Analysis: Some Retail Brokers are Sending Mixed Brexit Messages to Clients
- While the bulk of the industry increase margin requirements, marketing campaigns are inviting clients to trade the event.
There are a number of retail forex and CFDs brokers out there that have been sending conflicting messages to their clients in recent days. While most of the companies in the industry have implemented changes to tackle the prospective risks from erratic moves in the British pound (which are already happening), a number of those same firms are inviting clients to trade the event.
While the companies are preparing for the massive volatility which is likely to stem from the event, marketing messages across Facebook, Google and other platforms are conflicting. Direct emails and social media adverts are tempting forex traders to take risks around the event.
Easy Money vs. Heightened Risks
With the classic approach of promising easy money, the marketing departments of companies are inviting their clients to take on risk, while risk management units know that the same risk can ultimately result in losses for a brokerage.
The reality is that nobody knows what the outcome of the referendum on Thursday will be, and many brokerages could get their systems stress tested in the uncharted waters of low Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term and extreme volatility.
In order to keep their reputation solid, retail brokers should rather focus on the long term profitability of their clients. Instead of marketing departments soliciting clients with alleged easy money opportunities, they should rather focus on the matter only after the prospective Black Swan Black Swan A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in Read this Term is behind us later this week.
Considering the situation, the current status of the brokers in the industry should continue to accentuate the risks, rather than the profit opportunities.
Major banks are calling in their traders after a relaxed weekend, as the liquidity situation on the British pound markets since the start of the week has dramatically deteriorated. The GBP rallied across the board on Monday and Tuesday as the polls that are tracking the mood of voters have shifted closer towards the Remain camp.
There are a number of retail forex and CFDs brokers out there that have been sending conflicting messages to their clients in recent days. While most of the companies in the industry have implemented changes to tackle the prospective risks from erratic moves in the British pound (which are already happening), a number of those same firms are inviting clients to trade the event.
While the companies are preparing for the massive volatility which is likely to stem from the event, marketing messages across Facebook, Google and other platforms are conflicting. Direct emails and social media adverts are tempting forex traders to take risks around the event.
Easy Money vs. Heightened Risks
With the classic approach of promising easy money, the marketing departments of companies are inviting their clients to take on risk, while risk management units know that the same risk can ultimately result in losses for a brokerage.
The reality is that nobody knows what the outcome of the referendum on Thursday will be, and many brokerages could get their systems stress tested in the uncharted waters of low Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term and extreme volatility.
In order to keep their reputation solid, retail brokers should rather focus on the long term profitability of their clients. Instead of marketing departments soliciting clients with alleged easy money opportunities, they should rather focus on the matter only after the prospective Black Swan Black Swan A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in Read this Term is behind us later this week.
Considering the situation, the current status of the brokers in the industry should continue to accentuate the risks, rather than the profit opportunities.
Major banks are calling in their traders after a relaxed weekend, as the liquidity situation on the British pound markets since the start of the week has dramatically deteriorated. The GBP rallied across the board on Monday and Tuesday as the polls that are tracking the mood of voters have shifted closer towards the Remain camp.