The online currency trading shops are modern-day boiler rooms.
I have absolutely no interest in mincing words or playing politics with this post. I am exercising my First Amendment rights and I intend to speak plainly.
http://www.thereformedbroker.com/2011/04/09/inside-the-currency-boiler-rooms/
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FXCM and Gain are the two biggest brokers with a combined 260,000 accounts. Roughly 75% of customers lost money every quarter (both are public and have to disclose such stats to the CFTC). This is exacerbated by one simple metric: 50 to 1 leverage (that is down from 100-1 of a few years ago but still 25 times leverage allowed to stock traders). You can also make a deposit by credit card.
FXCM made $2,641 for every active trader, while the average customer had $3,658.
….”The business model for forex trading is to burn the customer and then find another one,” said Larry Harris, a USC professor and the former chief economist at the SEC.
Michael Greenberger, a University of Maryland professor and head of trading and markets at the CFTC said, “Once you have things that are done off exchange you are pretty much at the mercy of the dealer – telling you what the price is,telling you what you owe. Anybody I cared about – I’d say, ‘Stay away from this.’”
CFTC chairman Gary Gensler recently said it was the “largest area of retail fraud” his agency oversees.