Teacher and consultant to the futures industry since 1983
Teacher and consultant to the
futures industry since 1983
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Items you need to improve and protect your FCM or IB... 1. Very important and useful forms and letters for different applications for the FCM and the Introducing Broker. Visit our "forms" page. |
FOREX...
A TIME TO REVISIT, AS REGULATION As pointed out in my much earlier article: FOREX, FOReign EXchange, the cash foreign currency business. This business of trading in cash currency around the world is necessary and has been a viable way for major banks and businesses to protect themselves from exchange rate risk for probably hundreds of years. It is an important and legitimate business, and has always been done through world banks. Then came the speculator and along with that came the "trading" in cash currency. Still done through the banks and even through some honest clearing firms that handled the business as a service to their securities or futures trading customers. The commissions charged on such transactions varied, of course, but for the most part the fees were very reasonable, and in a case known personally the charge was $35 for each full contract of the currency traded as a cash transaction. There was also the "spread" between the bid and ask price of the cash contract exchange rate. This difference was usually equal to a cost of between $25 and $50 depending upon the supply of, or the demand for the particular currency involved. Then came the cons... And Now comes the regulatory agency... In January of this year (2001), the Commodity Futures Trading Commission was given the regulatory oversight of this industry. It has definitely been a good move for the public and the individual investor that wishes to take advantage of this investment vehicle. Many of the illegal firms have been closed by the FBI for fraud and mail fraud. Others though, who did a legal business but still "hurt" the uneducated public by hyping the greed factor and charging horrible obscene commissions and spreads still existed. There was no way to keep these slimey creatures from taking advantage of the unaware. But.... and thank goodness for this, the popularizing of this aspect of investments also brought forth some new (and some old) firms that are honest and decent. Firms that are really there to offer the customer a fair shake. It now gave the prospective investor an opportunity to locate the legitimate firms, and do some comparison shopping for the best deal. This has helped to bring about the demise of many of the firms that use the boiler-room approach to make millions for the owners of the firms and the unscrupulous sales people, while leaving the customer with an empty account. This year I have met and dealt with several honest firms that have added FOREX to the investment vehicles they now offer. I have seen the customers treated with respect, and given a real opportunity to make a profit. Losses still occur, make no mistake about that, but at least the losses are due to incorrect market trading decisions, and not to the thievery of these firms. If you, as a new or experienced investor, would like to add FOREX to your portfolio, I would say go ahead. Just be sure to check out the firm you work with, and be sure (like any investment), that you feel comfortable with the risk as well as the broker you are working with. We have added a section for the FOREX firms on our Honorees page of those who have been reviewed by us and awarded the "Futures Site Excellence Award" Why not start your search there? Get in touch with us by
email.
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