It is an old saw on Wall Street that most traders lose money. We now have some sense for that in the forex markets. The fact is that currency traders lose often and a lot. We all know intellectually that trading is difficult. However in the over the counter forex markets where small traders trade there are two other big challenges. The first is that these traders use very high leverage, like 50:1. Second the forex firms are acting as counterparties to their customer’s trades. There are other less conflicted options for traders. These issues aside it is still going to be difficult for traders to succeed in the forex game. In today’s screencast we look at the retail forex trade.
Items mentioned in the above screencast:
“These [forex] customers are losing money in spectacular fashion.” (LATimes via World Beta)
Counterparty issues aside, the odds are still stacked against forex traders. (Points and Figures)
Six tips for new “forex investors.” (The Reformed Broker)
Daily price chart for FXCM (FXCM). (Finviz)