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Traders have to realize that behind all of the smoke and mirrors retail FX brokers are, above all, marketing machines. The more accounts they open, the more money they make. Because the average survival rate for traders is so low, in order to survive they need a constant flow of new or returning clients, and although some brokers may claim to have over "50K+ clients" in reality the vast majority of those accounts have been dead for quite some time.
The actual figure is probably closer to a 10 % retention rate, and even the people running the trading houses have no problems discussing the dreadful odds their clients face. According to Drew Niv. chief executive of FXCM, "If 15 % of day traders are profitable, I'd be surprised.'"
To secure this constant flow of clients, brokers spend vast amounts of money on marketing schemes that I am sure you have been the target of in the past. They will try everything from huge internet advertising campaigns to direct mail offerings, even going as far as holding trading "conferences" or "seminars". In the end. you can rest assured that they want a return on their investment: your money.
Take, for example. their much-hyped "forex trading contests" that promise to reward the best traders with monthly cash prizes. What could possibly be wrong with rewarding good traders? A lot, actually. Trading contests and dreams of a large payoff place people in direct competition with each other,which, as you may know, tends to only encourage risk taking and lead to terrible money management decisions.
If you are trading to beat your neighbor. not simply to make money for your own account, then you can rest assured that you (and your neighbor) will soon find yourself broke. Even if we manage to put aside the ethical dilemma these contests bring up and focus squarely on the dollars and cents, we still find brokers coming out on top even when they are the ones paying out to traders on a monthly basis.
Get more of this in our community where we discuss this and trade like a dealer behind the mt4/mt5 software.
Just comment "I'm Ready" to join our community.
Traders have to realize that behind all of the smoke and mirrors retail FX brokers are, above all, marketing machines. The more accounts they open, the more money they make. Because the average survival rate for traders is so low, in order to survive they need a constant flow of new or returning clients, and although some brokers may claim to have over "50K+ clients" in reality the vast majority of those accounts have been dead for quite some time.
The actual figure is probably closer to a 10 % retention rate, and even the people running the trading houses have no problems discussing the dreadful odds their clients face. According to Drew Niv. chief executive of FXCM, "If 15 % of day traders are profitable, I'd be surprised.'"
To secure this constant flow of clients, brokers spend vast amounts of money on marketing schemes that I am sure you have been the target of in the past. They will try everything from huge internet advertising campaigns to direct mail offerings, even going as far as holding trading "conferences" or "seminars". In the end. you can rest assured that they want a return on their investment: your money.
Take, for example. their much-hyped "forex trading contests" that promise to reward the best traders with monthly cash prizes. What could possibly be wrong with rewarding good traders? A lot, actually. Trading contests and dreams of a large payoff place people in direct competition with each other,which, as you may know, tends to only encourage risk taking and lead to terrible money management decisions.
If you are trading to beat your neighbor. not simply to make money for your own account, then you can rest assured that you (and your neighbor) will soon find yourself broke. Even if we manage to put aside the ethical dilemma these contests bring up and focus squarely on the dollars and cents, we still find brokers coming out on top even when they are the ones paying out to traders on a monthly basis.
Get more of this in our community where we discuss this and trade like a dealer behind the mt4/mt5 software.
Just comment "I'm Ready" to join our community.
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