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October 21, 2006

Bored by Stock Trading?

posted by MR WAVETHEORY at 10/21/2006 01:48:00 AM

I recently came across an ad in a magazine for a dot com (an forex broker that shall remain unnamed) and I have to say that the pitch for opening a forex account with this broker borders on some very aggressive and very socially irresponsible marketing. The pitch:
Tick. Stock.
Tick. Stock.
Tick. Stock.

Boring, Isn't It?

Just because you've got a nice, solid grown-up stock portfolio doesn't mean you can't any fun. Why not add add currency trading into the mix at this dot com? It's fast, exciting, open 24 hours a day.
Why am I upset by this type of marketing? First of all, no broker should ask any customer to open a forex trading account because it is supposed to be fast and exciting and open 24 hours. Brokers who are working with retirees have a responsibility to their clients and a fiduciary duty to ensure safety of principal. Forex definitely fails on that criteria alone. Retirees should put their retirement money into something that will insure principal and safety and provide a suitable return.

Secondly, boring is good when you are investing. Most people who want excitement from investing are gamblers, not investors. Gambling is an addiction and asking retirees to put their hard earned dollars into forex trading is simply irresponsible, because forex trading can lead significant losses. Trading forex (unless you have significant amounts of capital) entails using leverage, typically 5-10 times the amount of money you put in. Some firms even offer 200 times leverage which means if a currency moves just 0.5% in the wrong direction, all your money will be wiped out.

Fast and exciting huh? Sounds to me like you lose all your money in 24 hours!

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