a significant amount of net capital in order to do business and conditions for trading forex have left generally stronger players opporating as forex brokers.

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