So let's talk about should you be
trading Forex?
Now in this video, right now in the
next few minutes, I'll show you the
pros and the cons of trading
Forex so that you can decide whether
Forex trading is for
you. So let's get started.
OK.
Well, the fascinating
world of Forex.
You see, it's super easy to find the
pros because everybody
is telling them to you.
Everybody is telling you how awesome
Forex is. So let's just write
down what are some of the pros
of the Forex markets?
Well, the first one that everybody
tells you is that it is open 24
hours. So it's not like trading
stocks where you have regular
trading hours and then a few
extended hours.
No, it means that you can trade it
24 hours a day.
It seems that it is the market
that never sleeps.
Now, we are trading from 5:00 p.m.
on Sunday until 4:00
p.m. on Friday and these
are Eastern times.
But as you can see, it is open
all the time. And this is intriguing
to many people because they have
still a daytime job and then
they want to trade at night or
in the evening or early morning.
And this is one of the promises
that the Forex market is just open
24 hours and you can trade
it round the clock.
There is another pro, this is where
people say, "it is the most
liquid market
in the world."
What does it mean by this?
It means there's a lot of volume
going on. Let me actually show you
how much volume is going on there.
I found this here that shows you the
average trading volume in the
Forex market, which is around five
trillion, five trillion
dollars every day are
changing hands in the Forex markets.
Now, in comparison, the New York
Stock Exchange is making
22.4 billion.
That is not accurate, it's a little
bit older right now
in 2020, we're around
160 to 200 billion
dollars. But again, it's peanuts
compared to what's happening in the
Forex market. So this is why the
Forex brokers tell you, "Why
wouldn't you participate in the most
popular market in the world,"
right? The most liquid market in the
world. What is another advantage
here of trading Forex?
Well, you have absolutely no
commissions.
Now, these days, as you know,
commissions have gone away for
trading stocks.
They are still there when you're
trading options and when you are
trading futures.
So, of course, it is super
attractive when Forex trading
says that there is no commissions,
why wouldn't you do this?
Then also, brokers are telling you,
"We give you free charts and
tools." You get calculators,
you get charting software, you get
everything for free.
Now, again, in 2020, right
now, this is pretty much the
standard.
Most brokerages for stocks
and options are also giving you free
charts and tools. But if you think a
couple of years back this is when
brokers were still charging for it.
You had to pay a monthly fee.
Anyhow, so with Forex trading,
it was always free and it will
always be free.
Sounds good thus far, right?
So let's talk about the fifth
advantage here.
You can actually start
with as little as $10.
Can you believe it? I mean, most
brokers ask you to fund your account
with at least $500 or $1,000.
And if you want to trade stocks and
options, it makes sense to start
with around $2,000 to $5,000,
right? And here you can start with
only $10.
Actually, let me show you this.
I just Googled it for you, where I
wanted to see that the top Forex
broker and I came across this
article from two days
ago. Look at this, Best
Forex Brokers 2020.
And you see there are the best forex
brokers. We'll talk about this in a
moment. I see the minimum deposit is
$100, $10,
$0, $200, $100 - super
easy to fund. And look at the
leverage here.
Oh, my gosh.
You're getting a leverage of 500
to 1. What does this mean?
It means that if you put $100
in there, you're getting $50,000
buying power.
I mean, amazing, right?
So it seems that just
looking at this, there's so many
pros why would you not
trade Forex?
Well, let's talk about the cons
here. And the first is Forex
is a short, or abbreviated, for
foreign exchange.
So this is what it stands for.
So you would think, like the New
York Stock Exchange or
the CBOE, the Chicago
Board of Options,
right? That there is an exchange,
but here's the deal. Here is the deal, and this is
the kicker. Most people don't know
this.
There is no foreign
exchange.
There's no foreign exchange.
So how are you trading them?
Well, this is the deal.
You are not trading
against other traders.
You are trading against
the broker. Yeah, that's it.
You are trading against the
broker. The broker is trading
against you because there is no
foreign exchange.
Now, this is why here in the
United States, Forex trading
has almost been banned.
So there's this commission here that
we have the CFTC,
the Commodities Futures Trading
Commissions. It's a government
institution.
And here they actually say, "OK,
investor alert, Foreign Exchange
Currency Fraud.
Beware of Forex
Fraud." Well, and
they mentioned it here, I'll be
happy to post a link to this article
here in the description.
The advertisement seemed too good to
pass up. High returns, coupled
with low risk from low
investments.
So you can read it yourself, I just
want to highlight something like
this. So this is here, the most
important paragraph that we have
and this is where "How do
these scams work?
So in a typical case, investors
may be assured of ripping tens of
thousands of dollars in just a few
weeks or months.
Often," here it comes.
Here's the kicker. This is from an
official government institution.
"Often the investor's money
is never actually placed
in the market through a legitimate
dealer, but simply diverted
or stolen for the
personal benefit of the con
artists." So
gaaaah, right?
So let's talk about this.
So let's go back here.
It's the most liquid market in the
world. However, again,
there is no foreign
exchange, right?
You're getting the idea here.
So we talked about it.
No commissions, no fees.
But here's the kicker.
Take a look at this.
So these Forex brokers, they
actually sponsor race
cars. This a Formula One car
FXpro is one of the brokers.
So I got this from a press release
from McLaren.com.
So they are sponsoring a Formula One
car. They're also sponsoring
RoboMarkets, which is another
Forex broker.
You see the FX and CFD broker
will support BMW
Motor Sport. And now you might say,
"So what? They're sponsoring a few
cars, who is watching Formula
One anyhow?" Well, keep this in
mind, sponsors are sponsoring
Formula One with 30
billion dollars.
And now you might say, "Well, big
deal. I mean, here in the US we have
football, right?" I mean, we have 32
teams, I believe, in the league.
But here's the deal, NFL
sponsorship is only
1.47 billion.
1.5 billion, wait, this is why Forex
brokers are not sponsoring NFL.
I mean, who watches NFL?
You get the idea.
So they are sponsoring race
cars, which is 30 billion, 20
times as much as
the NFL, 20
times as much. OK, so let's go back
here to the pros and cons, right,
because I don't want to divert it
for you. So you might be wondering
if there are no commissions,
if there are free charts and tools,
if everything is free
how do they make money?
How how can they sponsor
a billion dollar industry?
Well, we just talked
about it. What did the CFTC
say?
They steal money from you.
You are trading against the
broker and it's like playing against
the house. It's like Vegas.
Who wins, right?
Who wins when you're playing against
the house? The house always wins.
So, yeah, it's open 24 hours.
OK, like Las Vegas.
I mean, why would they close
Las Vegas ever?
Same with the Forex market, because
it is a billion dollar money
making machine.
And you have to be very careful,
especially when it is open 24
hours, it can lead
to addiction.
Same as Vegas here, because,
hey, let's just pull on the slot
machine one more time.
So it says, OK, it's
the most liquid market in the world.
So what, who cares?
It doesn't matter because you're not
trading against other traders.
Even if there are millions
and billions of traders in there,
you're trading against the house,
right? So therefore, it doesn't
really matter.
No commissions, of course,
why would they charge your
commissions when they steal
your money, right?
I mean, we have just seen it
according to the CFTC.
I mean, not my words, their words,
official government's institution.
Free charts and tools.
Same here. I mean, sure, how
else do they make money?
They steal your money.
Now, start with $10 here.
That's also very interesting.
You see in Forex, you can start with
$100 or $10, you have seen
it. Stocks and options, as I said, I
recommend that you have $2,000 to
$5,000 here.
So this is where compare it again to
Las Vegas.
In Las Vegas, I looked it up earlier
because I was just curious, there
are 164,000
slot machines, right?
You know, the slot machines where
you only pay $0,25
to get started here, right?
On the other hand, you have 600
poker tables, right?
Why? At the poker table, your
minimum buy in is anywhere between
$30 and $100.
So you get the idea, right?
I mean, this is why Forex
is like a slot machine.
And this is why they keep the entry
level low, because they even
let you fund an account with
your credit card,
with your credit card, right?
Anyhow, so let's talk about a
summary, because I promised you,
first of all, that this will be eye
opening. And
should you be trading Forex?
Well, keep in mind, you are trading
against the house.
There are a few brokers
that let you trade against other
traders, but most brokers,
most brokers out there
are taking the other side of your
trade.
And they are providing you the
quote. This is what they give you
free quotes and free tools
because they are telling you there
is no foreign exchange.
Keep this in mind.
So the key question here is, of
course, this is what everybody
wants to know.
Can you make money
trading Forex?
Maybe. There are some traders who
are really, really, really good, but
the odds are against
you. There's people who come back
from Las Vegas and they make money
every single time they go to Vegas.
But think about the majority.
What happens to the majority of
people when they go to Vegas?
They lose money, right?
So what should you do?
Should you be trading Forex?
Well, here's my advice.
If you want to trade, there are
great ways to trade, and I would say
trade stocks and options and here's
why. No CFDs.
CFDs is like Forex.
You are trading against the house.
I cannot say this often enough.
I hope that I can do this until
it sinks in, until you realize
that when trading Forex,
you're trading against the house.
Let me just know in the comments if
you have some experiences with Forex
brokers. If you have opened an
account and what happened then?
Did you make money or did
you lose money?
Anyhow, so hope that this
is helpful and tells you a little
bit behind the scenes of what
is happening in the Forex market.
The biggest market in the
world. What, the five trillion
market, compare this to 200 billion
in the U.S. stock market here.
Anyhow, if you enjoyed this video,
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"I'm trading Forex."
Or "You should be trading Forex," or
"I'm planning to trade Forex."
Right? It's a recipe for disaster.
Anyhow, hope you enjoyed
watching this video as much as I
enjoyed making it for you and I'll
see you in one of the next
videos.