How legal is giving forex advice?

I know that in most jurisdictions you need to be qualified and licensed to give financial and/or investment advice. But what about all these self proclaimed traders who run businesses where they "teach" other people how to trade?

I ran in to a person this weekend who "mentors" beginners in the forex market and how to trade profitably. Whilst speaking to him it was blatantly apparent to me that this guy didn't really have a clue. He just repeated parrot fashion cut and paste sound bites you can find all over forums like this, such as "support & resistance, round numbers, fibs, pivots, pull backs and price action etc, and then wham bam, we're all millionaires".

I actually asked him what qualified him to train others, and he said he was a self taught successful trader who trades from home, and teaches others as a sideline (yeah, sure it's just a sideline).

Now this guy is obviously not unique, and especially online there are thousands of people giving out trading advice to the unsuspecting sheeple who follow without question, but what are the legalities? Doesn't teaching others how to trade, or even the selling of signals and systems, constitute financial advice and therefore don't these people need to be licensed? Surely all these clowns with magical systems and courses for sale on clickbank are not licensed (nor even remotely qualified).

Just curious if anyone here has any knowledge about this.

Having paid for both; education and signals, I can confirm the following:

Those that can, do; those that can't, teach or sell signals. The more flowery the website and/or praise, the greater the scam.

One would be far better off talking a traditional business approach to their trading. That and long-long hours of screen time.

In the US, there is nothing illegal about teaching investments/trading without certification. That due dilliigance is up to the student to do his/her homework about the teacher's trading ability. There are only laws that says, a person can not sell investment advice or investment products/services without being certified.

Selling knowledge about the market or trading signals/systems is deemed not a threat to someones financial but selling investment product and services that holds monitary value and substantial financial risk is a completely different story. Being certified (i.e. series 6, series 7, etc) to sell investment advise or products/services only shows the person doing the selling is competent enough to explain the risk of investing in a particular market/product/service to unsuspecting investors. Being series 7 certified only show you knwo the basics of your craft of investment and has satisfied that requirement with the SEC/State. Look at Series test as an trader/investment rep obtaining their Masters degree in investments.

As Slack has said, "those that can't do teach". That statement holds very true in the investment world. So be very wary of the guy that sales you promises of world riches. If that was so, he/she wouldn't be selling the secret. All traders that are profitable knows something most don't and will not sell/give away that knowledge for anything. I'm tell you this from personal experience. No amount of money is worth what I know.

99.9% of the time if someone is selling educational trading courses, signals, newsletters, EAs, trading systems, etc .... they're making a helluva lot more selling the crap than they are trading. Even if they never sell any education material ... they probably still lost money trading.

All of that being said ..... in the US I believe it's perfectly legal to teach trading, obvious disclaimers should be adhered to though. Teaching is also a heckuva lot different than offering advice or promoting a stock. To offer investment advice you need to be registered.

I'm not researching whether or not to buy a course or advice from anyone, I was just curious as to the legal nature of some over inflated ego selling his useless advice or system to naive individuals. I totally agree with the statement "those who can do and those who can't, teach". Under no circumstances would I ever listen to anyone else's opinion of the market or investing without confirming the evidence and facts for myself.

In the UK I am under the impression that to be a financial advisor you have to be licensed and regulated, and it seems to me that Joe Shmoe telling people to trade X amount when Y indicator turns upside down and glows orange would fall under the same category of financial advice, and I was wondering how these failed traders turned marketers can get away with it so freely. Even regulated and licensed advisor's are being sued all the time for giving out inaccurate and bad financial advice to people who then go on to lose money, so it seems odd to me that the same thing doesn't happen more often with the comedy clickbank gang selling their "super uber infinity market crushing apocalyptic pro turbo smash and grab systems"

Nowadays, clickbank & many other platform are full of junkies monkey selling all sort of trading courses...

As traders, we just need to be extra careful & do all sorts of due diligence.

In Online & Offline world, there are not many scammers. Just that these scammers walk around too often...

Remember wall street recently, so many scammers are caught during financial crisis...

And the amount involved are Billions of dollars.

Agree... & I think that most of the sellers are bad traders. If you are so good trader why you loose your time doing that? Kicks the market & you will get soon more capital & more $$.

My 13 cents
13

Basically its "By the number".

For example, I recently came across a renown trader who sells a simple system that depends on Pinbars. Now, the entry to it is at a discount of $300+, compared to the normal $400+

Now, since 2008 to now, there are >1000 people who are 'trained' in the system, so if you look at it, that trader have earned at least USD 500,000 in 2 years.

Not a bad deal.

In my country (Singapore), many people come here to sell their education too. As this is a current loophole in the law (both USA, Singapore and many countries), legally there is nothing wrong.

Morally, that is another thing.

However, I feel that it is a necessary step for most beginners in their transition to the professional side. Its like a bug turning into a butterfly, you got to struggle....(unless some turtle mentors decides to start a turtle class again B-)

Financial advisors do not tell people to trade x amount. The key with financial advisors is, FA are licensed because they are authorized to take money from clients and manage the funds. Thats where the certification comes in. Look at an FA as an tax accountant. The client and the FA come together with a plan of action on how to manage/invest the clients money, then the FA take the clients money and deposit it into a management account.

The key is that FA's are allowed to accept cash money from clients and manage the investment based on a mutual client/FA financial/investment goals. If its an FA based in a big retail Bank, the FA will just put the money in a bank mutual fund as opposed with independent FA, has the authority to actually trade and make investment decisions with the money. Bank FA spread the money around throughout many longterm/short term mutual funds and ETF's. Once the money has been deposited, the Bank FA has no further access to the funds and the clients are usually sent over to Wealth Management. Independent FA have one-on-one personal relationships with the client and usually keep tabs with the client on how the money is doing.

Someone just telling you buy/sell a security doesn't need to be certified as he/she does not have access to your money or isn't managing your money. I can give you trading signals all day but you are responsibility for the profit/losses because you made the decision (in sound mind) to trade the recommendation based on your money ... you decision. If you gave the money to me (certified FA), then I'm taking full responsibility for the funds unless i have you sign an agreement stating other wise. Assuming I don't have you sign that agreement and i make bad investment decisions based on incompetent decisions, then you may bring legal matters against me. But if my trading/investment decisions where competent, most courts will though the case out in my favor as you *the client* should have understand the risk involved in investments. But thats another matter thats too long to explain.

In the US, for someone to give you actual buy and sell signals in the moment, there is a fine line that they must be licensed. That license is a Series 3, which they must have a Series 7 too (stockbrokers). It is a hard test and few people have it. A person is risking being sued. that is why most won't do it live. but to teach forex, one must not have a license to avoid the potential lawsuits. Many teachers used to be securities licensed in some area (there are tens of licenses), and surrendered their licenses so they could teach. If you don't spend the majority of your education on your own thinking, by books and teachers, then you are wasting your time and money. the system isn't the answer as much as it is what happens in your head. I am talking to myself as this chat.

I want to know if it is still illegal to provide FOREX signals here in the US and sell them to people on a daily basis - even if you have a disclosure on your website or document that you share with them?

Bumping up this old thread since I was looking up information on the same topic. I am curious to know the legality of signal trading, copy trading, etc.

From what I understand, if I am simply providing signals (for free or paid), I am only providing information for educational purposes (assuming I make the necessary disclaimers). So it's just like any of the Youtubers or journalists offering advice.

But what about copy trading? Unlike an FA, I am still not taking anyone's money. Your money is still with you. But if you make Buy/Sell decisions based on my actions, and end up losing money on this, does the law still see me as an FA operating without a license?

That is a question for qualified lawyers for sure, and one that knows about international laws, not us low-life's on FF.

For a start, you didn't even give a clue about which countries laws might apply...

Do people do not know how the internet works?

A. I. would be a better source, let's ask Grok...

The legality of signal trading and copy trading varies significantly by jurisdiction, but here's a breakdown based on the information available:

Signal Trading:

1. General Overview: Providing trading signals, whether for free or for payment, is generally seen as distributing information or advice. If you are clear that your signals are for educational purposes and you include disclaimers stating you are not a financial advisor (FA) and that investing carries risks, you're less likely to be viewed as providing regulated financial advice.
2. Regulation:
   1. In the UK, the FCA considers signal providers to be giving financial advice if they suggest specific transactions in financial instruments, which would require authorization under MiFID. However, if signals are clearly presented for educational or informational purposes, with proper disclaimers, this might not apply.
   2. In India, SEBI rules state that only Registered Analysts (RA) or Registered Investment Advisors (RIA) can give financial advice. Signal providers might fall under this if they are explicitly advising on trades, but educational content with clear disclaimers might avoid this classification.
   3. Australia has the ASIC overseeing financial services. Signal providers who offer advice or recommendations might need to be licensed unless they operate under an exemption like providing general advice with disclaimers.

Copy Trading:

1. Legal Implications:
   1. Copy Trading involves a more direct link between your actions and the trades executed by others. Here, you aren't managing funds directly, but your trades are being mirrored by others.
   2. Regulatory Perspective:
      1. In many jurisdictions like the UK, Australia, and under the EU's MiFID, copy trading can be considered a form of portfolio management if it involves automatic execution without client intervention. This could mean that platforms or individuals facilitating copy trading might need authorization as they could be seen as providing investment management services.
      2. If you're involved in a setup where your trades are automatically copied by others, you might be seen as indirectly managing their investments, which could attract regulatory scrutiny. In the UAE, copy trading platforms must comply with SCA regulations, including obtaining necessary licenses.
      3. South Africa (FSCA) has explicitly stated that copy trading services require a Category Two asset management license, which is distinct from merely giving advice.

Key Considerations:

1. Disclaimer and Transparency: Always include disclaimers stating that your signals or actions are not personalized advice, and that individuals should do their own research.
2. Regulatory Compliance: Understand the regulations in your country or where your followers are based. If you're facilitating copy trading, you might need to look into obtaining proper licenses or working with a regulated entity.
3. Educational vs. Advisory: Frame your content as educational rather than advisory to potentially sidestep some regulatory requirements, but be aware this might not always be a foolproof defense.

In conclusion, while providing signals for educational purposes with disclaimers might keep you out of regulated advice territory in some places, copy trading, where your actions directly influence others' trades, often blurs the line into regulated financial services. Always consider consulting with a legal expert in financial regulation to navigate these waters, especially if you're operating on an international scale or in multiple jurisdictions.

A video from Darwinex (who seem to kind of know their shit) from min 28:25 might be a bit enlightening. Thanks to Outthere who brought it to my attention in the Darwin discussion thread.
Not advice for the thread readers. Contact your nearest regulator for advice.
https://www.forexfactory.com/thread/...9#post15105929