Question and answer time - brokers and forums

Please note: All material in this post is simply one man's opinion and not proven or suggested to be factual. Any reference to 'forums' or 'brokers' are referring to no particular forums or brokers specifically. Feel free to discard this post as an old fool's ramblings if you so choose.

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Question: Do most brokers want you to lose money or make money on a long term basis?

Answer: Most want you to consistently lose money but to think that you're going to figure it all out eventually and to keep trying. They know that although this means that some will eventually figure it out and have success, statistically most will just continue losing their money, but the sense of hope keeps this process in action for as long as possible.

Question: Why do big brokers offer so much free help and training in how to profit from forex?

Answer: They generally don't. What they offer is lots of free help and training in how not to make lots of money. They teach lots of methods that the common newbie or intermediate trader thinks should work, when in fact they don't. This creates the illusion that if one just learns what they teach and practices for long enough, they'll be rich eventually. This keeps traders trying, and losing, and this keeps the cash flow going into the brokers' pockets. A lot of time and effort is spent on doing this.

Question: Why do many brokers ban scalping?

Answer: Because they hate losing money. Why encourage traders to take lots of quick profits when they could instead encourage you to set a wide stop and 'let your winners run' and have your stop hit most of the time or your psychological programming convince you to close your profits early.

Question: Why are forex forums covered in adverts from brokers and what do they get from that?

Answer: Money.

Question: What does this mean for forex forums?

Answer: It means that forums are likely to be riddled with brokers posing as members, there to encourage ideas that lose money and hinder those that make money. It also explains why forex forums are made up mostly of trading methods that do not work and tired old rules from decades ago that have run their course and no longer make money. What is more beneficial for brokers to do: Advertise their services in a place full to the brim of people who know how to make money in forex, or, advertise in a place full to the brim of people who only know how to lose money?

Question: Why do the same group of posters descend upon threads that might actually help people succeed, and clutter them with useless nonsense and debate until the thread dies, but they let the others flourish?

Answer: I'll leave that one up to you.

Question: How long do posts like these remain on forex forums before they are removed?

Answer: Usually not long.

Question: Why?

Answer: Because although they may be beneficial to some traders who are still trapped 'inside the box,' they are not beneficial to the interests of the brokers or those who profit from the forums.

Lol, the clock is ticking...

Agree... but I will discuss point #1.

Of course, the ultimate customer is one who has loads of money and keeps topping up the 5 figure account regardless of continuous losses. But that's not likely, and not often. So...

The usual customer puts a small few dollars in and trades pennies. Not a huge windfall for brOkers except that there are a million of them losing.

The brOkers would want some large account customers, yes ?? The kind of trader who trades multi-lots (a few Mil) and generates spread revenue. Of course the brOker would learn to offset the trades of someone who consistently wins.

I would think that they should want to raise the minimum account balance and raise the max leverage back to the sky. That would send the stock shares of the biggest brOkers climbing.

But I will say... it aint no giveaway program.

Is gbp/chf a mirror of eur/gbp as usd/chf is a mirror of eur/usd?

Question: Do most brokers want you to lose money or make money on a long term basis?

Brokers want volume. Winning traders bring volume but are few and far between, so they also have to attract a large number of losers. If you are a loser, then they would probably prefer you to lose quickly rather than consume their resources making tiny trades.

Question: Why do big brokers offer so much free help and training in how to profit from forex?

There is competition between brokers to attract customers. Some potential customers are impressed by this garbage.

Question: Why do many brokers ban scalping?

Shoddy brokers can have trouble offsetting the trades fast enough exposing them to risk.

Question: Why are forex forums covered in adverts from brokers and what do they get from that?

What sort of adverts would you expect on a forex forum?

Question: What does this mean for forex forums?

They are free to use.

Question: Why do the same group of posters descend upon threads that might actually help people succeed, and clutter them with useless nonsense and debate until the thread dies, but they let the others flourish?

Some threads attract debate some don't. Debate keeps threads alive it doesn't kill them.

Question: How long do posts like these remain on forex forums before they are removed?

Unfortunately, forever

No... gbp/chf is a cross rate of gbp/usd and usd/chf.

So.... if you look at the current rates... gbp/usd X usd/chf = gbp/chf. >>> Always, everything must be in balance.

usd/chf isn't really a mirror of eur/usd, it just looks like it sometimes. The difference can be found in eur/chf. So, if eur/chf doesn't move at all... then eur and swissy will be a mirror image.

Question: Do most brokers want you to lose money or make money on a long term basis?

As euclid suggested, I would imagine brokers are looking for volume. From the moment someone funds an account they already have the traders money. They use that money to make money. I would think they just try to cover their exposure and not lose money. It would also be stupid of them to do something so outrageously scandalous that it would jeopardize their business. That is why it is a good idea to use a regulated broker. They can be fined or have their ability to provide broker services revoked. It also creates a medium for negative publicity if someone files a complaint.

With that said, they may do some things that some people might call unethical in regards to spread shading, disconnects, etc, but again, they don't want to soil their reputation or risk losing their business. These small things fall into the "gray area" and only give them an edge over traders trying to profit short term. It just helps them preserve their business and cover exposure.

In the long term, brokers are powerless in preventing someone from making money. Those that say currency trading is too rigged to make money speak out of ignorance, lack of experience and/or frustration. No broker or market maker can control the market. The value of a United States dollar is not going to increase because 65% of retail traders hold USD short positions. Central Banks are serving other interests and not retail brokers interest. Currencies appreciate or depreciate in value because of factors such as interest rates for example. Interest rates change based on economic factors... not because you are buying Australian dollars or whatever. A central bank may print more money than originally anticipated. This is also something that would affect price long term. All the broker can do is cover their exposure and hope they keep bringing in more volume. Kind of like how a sports book tries to even out the pay on both sides and just rake in the spread.

Question: Why do big brokers offer so much free help and training in how to profit from forex?

As euclid also said, they help attract new customers. Just as important, they get current customers to feel satisfied about being with a "friendly" broker and therefore keeps them from withdrawing their money. They may also be seeking to get traders to be more active and trade on shorter time frames knowing this will keep them from profitable and possibly eliminate small accounts altogether.

Question: What does this mean for forex forums?

Answer: It means that forums are likely to be riddled with brokers posing as members, there to encourage ideas that lose money and hinder those that make money. It also explains why forex forums are made up mostly of trading methods that do not work and tired old rules from decades ago that have run their course and no longer make money. What is more beneficial for brokers to do: Advertise their services in a place full to the brim of people who know how to make money in forex, or, advertise in a place full to the brim of people who only know how to lose money?

I don't know if it means there are members employed by brokers to provide misleading information. Who knows, maybe. Again, I would imagine they just want more accounts (volume) and cover their exposure. Having 'broker moles' (as someone once called it) means having to pay someone to "encourage ideas that lose money". I think that's something they don't need to pay people to do. There are more than enough poor traders out there that do the job for free. Someone could start a thread on the holy grail and people will destroy it in a couple pages by adding indicators and all sorts of crap to it.

Question: Why do the same group of posters descend upon threads that might actually help people succeed, and clutter them with useless nonsense and debate until the thread dies, but they let the others flourish?

People like to discuss ideas. Just so happens that most of those ideas are terrible. Some people spend a great deal of time on Forex Factory and some like to challenge every method presented. Therefore they post often. This might explain that 'same group of posters' theory. Not saying it isn't possible that some may work for brokers, but I highly doubt that there are many, if any, for the reasons mentioned earlier.

Now I don't want to sound like a defender of brokers. I'm the first person that will tell you to not trust them, but I also believe that forex trading is not easy for someone without experience. If it was then everybody would be rich and making money from day 1. Where people get into trouble is they overleverage their open positions. They do this because their inexperienced and think they can make alot of money fast. In other words their window is too small. They have no concept of the danger of leverage. So what happens is they get margin called. Some get margin called over and over. Then they start to blame it all on the broker. Again, I don't like brokers and I wouldn't be surprised to hear some of the things they might be doing, but when you gain experience you will see there are ways to profit and minimize the risks.

Yes, when EUR/CHF is not in a trend, then yes, E/G looks like G/C mirrored. Just note the pip value differences, E/G pip value above G/C big time. Look at higher TFs, there were trends and ranges in EUR/CHF, just as in any pair...

The truth about scalping, that it is doesn't exist in the real inter bank. If your were a bank or a big company and tried to buy currency with 1 pip spread and sell it in a few seconds after, you couldn't because dealers will give the price with much bigger spread and time execution.

When you are playing with small lots it is fine for brokers, they can afford this kind of losses. But when you are truing to do it with big lots, they even can not hedge it on the market, that is why they doesn't like scalping.

But if you are long term trader they can not do anything with you. So just stop blaming brokers and study the market.