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The pumpers and dumpers of forex

  • #21
  • Apr 4, 2007 1:57pm Apr 4, 2007 1:57pm
Quoting blueruby
This would be true if the broker offset every trade with a bank.

90 - 95% of all traders blow out their account within 90 days, or whatever that oft-repeated statistic is.

So, on accounts under, say, $5000 or so, why wouldn't a broker just take the other side of every trade?

In 90% of cases, they get the spread plus the $5000 within a month or two. Do that a thousand times and that starts to add up to some real scratch. Why settle for a few hundred dolllars in spreads when you can sit back and bank on a true 90% probability trade?
For fear of the 5% who would eat their lunch for them. It's like setting your takeprofit at 10 pips and your stop at 200. Yeah your going to win a lot, but that rare loss is going to bankrupt you.
  • #22
  • Apr 5, 2007 7:00am Apr 5, 2007 7:00am
Quoting Darkstar
For fear of the 5% who would eat their lunch for them. It's like setting your takeprofit at 10 pips and your stop at 200. Yeah your going to win a lot, but that rare loss is going to bankrupt you.
Then if things get too one-sided, they cover their risk by moving the order to the bank, or buy options.

Igrok mentioned working with a broker to program something like this.

It wouldn't be hard to see which direction the 90% was going, and cover the 10% that was right.

Maybe use a different strategy during strong trends when many beginners could be right.

I'd say it's easier than you'd think, and would be very profitable. Therefore, it's a cinch they do it.
  • #23
  • Apr 5, 2007 9:19am Apr 5, 2007 9:19am
Here's what I'm talking about. I hadn't read this, but read another of Igrok's posts -- which is what prompted my comments above.

http://www.forexfactory.com/showthread.php?t=20253
  • #24
  • Apr 5, 2007 4:30pm Apr 5, 2007 4:30pm
Quoting Darkstar
OMFG do these threads ever end? Look, if you THAT concerned about your broker go out and mortgage your house. Then you can open an account on Currenex or FXall and trade with the banks as your counterparty. No broker, no arbitrary spreads, no excuses for why you suck as a trader.

Instead of bitching about how the system is stacked against you why don't you ask which brokers you can trust and work from there? I promise you they are not all out to get you. Truth is most of them could give a rats ass about your $1,000 mini account anyway...
AMEN TO THAT DARKSTAR!!!!!
  • #25
  • Apr 5, 2007 4:42pm Apr 5, 2007 4:42pm
In your example, if a 1000 people were really following a system, I'd guess that more than half would be in demo accounts and most others would be in micro or mini accounts. I seriously doubt the average trade would be 1 lot.

That's not to say a really popular and successful strategy couldn't reach a level where significant money was following it...but I don't think it happens often.

Quoting permanentjaun
Way to over react. I'll give a very possible scenerio though. There are strategies on forums that have nearly 1 million views. If you don't believe me then you can PM and I'll send you a link. Would it not be improbable for only 1000 people to be following the strategy on that thread? If their average play was 1 lot for those 1000 people then I would think a broker would have a severe interest in getting that money. Forex may be the largest market in the world, but the market on any one broker is not nearly as large. They very well could be affected easily by a popular system.

I think I should further the topic by asking if anyone has heard of any future possibilities for regulating forex? Essentially the relationship we have with our brokers right now would be like buying virus protection from a company that also creates cimputer virus'.

What would forex be like if it were regulated like NYSE and other major stock markets? Matt
  • #26
  • Last Post: Apr 5, 2007 6:45pm Apr 5, 2007 6:45pm
Pumping and dumping is just a bunch of BS...I doubt it even happens as often as people claim even on the Penny stock market. Been there done that... Its just a bunch of traders who made bad (or very very bad) calls. I dont feel one bit sorry for them either. Why? Coz investing in pennies was their decision and they should have known the risks.

I highly doubt there being a 'department' where they screens forums. LOL. Think about it, if one wealthy investor called in with an order for $100M...versus 100,000 investors with their mini $1000 accounts, who are they gonna cater more to?
Keep in mind that there are only 20k+ members on this forum. There's no incentive for them to give a c**p.

Darkster or whoever said: stop finding excuses for being a sucky trader was right.
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