[Admin SME]

So let us take a look at the “FX industry” again.
On the one hand we have the brokers. Yes, there are differences among them. Some are better than others.
But the principles are clear.
AVOID unregulated brokers. They may just take your money and run, without you being able to do much about it.
Also, AVOID any “desk-based” brokers, who are intentionally trading against clients. That should be intuitive.
Now. Let us talk about some of the others. Like the ones who will manipulate the SLIPPAGE against you, or the ones who will manipulate the SPREAD against you (so you will just get stopped out even though the real market was never there).
Down to the ones who will intentionally place errors in the trade booking (yes, that IS illegal!), will create artificial price spikes (so you get stopped out) or will outright give you wrong prices away from the market.
If you detect any of these things, then RUN.
Anyways, let us continue. Ah, yes, prop firms. That new breed of FX firms. Whereby some of them place successful traders on a separate book, in hope of making these lose (aka MyForexFunds). Or the ones who come up with artificial “rules” to make sure that
as a group you will “fail” so that you need to pay the “challenge fee” again. Ever heard of these?
Anyways.
So what is going on? Well;
these new prop firms took a lot of business from the retail brokers, and now often play a similar game.

Anyhow. Let us go to the participants with less IQ.
The salesmen, marketers, promoters. The Youtubers who will do ANYTHING if they get paid via money or clicks.
The sellers of statistical indicators, who post these nice cherry-picked screenshots of the days when their signals were good.
Just for you to buy it and to realize that you get whipsawed on a Monday.
The sellers of EAs who show the amazing curves going from the lower left corner of your screen to the upper right one.
Just for you to learn the hard way what “martingale” means.
The sellers of “trade signals”.
The ones with the baseball caps, tight shirts, fake rolexes and leased supercars,
who made their money by running a fitness club and now try to convince you that they were profitable trading FX.
Or the “ICT traders” who have “50 funded accounts” and make MILLIONS, this by using the powerful “silver bullet setup”.
But who never ever show any real track records.

Yes, it is a dirty SHARK POOL out there.
Oh, did we not forget some of the main parties?
Wait, maybe THE MAIN party?
The quants, separated in glass rooms. Who are busy all day “optimizing” their “algorithms”.
Mhm.
What are these guys up to?
Why are they so silent?
His name could be Dimitri, Victor or Xin Xiu.
Everyday he goes to work.
Passing various security barriers with his card which is hanging around his neck with a blue velvet band.
He has a very high IQ.
He was at MIT, or Stanford, or Harvard. He has a PhD.
He never kissed a girl neither, but that does not matter.
He is proficient in 4 programming languages. He avoids the sun, the gym or parties.
The social intelligence is lagging behind. But that does not matter.
After several years, Xin Xiu is gonna pack up, collect the money and go back home.
Maybe to join a start-up, or to get into politics.
Yes, Xin Xiu is intelligent.
However, he never believed much in “ethics”. He is not religious or spiritual.
His existence is dominated by one thing and one thing only, namely, COGNITION.

[Admin SME]

James Smith is a retired engineer, now living with his wife in a nice little house in the British countryside. After his decade-long career and after a few years of “not doing much”, James was browsing when suddenly an ad catches his attention.
“Forex trading………….make 10k per month………..work comfortably from home……………”. At first, James does not think much about that.
However, a week later, after James made a list of potential projects he wants to get engaged in to fill up his day and to make something extra,
James concludes that “learning to trade” will be the most logical choice for him. After all, he has dealt with “complex problems” all his life and has a lot of quantitative skills and an affinity to technical things.
And so it begins.
Having downloaded MT4, it does not take long until James sits in front of moving price candles, thinking to himself “come on James, how hard can it be to cut out 20p out of these big moves?”.
And before he realized it, the FX monster has started to lure him in.
As so often, it all starts in an innocent way. James puts some “indicators” together; some bollinger bands, moving averages, stochastic oscillators.
He spends hours and then days on forums. Finding all kinds of indicators which “should” give him an edge.
Slipping his black tea, James thinks to himself “all I gotta do is to improve my forecasting accuracy from a random 50% to something higher”.
James found his new baby. His wife Brenda is happy to see her husband excited again, “working on something” rather than watching news shows on TV.
So Brenda sees nothing wrong with her husband’s new “hobby”.
And so James spends may afternoons “working on the best settings of his indicators”, taking notes of the upcoming FOMC and much more.
So after all, the big day comes. James clicks the left button of his mouse.
His first trade!
He places his TP and SL. He feels good. But it gets better. After going sideways for about 2h, the price of GBPUSD finally does go up and hits James’ TP.
What follows is a new feeling of LIFE. James feels on top of the world. Didn’t he always know that he is made for this?
That evening, Brenda and James are joining their neighbours’ dinner party.
Everyone around the table is entertained by James’ elaborations on how the “Fed will soon increase interest rates”, the German economy is in for a “hard landing” and much more.
James feels good. Finally, he feels “needed” again. How nice things are after all!
Fast forward three weeks.

Things have not been going well. Driven by his first “successes”, James was quick to trade bigger and bigger. But all that happened was that after several losing days, James thought that he “can make it all back” with just one “great” trade.
And so he sat down, took many sips of his black tea; this while the days got longer and longer.
“Come to bed James”, is what Brenda says.
But James feels horrible.
He sits in front of his computer in his little, dark room. Staring at that big red number on his screen.
Despite all his “research”, his “come back trade” was stopped out. All the losses were now succeeded with a bigger loss instead of his “expected” come-back.
And so it goes.
“Maybe it is that bloody broker” he thinks to himself. So he switches to another one.
“Oh, look at this indicator! If I add it, then it increases my win-rate enormously!”.
And so it continues.
On some days, James makes 20 pips and “closes the day”.
But, no matter how long he stays; overall the big red number gets bigger and bigger.

Fast forward 6 months.
James is not doing well. His face is red, certainly not from the glass of Scottish whisky on his desk, but just from looking at that bloody, HUGE number on his scree.
James feels like a “loser”. If he can just “make it work”, find that one “indicator” or strategy that will allow him to win it all back.
But instead, it all becomes a nightmare.
James cannot sleep well anymore.
His dreams are about price candles going for his stops.
What the heck did he get himself into?
And the day comes.
“Honey, as you know it is Tim’s graduation next week. I was thinking whether we could get him that really nice bike?”
But James stays quiet. “Brenda. We need to talk”.
Brenda gets nervous because she KNOWS that with that tone in his voice, something is up.
“What is it darling?” she asks.

“Brenda. Please forgive me! I made a horrible mistake!!!!!! I lost control….I….I”
And then Brenda sees that big, red number on James’ screen.
And she freezes.
— GBP 270,000
“James, what happened??”
“I am…..I am sorry honey…..I lost our savings…….I….I”
and then, James just cries…………….yes, he cries, something that happened maybe five times in his entire life.

And so it goes.
In the end, the money is never recouped.
Difficult decisions had to be made…

And that is what happens, when someone engages with something he does not understand.
“It is all driven by supply and demand” was written in that books on financial economics he had bought at the bookstore in town.
“It is all about controlling your emotions” was what James had read on that forum for traders.

But in the end, ignorance asks for a high price.
And the “industry” knows exactly how to lure people like James into its claws.

People like James and Brenda are also part of the reason why I am doing what I am doing.
However, while I am still “out there”, THEY need to make that effort to find me.

Stay safe,
Djamal

[Author]

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