When one decides to trade in financial markets one is taking risk .. we all know that..
What many of us don't know that apart from "market Risk ( You investment going up or down ) there are other risks.
Namely :
Is the market regulated by a reputable body and are there enough checks and balances
Is it a true Regulated Exchange ( Just have a name Exchange in your company name does not make you an true exchange)
Market transparency: Are all trades visible? are prices true market prices
Client Money safety: If the broker defraud me of my money do I become just another unsecured creditor?
Is there any insurance to protect me (For example in US equity brokers clients are covered by SIPC insurance but the same is not true about Futures brokers clients...SAD but True )
With FX/ Binary / Financial Betting there are additional issues such as : Can one verify if the bet settlement is based upon the real and official price or some broker defined price which the broker alone can decide
Be very carful about OTC ( Over the counter Financial products, Meaning non Exchange traded ) and it's operators
I am not saying all are dishonest but by nature you are dealing with a individual entity which is most likely a market maker meaning for you to win they must loose
They may say.. but does the regulator force them to disclose that information?
1) We hedge trades within our clients
2) We hedge trades externally
Lets talk about another part of this industry:
Trading predictive software sellers
Trading Education / System sellers ( I am not talking about university courses but more commercial system sellers)
Most of them say " we can show you how to make money but when asked the following question they run away..
And the question any consumer should ask is
A) Ok Mr so you know how to make lots of money on the market. and want me to purchase your "Idea" . can you show me broker statements showing that whatever system your are selling has worked over a period of time? and an independent audit by registered accountant? DO you risk your own money
B) If you are so good why don;t you manage other people's money ( imagine the regulatory hurdles they will have to go through)
9 out of 10 you will get all sort of evasive answers to these 2 questions
It seems in US none of the above need any financial services licence! so any tom dick and harry can start something like this and sell books, seminars, software etc ( note I am not talking about Toolbox software but more Black Box seller)
Don;t know about UK or other EU countries or even strict states like Singapore , In Australia financial services licence is required but one can "rent" one easily
and NZ is becoming a hot spot for New FX brokers!
I know I know the vested interests are going to jump up and down and call me Negative/ watchdog / control freak etc
and wave the US flag .. shouting Free Market fre emarkets let the market rule .. yes sure.. I am not against free market ..neither am I against OTC per say... what concerns me is government and society allowing such loopholes to exist allow such scope of scammers to operate
I always wondered why one of the large exchanges not come up with a true global SPOT FX True Exchange!
Or
Why CME , CBOT .LSE, NYSE, ASX etc hold the margin money DIRECTLY so even if broker goes down consumer is protected!
Mum and Dad investors should be protected from such perils
MK
What many of us don't know that apart from "market Risk ( You investment going up or down ) there are other risks.
Namely :
Is the market regulated by a reputable body and are there enough checks and balances
Is it a true Regulated Exchange ( Just have a name Exchange in your company name does not make you an true exchange)
Market transparency: Are all trades visible? are prices true market prices
Client Money safety: If the broker defraud me of my money do I become just another unsecured creditor?
Is there any insurance to protect me (For example in US equity brokers clients are covered by SIPC insurance but the same is not true about Futures brokers clients...SAD but True )
With FX/ Binary / Financial Betting there are additional issues such as : Can one verify if the bet settlement is based upon the real and official price or some broker defined price which the broker alone can decide
Be very carful about OTC ( Over the counter Financial products, Meaning non Exchange traded ) and it's operators
I am not saying all are dishonest but by nature you are dealing with a individual entity which is most likely a market maker meaning for you to win they must loose
They may say.. but does the regulator force them to disclose that information?
1) We hedge trades within our clients
2) We hedge trades externally
Lets talk about another part of this industry:
Trading predictive software sellers
Trading Education / System sellers ( I am not talking about university courses but more commercial system sellers)
Most of them say " we can show you how to make money but when asked the following question they run away..
And the question any consumer should ask is
A) Ok Mr so you know how to make lots of money on the market. and want me to purchase your "Idea" . can you show me broker statements showing that whatever system your are selling has worked over a period of time? and an independent audit by registered accountant? DO you risk your own money
B) If you are so good why don;t you manage other people's money ( imagine the regulatory hurdles they will have to go through)
9 out of 10 you will get all sort of evasive answers to these 2 questions
It seems in US none of the above need any financial services licence! so any tom dick and harry can start something like this and sell books, seminars, software etc ( note I am not talking about Toolbox software but more Black Box seller)
Don;t know about UK or other EU countries or even strict states like Singapore , In Australia financial services licence is required but one can "rent" one easily
and NZ is becoming a hot spot for New FX brokers!
I know I know the vested interests are going to jump up and down and call me Negative/ watchdog / control freak etc
and wave the US flag .. shouting Free Market fre emarkets let the market rule .. yes sure.. I am not against free market ..neither am I against OTC per say... what concerns me is government and society allowing such loopholes to exist allow such scope of scammers to operate
I always wondered why one of the large exchanges not come up with a true global SPOT FX True Exchange!
Or
Why CME , CBOT .LSE, NYSE, ASX etc hold the margin money DIRECTLY so even if broker goes down consumer is protected!
Mum and Dad investors should be protected from such perils
MK
