The truth about retail Forex brokers !!

Hi Folks !

I found this statement from Bill Williams about Forex brokers when
surfing the internet.

Nothing more to add !!

Greetings

Bernhard

P.S. Does anyone of you know a good currency futures broker ?

10.07.2006
....reasons
why I do not trade Forex
bill wms

WHEN TO NOT TRADE FOREX
Because so many people bombard us with requests
about forex, we teach people how to trade it.
Better to teach them the right way than to let
them commit financial suicide. Nevertheless, we
do not advocate forex trading unless you have a
particular reason as to why you need to trade
during the middle of the night, or you have a
specific need to trade in currency pairs that
do not involve the U.S. dollar. If the U.S.dollar
is involved and you are able to trade during U.S.
market hours (7:20am-2:00pm U.S.Central Time) you
are much better off trading currencies in the
Chicago currency futures markets. Here is the
reason why:

* Brokers deceive you about there being no com-
missions. $30 minimum/round turn(called spread)
is in reality a commission that eats up your
capital at an astonishing rate. Even winning
traders lose money and end up with negative
results because of this outlandish overhead.
Trading futures, you never have to pay a broker
more than $10/round turn, and usually quite a
bit less than that.

* Guaranteed fills. True but... The only way a
broker can guarantee fills is for the broker to
become the buyer or seller of last resort. That
means the broker is running a bucket shop. All
forex brokers are the buyer and seller of last
resort.

* Brokers do not tell the truth about volume.
They show the volume for all forex trading,
which doesn't even come close to the volume
they truly have at their own brokerage, which
is where you are trading. Volume in currency
futures is considerably higher than the volume
traded at any single forex broker, often great-
er by a factor of ten.

* Leaning. Brokers say they are charging you a
3 pip spread to trade the popular currency
pairs. But in reality a broker may be making
as much or more than 10 pips on your trades.
He does this by skewing prices. Since you are
not trading at an exchange, the broker can
feed you any price he wants to feed you. He
can buy at the bank for perhaps 7 pips less
than he sells to you. He then charges you 3
pips for the privilege of being ripped off for
a total of 10 pips.

* Unregulated. Forex may sound like an exchange
but it isn't. It exists entirely in cyberspace
with every broker and every bank having diff-
erent prices for any particular currency.There
is no regulation,even for brokers who register
with the CFTC and the NFA. Forex brokers do
not have to mark to market each day as do
futures brokers. If your forex broker files
for bankruptcy or absconds with your money you
have zero recourse.

* No guarantee. If a forex broker does go out
of business, you could lose all your money.
There are no guarantees and no one standing
behind it. Futures brokers are required to
mark to market every day. They have to put up
cash to cover every open trade on their books.
Future brokers have gone broke, but no future
customer has ever lost one cent of the money
in his trading account because of a failed
broker. Nor have they had to wait for their
money. It is immediately available.

* You can get exactly the same action in the
euro fx futures as you get in the"Euro" forex.
Commissions are as low as one tenth per round
turn depending on volume, through a regulated
broker, trading electronically at an exchange
where you know the true price of the currency.

* What is the true price? A forex broker can only
give you the price of a currency as quoted to
him by the bank through which he trades. Banks
have diffeing prices for a currency. You never
know what the real price is because there is no
central exchange through which all prices flow.
Besides not knowing the true price from the
bank, you can also be deceived by "leaning" or
"skewing" of the real price at the bank. Forex
brokers comonly lean the prices.

* Forex brokers are not truthful. They lure
people in with hype and false advertising: "No
commissions!" "Guaranteed fills." "24 hour
trading:" Who in their right mind is going to
trade in the middle of the night unless they
have a special need. While it is true that
total forex volume is greater than in the
futures, futures volume at the exchange is
greater than the volume at your broker for the
most popularly traded currencies. The only
place where the liquidity differential matters
is in currencies like the Mexican peso, the
Brazilian real, and somebody's drachma. Those
thinly traded currencies may be more liquid in
forex. But if you trade anything but the few
most liquid and popular currencies, you are
going to be paying at least 5 pips, and often
more. Unless you have a particular comercial
need to deal in Polish ziotys, Indian rupees,
or some other thinly traded currency, you don't
need forex.

* You are told by forex brokers that there is
little or no stop running. This is one of their
biggest and boldest fabrications. The truth is
there is far more stop running in forex than in
futures, and possibly as much stop running as
in the stock market. I have friends who work in
forex as well as many traders who of necessity
have to trade forex. One of my students is a
market maker in forex. These are people who
should know, but in case you don't want to
believe me or them, simple observation of forex
trading will reveal the vast amount of stop
running that takes place there. Who is it that
runs the stop? It's your friendly forex broker,
that's who. The broker has a vested interest in
seeing to it that your orders are filled. Stop
running is nothing more than order filling.
The broker sees to it that everybody's orders
get filled.

* Probably you have heard that if your are win-
ning regularly in forex, you may be barred from
trading. Is this true? Yes it is. The fact that
is true is just another proof that when you
trade forex you are trading at a bucket shop.
In the book, "Reminiscnces of a Stock Operator,
" we are told that Jesse Livermore was banned
from trading a certain stock brokers because
they couldn't stand him beating the housel. The
same thing is true with many forex brokers.
Since they are the ones guaranteeing you a fill
they in effect the buyer and seller of last re-
sort. The truth is that most forex brokers have
precious little liquidity at their firms. In
order to give you the impression that there is
liquidity, it is the broker who gives you your
fill. It is the broker who does the stop run-
ning that supposedly doesn't exist in forex.
But if you are regularly beating the socks off
the broker, he will ban you from trading at his
firm.
Now you know the truth about forex. I challenge
any and all forex brokers to prove that I am
wrong.

I've met Joe Ross (Ross Hooks, Law of Charts) two times, he said that to me with almost the exact words as Bill Willians. I think in his forums you can find his reasons not to trade forex.

I personally believe that they're are right, but for me as long you dont put all your money in forex and trade with decent MM, you can find some true forex brokers who are not looking to steal your money. Forex is simpler, easier and more accessible to newbie traders, it's like throwing some bait for we to eat and get caught on their promisses.

I have an account with Oanda for more than 2 years, putting some money at there and had withdrawn it with no problems, with the actual financial crysis I was very worried about safety of my funds and I'm still worried, so I have only a 1/100 of what I had in my account (i had withdrawn it). I'll try to get into futures trading and see what I can get.

For sure there is honest people trying to get their money and serve traders for Forex trading. My only deception is that after seen Forex very closely for more than 4 years, so little was done to make it more trustable, transparent and regulated to all trading community.

Hope this message serves as an step to regulamentation to Forex brokers and to give all newbie traders an alert to check where they will put their money. I believe that spot forex can be the greatest market to trade and will for sure keep looking at it for the next years.

Though I agree that brokers will use all stops to screw us, I dont agree they will use this measure against us. Why? Any seasoned trader can use this against the broker either you use multiple brokers ans compare prices or do something more complex in unraveling price inequalities/inaccuracies within a broker.

Ive been thinking about the reliability of forex brokers for a while. The reason so many new traders choose Forex is basically the free charting and massive amount of advertisement from brokers.

Id also be interested to hear about any Futures brokers with excellent realtime charting that isnt too costy. Im not sure if they offer demo's either.

Leon

AMP Futures, Mirus Futures + Free NinjaTrader Charting. 1 e-mini S&P daytrading margin $500.

$2,000 minimum deposit to open account

The truth..indeed

This is why you trade with an ECN w/ a bank feed not a retail/mm feed

It is not possible for individuals with low funds though, is it?

Leon

I have not come across any ECN w/ bank feed for those with low funds. So sadly the options for those with low funds are try to make money from a MM and run or to save up their pennies for a ECN w/ bank feed.

So what are we talking, 10K or 100K? In your own opinion, how does the charting differ from MM charting(ie. Why is it worth using over MM charting)?
I would guess that MM prices cut pips off the begining/end of moves, and are delayed by a tiny amount of time which destroys your edge if scalping.

Ive been using a CNX ADMD demo and find that prices move much faster. Im not totally sure about the quality of the quotes though.

Leon

Except there is one major problem with the man's argument. Unless a broker has successful customers he cannot keep his business open. Anyone that has ever run a business where repeat customers are needed knows that getting customers is always more expensive than keeping them. Any company or firm that ran their business like this man says forex runs theirs would soon be out of business. I have lined up a dozen accounts form various companies and watched their price movements over a period of time and found that some brokers feeds operate speedier or faster than others but all would be within a couple of pips from each other. There was no imaginary spread where one would be 10 pips from another so the customer could be cheated. Does this mean it never happens, no but it is just plain common sense that the big companies would not survive unless they could keep and maintain a steady customer base. That customer base would not stay if they didnt start making money over a period of time. It is just plain business. Companies need people to make money, they need them to stay and continue to do business with them. That is how they survive and stay in business. Promoting blame to get people to switch to your form of trading is just selfserving.

Has this man ever heard of something called...A BANK?! For F's sake, really?! I'm honestly too pissed off to really try and say something constructive, so I bid you guys a good venture.

HAI FRIEND,
If forex unregulated where i can found future broker to allow me invest in small money per share on future market and trustworthy before i invest with big money because i still learning for this job. All information very in value.Thank you

I dont agree with the repeat customer analogy as it applies to Forex simply because there are enough people interested in trading Forex to keep a pretty consistent revolving door of over confident new b's losing money. MANY businesses survive this way.

But more importantly, I have the same experience as you regarding price action. I ran charts side by side for months and never noticed significant disparity.

Rex

Hey Leon!
I don’t really know much about trading futures. I have been studying about it but I don’t know how to use the platform. I’m using a demo account from tradeview calls core options. But I can’t understand how that thing works. Maybe you should check and then I can ask you my questions…hahahaha. Anyway, that’s what I know.
Angy

Stop Hunts! I love em.

If there werent stop hunting there wouldnt have been markets. Somebody has to lose to make your profits.

It seems that you have not done research well enough and you really do need to check your facts. Don't under estimate our intelligence. I think most people that do trade FX have done enough research about their brokers. I know I have, and I do pay a fixed spread that pays me back probably 5 times as much as futures in one day, sometimes in even an hour.

Rewrite your little speech.

Uh.....so why are we all here?

And will someone make my account stop growing? My poor broker might get upset....

Clockwork

ROFL. Just sounds like someone that couldn't get the hang of 24 hr markets.

I suppose I can see the allure of having a fixed open, but it's kind of sad when such notable people are quoted as blaming their failure on a broker.