Does forex trading add value to society?

Hi,
wanted to start a discussion on does forex trading (trading in general) add value to the economy or society? Found this nice link on the subject - http://ask.metafilter.com/73250/Does...economic-value

Any inputs much appreciated.

Use the search, this thread has come up a few times before.

Nah. It's a business like any other.

I suppose, IF your money goes through a NDD (not a bucketshop) and actually hits the market, you are technically contributing to the force that pushes a currency up and down.

Of course, your forceful impact is as strong as a nat on an elephants ass, so there's your answer.

I have so far avoided elephant asses! Will try if you wish!

The added value may be mainly educational, as people normally get a basic understanding of markets and the world economy. Whether they will get a profitable trader does not really matter in this aspect.

Good weekend to all!
Ciao!
Gnat - Matt

My mentor expalined something pretty valid to me one time. If you consider the value added from business to our community at all you have a growing economy. Especially local economies. When you trade forex. You are taking global lilquidity out of a foreign market and injecting it into your local. This is a huge point to the benefit of it under present global conditions.

For instance Walmart takes goods bought over in china. We have all heard the rhetoric about how it is losing American jobs. And sending money out of the country thus created a trade balance to the tune of -60 billion or something. The outsourcing of IT jobs to India and such. In San Diego where i am from there actually is a problem with moderately trained illegal immigrant labor taking away from construction prevailing wage jobs. Hard to Unionize. Blah blah blah.

When you are taking clean liquidity out of a global market. It is nothing but good for everything in your community. You pay local capital tax. You spend in your community. Kind of defeats the purpose if you shop at walmart. lol

Their is an argument that speculation might be a bad thing, on a macro level taking away the dignity of an originally industrialized nation. But imho
we are way past that and anything you can do with an upcoming recession to inject your own liquid here is missionary work in this fiasco.

It's not "having money" that makes wealth, it's putting money to work that creates wealth. You think banks just store lots of money in vaults? No they invest it for a return.

Capitalism isn't about having money or adding value, it's about putting money to work. If you take money from forex (or commodity trading or whatever) and put it to work better than the people you take it from (even if that's just to increase your lot sizes so you can take more money later on) then you are a good agent of capitalism.

Money will always gravitate to those that can make the most use of it. It's up to us to be an agent of capitalism, or not.

Has nothing to do with adding value... if you need a warm fuzzy moral outcome to justify your success then quit trading and go save some trees or run an animal hospital or a homeless shelter or something. Of course you need money in order to do that... and quite a few people take trading income and send it to places like that, so there's the paradox.

As Bud Fox once said...
"You're right, Lou, you're right. But you gotta make it to the big time first, then you can be a pillar and do good things."

http://en.wikipedia.org/wiki/Zero-sum

How many people will be out of jobs if Forex is outlawed?
How many internet and telephone lines will be less? How many jobs less in companies directly or indirectly supplying services to the forex industry?

Simple answer. Isn't it?

anyone who doesnt understand the ENORMOUS value that the forex market adds to society is in serious need of a history lesson!! forex exists for the same reason every other commodity market exists! it is here so that the producers of the world can hedge their risk. and if you dont think hedging risk is important, consider reading a book about economics:

traders provide liquidity to this vital market. when a hedger wants to hedge, there is always somebody willing to take the other side of his trade. this is your service to society, be proud of it!

What he is referring to, for all the mouth breathers out there, Is in a commodity market, for instance, a grower of corn will take a future contract short on a corn commodity. In a season where rain doesnt fall, the short contract will make him money in the same extent as the actual crop lost him money.

This is actually The ONLY REASON that we have futures markets.
Nice hit merlin

Thanks for the input folks.

Its not what you do with the money from forex gains thats the value, but what you are providing. You could sell drugs and give a portion to the poor and buy cars and houses and say ur adding to the economy if thats the case..
Like merlin said, ur adding liquidity, even if its a tiny segment, but as retail traders are growing, all those micro and mini lots start to make small ripples in the market. Plus there are lots of type of forex traders out there, it goes more complex than just sittin near a pc and takin out 20 pips, people use the market to hedge downside risk to foreign currency purchases or house values, I know people that took out mortgages and uses the fx options to hedge the risk that they have in the foreign currency mortgages. Corporate buyouts valued in foreign currency has been using options for a long time to hedge their risk, all those things add liquidity to the market and makes these things possible.

We add liquidity. Thats all.

So get lost demos!!!


But let's pray equality will never apear in the world.
F.E. small volatility on EG is caused by similar prices.
I think similar will happen with easteuropeans currency after couple of years in EU [f.e. Polsh zloty goes up terribly]
If some free trade and employment area will spread around the world - roullette will be only option for us.

Am I right?

You hit the nail on the head. If a trader in India is trading EURUSD and Cable and make profits, it would be good for his local economy coz he will pay taxes and spend the money he squeezed out from global markets, in the local markets.

When I start making serious amounts of money, I will use a proportion of my earnings to help those less fortunate than me. As it stands, I have an abundance of time and therefore use that to help those less fortunate than me.