Talk:Forex scam

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[edit] Article quality

This article should be deleted or rewote almost entirely, it seems to be written from the perspective of a bitter trader grasping for reasons why he/she lost money in an attempt to deny how bad their trading was. - Koheleth

The orginal writer of this article has next to no understanding of the FX market or how a market maker makes money. Its so laughably silly its almost not worth correcting since the entire thing borders on satire. —the preceding unsigned comment is by TraderGod (talk • contribs) 17:19, 26 January 2006 (UTC)

Feel free to improve it! However, you should read the links I put on your talk page; your edits were not in an encyclopedic style, and I have reverted them. For example, you shouldn't address the author of the article: there is no one author on Wikipedia. If you want to find out who wrote what you disagree with, you can go to the history page and see who wrote what. Rather than saying that something is "wrong", you should correct it.
Please keep in mind that I'm trying to help; I wrote no part of this article, nor do I particularly understand/care about the foreign exchange market. I once edited the article for grammar and kept it on my watchlist. --Mgreenbe 16:24, 26 January 2006 (UTC)

Agree with Trader God. This is actually one of the worst articals I've ever seen on Wiki.

It's a wiki; be bold! --Mgreenbe 11:39, 3 February 2006 (UTC)

I hope that anyone that reads these pages will have the sense to view the real situation from a better source. It not only satires the forex market, but retail traders also

Worst Wikipedia Article Ever!

[edit] Controversial article

Some of the last few edits seem to just be vandalism, for example changing headings to nonsense. This is obviously a controversial article, but one that was threatening to take over the Foreign Exchange Market page, where I don't think it belongs. I expect that everybody recognizes that there are such things as forex scams, so editors ought to spend their efforts properly explaining what they are. If you think the description is too broad, I suggest that you start a new heading on how to distinguish between non-scamming retail forex brokers and forex scams. Smallbones 12:37, 6 March 2006 (UTC)

[edit] Inflamatory Language

I made a couple of changes to the text in hopes that they might be a start in eliminating what appears to be a direct correlation being drawn between retail forex brokers and fraud. The use of the terms "con" and "mark" really don't contribute to the discussion. Too, if one reviews the CFTC's concerns about "forex fraud", the agency's cautions and concerns are pretty much directed to unregulated brokers, not registered ones.

There are an abundance of specific cases where the CFTC has found wrong doing. I suggest that references to those cases would be far more useful than undocumented claims suggesting that every retail forex broker is a scoundrel or that anyone outside the inner circle can't possibly succeed trading the forex. If retail brokers were all crooks, I'm guessing the CFTC would be issuing something more than advisories saying that speculators should stay away from "brokers" hyping the investment opportunity.

Mcduffodonnell01 21:54, 8 April 2006 (UTC)

[edit] Contradictory and NPOV

This article contradicts the Forex article. In that article, it says that dealers' prices remain similar, otherwise they would be arbitraged (which is true). This article says that dealers manipulate their prices. If this were true, dealers would lose out to the arbitrageurs. This article also seems to be a non-neutral POV. It portrays retail forex as though it is impossible to profit from it. This is not true whatsoever.

I would have a tendency to agree with this comment. A good share of the article beneath the fold is really nothing more than unsubstantiated conjecture that would lead those unfamiliar with Forex trading to think that every retail broker is a crook and that the private speculator can't trade profitably. Neither is, of course, the case.
The subheads "Why retail speculators shouldn't be able to beat the market", "Why retail speculators can't beat the market", "Why brokers offer high leverage", and "Why brokers guarantee the execution of stop loss orders" are clearly pejorative. If I had the time I'd make some further modifications to this page but my schedule doesn't allow me the luxury of doing that any time soon. For now, I'd suggest these sections be deleted until such time the charges can be authoritatively sourced.
As far as the arbitrage issue is concerned, the biggest difference I've seen is not to be found in the displays of dealing desk broker rates, but the reorders that all too frequently are generated when a market order has been placed. In a volatile market one doesn't have the time to do such things and even if you did, you'd be wasting your time because the actions of one broker are certainly not going to generate a consistent and predictable impact on the actions of an other. Mcduffodonnell01 21:44, 25 April 2006 (UTC)
The introduction is fine. The other sections describe things that are not "scams" but elements present in any market maker, even those that make markets for equities (stocks). Gambler's Ruin? How is this a scam!?!? That would be like saying every Casino, and stock market is a scam as well. Those risks are not hidden from the user, but posted up front. It's true that there are actual "scams" but the techniques that they employ are barely mentioned here (only price spiking and order requoting). I think that almost all of this content should be deleted. It should be replaced with descriptions of price spiking and order requoting. Also worth mentioning is the performance of managed accounts. Managers can lie with numbers about the performance of their fund. They also tend to understate the risks involved in trading on margin.

[edit] revert blanking

It looks pretty bad just cutting off half the article, including a quote from the WSJ of a Forex broker saying that he'd be surprised if 15% of retail traders make a profit. Can you really justify removing that from the article? As far as the NPOV and contradictory tags, I'll suggest that you identify exactly which statements are not NPOV. The explanation of the "contradiction" cited seems to assume that forex scammers are honest - that is the only contradiction that I see. Smallbones 08:57, 25 April 2006 (UTC)

I'm sorry, I am a new editor. I must have accidently only posted a section. But the fact that this article contradicts Forex and is written in an NPOV, still stands. We must add the templates until it can be properly discussed.
As for the contradictory, maybe you didn't understand my reason above. Forex says that prices between dealers must be somewhat similar, otherwise they would be arbitraged. This article incorrectly states that dealers manipulate prices. But if this were true, they'd be arbitraged and lose out in the end. Exactly the opposite of what this article argues.
As for the NPOV, I'm not the only one who has suggested that this article was probably written by an unsuccessful speculator in the Forex market. Please read the comments above, They call for deletion. It is true that there are Forex scams, and also true that most revolve around managed accounts, but this article gives a very distorted picture of the Retail Forex market. There is a bias that all Retail opportunities are fraudulent and/or impossible to be profitable. I can't believe I'm the first person to see this. It should be obvious: "Why retail speculators can't beat the market". Come ON!

[edit] Conflict Resolved

I think the conflict between the forex page and this one has been fairly resolved. As I mentioned in a previous post to this discussion, arbitrage between two dealers is an impracticality largely because the actions of one seldom reflect the actions of others, at least on a predictable and timely basis. Manipulation might be too strong a word to use in this discussion, but the mere existence of "reorders" should tell even the novice trader that there are a lot of dealing desk brokers who reject market orders, offering alternative pricing when it suits their purposes. If anyone can come up with another justification for reorders, I'd love to hear it.

[edit] Been there......

I've worked for a forex company who totally screwed clients over!

Massive spreads, huge leverage. Encouraged people with no trading experience to bring business and trade. When money was lost, we were told: don't worry, bring more business!

If you wanted to enter the market, the company gave ridiculous prices along with the excuse 'the market's moving and you won't be able to grab a good price - take it anyway!'

The company have since left Tokyo, where they were set up, after withdrawing their application for a trading license.

The Financial Services Authority of Japan have clamped down on many foreign companies who came into the country before regulations were instigated.

I think that you might be able to contribute to this article, but there are limits, i.e. please don't get emotional, personally involved in the arguments, etc. Where you could contribute is to refer to facts, and reputable publications (perhaps especially in Japan) that explain these scams to the layman in clear language.
I've been accused here (more or less) at times of saying that all retail FX traders are crooks. I don't think that we want to say this, but there obviously are some crooks, and it would be nice to detail how they work, and how to tell them apart from honest businesspeople.Smallbones 14:57, 3 May 2006 (UTC)

[edit] The Forex Market is full of misleading advertising

Why complain when someone tries to bring a little balance, or reality into public view.

I have read several times that 80 to 85% of all new fx trading accounts lose money overall. Why is this when a trader's odds should be just under 50% using blind random trade selection.

The reason is simple. The real cost of trading forex is not 2 to 5 pips as advertised everywhere (irresponsibly). It is on average closer to 65 pips as stated at forexfacts.atspace.com Wake up people, you either have a realistic understanding of your odds, or you lose. I win consistently through hard work and knowledge, logic, understanding trader sentiment, sound risk management etc... I NEVER set stop losses! I repeat I NEVER set stop losses.

If you want to win, there are no shortcuts. Well that is my understanding and I hope it helps.

Good luck and stop picking on people who try to break your false illusions.

[edit] Objectivity

Considering the latest revisions to this page, I removed the NPOV notice. While the page may still need work, I personally think we're getting much closer to the truth. Instead of posting such a notice again, I suggest the page's detractors edit the page, making corrections where they think they are needed. In the words of George Orwell (I think he's responsible for saying this), "Facts don't cease to exist because we choose to ignore them." Mcduffodonnell01 20:14, 7 May 2006 (UTC)

[edit] Errors?

There are gramatical errors in the "The use of stop loss orders" section. Could someone please correct them.

Thank you for your suggestion! When you feel an article needs improvement, please feel free to make whatever changes you feel are needed. Wikipedia is a wiki, so anyone can edit almost any article by simply following the Edit this page link at the top. You don't even need to log in! (Although there are some reasons why you might like to…) The Wikipedia community encourages you to be bold. Don't worry too much about making honest mistakes—they're likely to be found and corrected quickly. If you're not sure how editing works, check out how to edit a page, or use the sandbox to try out your editing skills. New contributors are always welcome. --P3d0 12:59, 20 June 2006 (UTC)

[edit] This article as seen by an outsider

The article as presently written states:

"A forex scam is any trading scheme used to defraud individual traders by convincing them that they can expect to profit by trading in the foreign exchange market. These scams might include churning of customer accounts for the purpose of generating commissions, selling software that is supposed to guide the customer to large profits (see, e.g. James Dicks), improperly ..."

Whether or not Mr. Dicks is a nice guy or even an honest man, this wording effectively says he's a scammer. Maybe he is, maybe he's not, but it's not for Wikipedia to say, unless he has been convicted. Wikipedia doesn't hold opinions -- it reports verifiable facts. Sometimes those facts may include quoting others' opinions, but only in cases here the person opining is notable and relevant. For instance, articles can quote George W. Bush expressing his opinion of John Kerry, but not me giving my opinion of Kerry (I'm not notable). For that matter, we would not quote Bush's opinion of string theory physics in any article on string theory since it's irrelevant to the topic.

Wikipedia requires all content within all articles meet three important policies:

Furthermore, Wikipedia's biographies of living persons policy requires additional care in describing individuals.

I've deleted the James Dick reference. --A. B. 03:26, 18 November 2006 (UTC)

The section presently labelled "Trader recourse and anticipated changes within the forex market" starts with:
"Traders have recourse to dedicated blogs that document the risks, scams and unfair practices associated with dealing desks 11 12 Interactive forums allow discussion, complaint and rebuttal by both traders, and the brokers/market makers. see: http://nondealingdesk.com/ Such blogs and forums hold the possibility of creating change within the retail forex industry ... "
Those 3 links do not meet Wikipedia's external linking rules:
"Except for a link to a page that is the subject of the article or is an official page of the subject of the article, one should avoid:"
  • "Links to social networking sites (such as MySpace), or discussion forums."
  • "Links to blogs, except those written by a recognized authority."
  • "Links to wikis, except those with a substantial history of stability and a substantial numbers of editors."
--A. B. 03:40, 18 November 2006 (UTC)

[edit] Links moved from the main article

I removed (or neutralized) the following inappropriate text:

"Several websites (e.g. Information About Forex Scams and Forex Scams: How to Spot Them a Mile Away) give information on forex scams in order to attract customers to forex brokers who turn out to be forex scammers. For example, the first website above contains advertising links to several forex operators including one who sells FX prediction software which claims '80% accuracy.'"
"Scam example: currencyman.com - Learn Forex and Forex Trading with a FREE Demo Account! An example of the "scam format" and considered by one editor to be a forex scam. A different editor views obviously risky forex sites as a contrived effort to distract the public, as well as regulatory and enforcement bodies, from greater wrong doings within the retail forex industry."

This stuff doesn't meet Wikipedia's rules:

  1. A link to a site from Wikipedia is heavily weighted by Google. So if these sites are scam sites, there's no point helping them get higher search engine ranks. See WP:EL and Spamdexing. (Unlike the actual article, links here on the talk page have "nofollow" tags meaning Google's search engine will not use them.)
  2. It's inappropriate for Wikipedia to express such non-neutral opinions. If the operators of these sites have been convicted or fined, those legal decisions can be cited, but otherwise, perjorative language such as calling them scams must be avoided. See WP:NPOV.
  3. The second paragraph cites different editors' opinions. That's not something Wikipedia does -- see WP:OR. --A. B. 03:54, 20 November 2006 (UTC)

[edit] Editing this Article

Please provide some sourcing, or some evidence to back up claims.--DrewWiki 09:36, 27 November 2006 (UTC)

I will remove all factually incorrect, unsupported, or opinion based comments in this article

Please sign your posts. Do please note that the first three paragraphs have 7 solid citations. Some of the stuff at the end is a bit weaker however.Smallbones 08:47, 27 November 2006 (UTC)
Sorry i fogott to sign, i'll retro activly sign. The first few paragraphs are good --DrewWiki 09:36, 27 November 2006 (UTC)

[edit] False Information

"Additional costs may include margin interest, and if a spot position is kept open for more than one day, the trade must be "resettled" each day, each time costing the full bid/ask spread. "--DrewWiki 09:36, 27 November 2006 (UTC)

I think the operative word is "may" though it may not be clear that it applies to the second phrase. Feel free to restate, especially if you have a good source. Smallbones 09:42, 27 November 2006 (UTC)
Sorry I should not make declaritive statements, I firmly believe that this comment is wholy untrue, but I do not need to provide evidence for this as it is a market reality. Those that believe it to be true need to post sorces. Is this correct or am I incorrect?--DrewWiki 09:52, 27 November 2006 (UTC)

[edit] Deletion of the section "The disadvantages of retail speculators"

This is not a section that talks about scams, the disadvantages are important to note, but it is not due to scams but the structure of the market. If you would like to include this concept in wikipedia include it in Retail forex--DrewWiki 09:50, 27 November 2006 (UTC)

I think I'll put this section back - it has been the center of the article since it was started. It certainly does mention Fraud (in title of WSJ article) and the quote is about something pretty close to fraud (shall we call it scamming?) whether people are overly sensetive to using the "F" word or not. The whole section is similar, it's the info that shows why scams are so easy to set up in the forex market. Smallbones 10:22, 27 November 2006 (UTC)
I need to disagree with you here. Here is my interpretation of the paragraph, let me know your version. also keep inmind, according to wikidictionary fraud is Fraudulent deal. Business plan intended to defraud

I think the key term is Intended to defraud.

"The foreign exchange market is a zero-sum game, which means that any gain that one trader makes is a loss for another trader and both are giving money to the broker." -- This is a function of zero sum game markets, this is not a scam or fraud. Current economic theory states that market makers deserve to be compesated becuase they provide a service, matching buyers and sellers. As it happens, Forex is a zero-sum game but that is neither a negative nor a positive, just a fact.
"It also means that the average return for all traders is less than 0%, even though there is high risk in this market. There are many experienced, well-capitalized professional traders (e.g., working for banks) who can devote their attention full time to trading in this market. An inexperienced retail trader will have a significant information disadvantage compared to these traders." -- This also does not suggest manipulation, fraud or a scam. Financial literiture is full of example of how in every market retail traders underperform the more they trade. This in now way demonstrates an intention to defraud. There is an informational disadvantage true, but no one forces these people to trade or misleads them, at least that is not demonstrated here.
"Retail speculators are almost always undercapitalized, and as such are subject to the problem of gambler's ruin. In a fair game (e.g. one with no information advantages) between two players that continues until one trader goes bankrupt, the player with the lower amount of capital has a higher probability of going bankrupt first. Any speculator who plays this strategy (i.e., gambling without skill) is effectively playing against the market as a whole, which has nearly infinite capital, and he will almost certainly go bankrupt. Any speculator — particularly undercapitalized traders who do not have any informational advantages — needs to understand the reason why he thinks he can "beat the market" in such a difficult trading environment." -- While this is important information for traders to know, it should be included in retail forex not this page. This again, does not suggest fraud or scam, it is an interesting economic princple
If the retail trader always pays the bid/ask spread, which is most likely the case, it makes his odds of winning less than those of a fair game. Additional costs may include margin interest, and if a spot position is kept open for more than one day, the trade must be "resettled" each day, each time costing the full bid/ask spread. Also, the retail trader is not always guaranteed the best price (called best price as compared to dealable price). -- Same complaint as above
"According to the Wall Street Journal ("Currency Markets Draw Speculation, Fraud", July 26, 2005), "Even people running the trading shops warn clients against trying to time the market. 'If 15% of day traders are profitable,' says Drew Niv, chief executive of FXCM, 'I'd be surprised.'" [12]" -- While also, this is important for people to know low returns do not show fraud, scams or any intelligence working agaist them. Poor trading is a fact in retail markets, but that is also true in gambling and gambling is not a scam.
Guaranteeing returns is a scam, misleading people of the risks is a scam or fraud but this paragraph is not. I will delete this section again in an hour or two, but i am open to your thoughts and changing my mind--DrewWiki 11:02, 27 November 2006 (UTC)


It is a fact that the foreign exchange market is a zero sum game, that has never been in dispute, but the fact that it is a zero sum game does NOT make it a scam. It is neither a positive nor a negative right?--DrewWiki 11:41, 28 November 2006 (UTC)
I found the section useful as a way to contrast from the grandiose claims that scammers make. The article never stated the nature of Forex trading was a scam, but by giving an explanation of risks and the expectations, the reader is more informed. Scammers, on the other hand, promote Forex as the new stock market, with huge gains, misleading new traders in to putting money in to something that will likely be cashed out by someone else. —The preceding unsigned comment was added by 67.169.252.124 (talk) 19:27, 7 December 2006 (UTC).

[edit] Deletion of section "Anticipated changes within the forex market"

The comment in this section is not backed up by the link provided. The link was for an article explaining how the CME is going to combine with Reuters to make a competitor to EBS. Given that virtually 0 retail clients have access to EBS, and that it, no where in the article, explains that more oversight is needed. This section has no purpose other than displaying someone's opinion.--DrewWiki 10:00, 27 November 2006 (UTC)

[edit] Deletion of entire section

The butchering of this section is an excellent example of the limitations of consensus editing. Remove all "opinion" in the search for "facts", and the remains are left with little if any real value. The real and useful experiences of forex traders, (facts), have been edited into oblivion.—The preceding unsigned comment was added by 207.6.167.215 (talk • contribs) 14:44, 27 November 2006.

I disagree with the statements that were made, not only were they opinion but they were, in my opinion, incorrect. If there was supporting facts to back it up, that would trump my opinion, but given that I am more than a little experienced in this area I felt I had a duty to remove those comments that were incorrect and misleading.--DrewWiki 05:21, 28 November 2006 (UTC)

Perhaps you have hit the nail on the head. Consensus editing allows for editing based upon opinion as to what is correct or incorrect, as well as upon an editor's own self perceived experience level and sense of duty. If your are awaiting supporting facts to trump your opinion, I am sure that you will be eager enough to remove any edits not consistent with those new facts, if and when they arrive. In the meantime, I look at this article in its current form, not only the most recent edits, and wonder where the meat of the subject has fallen away to. In case you are wondering, I have no sense of duty to deliver, that is re-deliver, facts upon the subject concerned. Happy editing. We now have a nice simple article that defines "scam" in a way that seems quite understandable.

I am very sorry you feel this way. All of my edits were due to the LACK of facts, not that there were facts that I did not like. I am would be more than happy, actually genuinly interested if there were facts to support what was stated, but as they were stated there are no facts. Wikipedia is a place for facts and backed up statements, not a place for opinion, thus instead of me putting in my own opinion, I simply removed items that were not based in facts. Furthur, please remember to sign your comments.
Remember
Wikipedia requires all content within all articles meet three important policies:

.--DrewWiki 07:26, 28 November 2006 (UTC)

[edit] The Purpose of this Article

This is an article about Forex Scams. From what I understand that means that any points made about how well people do in this market or if there are disadvantages of this market should be put in the Retail Forex or Foreign Exchange articles under a "disadvantages" section right?

Shouldn't all sections in this article directly purtain to either a Forex Scam, Common Forex Scams, Forex Fraud, or how to avoid these?

--DrewWiki 11:43, 28 November 2006 (UTC)

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