Stock brokers were already popular for their catchy commercials that have one loud message – you can become rich just by trading stocks online. However, now, the commercials for online stock brokers are more conservative.
Joshua Brown, a financial advisor, based in New York City, highlighted some not-so-good facts about the “Currency Casino”.
- 75% of traders with online currency firms don’t gain any money. Three quarters of them lose money, that’s the ugly truth. This information came directly from the online trading firms themselves since they report this data to the Commodity Futures Trading Commission, or the CFTC.
- The Client’s attrition rates, as seen by foreign exchange firms, are between 15-25% in a year, as compared to the 5% attrition rate from traditional online stock brokerages.
- The standard leverage levels of this industry dropped from 100 to 1, to a 50 to 1. This automatically excluded Forex as the investors’ ‘asset class’. This activity may well be categorized as gambling more than investments to stocks and bonds.
Almost anything has its advantages and disadvantages. Once you decide to get into something, it will still be best to know the good and bad sides of it, in order to manage your own expectations.
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