Financial illiteracy – leading financial newspapers style
Reading an article recently published by FT titled “Time for regulator to move on retail FX trading” you can’t avoid
Reading an article recently published by FT titled “Time for regulator to move on retail FX trading” you can’t avoid the feeling that quality investigative financial journalism era is over.
It’s a unique article in a sense that it is probably one of the most superficial and unprofessional articles published about the fx market in recent years. But apparently this is lately systemic to the financial newspapers industry: few months ago WSJ published an article which may even be worse than FT’s one. Just like an extremely terrible movie you can’t stop reading and appreciating the sub-par quality of the content, realizing it is so bad – that it is special.
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Without getting into too many details it’s clear that FT’s author spent no more than 5 minutes ‘researching’ the subject he wrote about, probably reading comments of traders venting out frustration at trades gone wrong. The author doesn’t realize the not very fine difference between a market maker and an actual broker and perceives all forex brokers as stop-loss hunters going after client deposits while offering high-leverage. The author may want to Google the words ‘broker’ and ‘market maker’ and then read about STP and Agency models as well as understanding that high-leverage is available in many other instruments, not just forex, being a must for many professional traders.
Not to say that the author got the forex market completely wrong, it is true regarding many small unregulated brokers, but such an unbalanced article causes much more damage than “500-1 leverage”.
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If ‘respectable’ newspapers such as WSJ and FT allow themselves to publish such poor articles it means that they are aiming for the lowest common denominator of their readers – lack of knowledge. Just like political speeches aimed at simpletons such articles use shallow description of incidents to which almost all the people can relate thinking it’s what the whole forex industry is about. Such large newspaper sharing an unbalanced one-sided opinion with its mass audience is equal to village elderly screaming ‘burn the witches’ during the Middle Ages.
If this is the case then why would the Russell Wasendorf’s of our world even bother to cover their frauds? They know that neither regulators or journalists will ever care to investigate them.
Dozens of commentors thanking the author for ‘explaining’ how the forex market works is the unavoidable result of such ‘mass-journalism’. However one persistent commentor named Gerald Clemente did have a different opinion: “Wow, Paul. Since when does a poorly researched bombastic opinion passes as news story? you sound like someone with an agenda, are you a journalist?”
A moment of irony: the opening part of this article was sent to me by email and had this in the footer: “High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article.”
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Yes and no. They’re paid to be churnalists, not thinkers and the FT lost its edge years back, it’s agenda is as naked as the UK’s Daily Hate.
Were I’d take issue, or is that where 😉 is on the regulation standpoint. As we discussed last week on a thread the UK’s regulation is excellent and the moves in Asia wrt to margin requirements suggest they’re up to speed, or getting there. It’s the USA that desperately needs to get its house in order..and that’s an issue way above FX retailing only as proved by MB and PGB Best..
Yes and no. They’re paid to be churnalists, not thinkers and the FT lost its edge years back, it’s agenda is as naked as the UK’s Daily Hate.
Were I’d take issue, or is that where 😉 is on the regulation standpoint. As we discussed last week on a thread the UK’s regulation is excellent and the moves in Asia wrt to margin requirements suggest they’re up to speed, or getting there. It’s the USA that desperately needs to get its house in order..and that’s an issue way above FX retailing only as proved by MB and PGB Best..
Spot-on Michael, great article.
That guy has no idea what he is writing about.
Spot-on Michael, great article.
That guy has no idea what he is writing about.
Bravo! 😉
Bravo! 😉
hmm, i misread it as 120k trades… 120 doesn’t sound realistic, that’s odd… unless it’s huge trades which i doubt
hmm, i misread it as 120k trades… 120 doesn’t sound realistic, that’s odd… unless it’s huge trades which i doubt
Well said that man.
We at team ForexSpace couldn’t agree more!
well, Russia, Israel, and MENA may not be affected since the countries don’t all have regulation yet to need their approval. But, will effect many of the South East Asian countries. Bode well for this initiative http://forexmagnates.com/financial-commission-brings-a-fresh-direction-to-resolving-traderbroker-disputes-in-the-forex-industry/
well, Russia, Israel, and MENA may not be affected since the countries don’t all have regulation yet to need their approval. But, will effect many of the South East Asian countries. Bode well for this initiative http://forexmagnates.com/financial-commission-brings-a-fresh-direction-to-resolving-traderbroker-disputes-in-the-forex-industry/
Well said that man.
We at team ForexSpace couldn’t agree more!
Not very original either, this article was basically just a rewrite of the same hit piece the WSJ put out 6 months ago..
Not very original either, this article was basically just a rewrite of the same hit piece the WSJ put out 6 months ago..
Outlaw bucket shops…! & Ban CFD’s at the same time.
Lock up the thieving operators…. Bucket boys and Barrow Boys…
Bury the lot ’em.
Outlaw bucket shops…! & Ban CFD’s at the same time.
Lock up the thieving operators…. Bucket boys and Barrow Boys…
Bury the lot ’em.
Ouch….does the truth hurt..??
Great Article….! should be more of it…!
Wholesale industry can look after itself, but for way tooooo long the Retail clients have been raped by less than professional CFD and Forex shops..!
Maybe the party and long long lunches at the clients expense are over..??
Ouch….does the truth hurt..??
Great Article….! should be more of it…!
Wholesale industry can look after itself, but for way tooooo long the Retail clients have been raped by less than professional CFD and Forex shops..!
Maybe the party and long long lunches at the clients expense are over..??
Stef, back in the day folk were paying a 20 pip spread on cable and you could only realistically position trade. Customers have choice, if they choose to invest in Cypriot glorified money laundering operations and have no security then that’s their choice.. Customers can only get burnt through one of two ways; broker/firm goes bust or they constantly get bad fills or are skimmed on exit. However, as a swing/trend trader (who does less for more) you can easily live with the second issue, poor fill by 2 pips when I’m shooting for 300? I can live with that.… Read more »
Stef, back in the day folk were paying a 20 pip spread on cable and you could only realistically position trade. Customers have choice, if they choose to invest in Cypriot glorified money laundering operations and have no security then that’s their choice.. Customers can only get burnt through one of two ways; broker/firm goes bust or they constantly get bad fills or are skimmed on exit. However, as a swing/trend trader (who does less for more) you can easily live with the second issue, poor fill by 2 pips when I’m shooting for 300? I can live with that.… Read more »
@Paul H:
OK, but then, regarding your own last line: hasn’t PFG Best just gone bust? Hasn’t MFG too? Have these two triggered changes in the industry towards more protection and monitoring?
@Paul H:
OK, but then, regarding your own last line: hasn’t PFG Best just gone bust? Hasn’t MFG too? Have these two triggered changes in the industry towards more protection and monitoring?
A. I’m predicting a major clear up contraction and consolidation from what is to all intents the wild west out there to educate what is for the most part a pretty stupid retail industry. For example, wtf would anyone invest their hard earned in a Cyprus outfit? It would be as daft as putting your cash into a start up fund in Athens regulated by a body on a mythical island of Atlantis. There are far too many industry players doing the same thing, for example how many realise that their broker, whose site and business complies and ticks all… Read more »
A. I’m predicting a major clear up contraction and consolidation from what is to all intents the wild west out there to educate what is for the most part a pretty stupid retail industry. For example, wtf would anyone invest their hard earned in a Cyprus outfit? It would be as daft as putting your cash into a start up fund in Athens regulated by a body on a mythical island of Atlantis. There are far too many industry players doing the same thing, for example how many realise that their broker, whose site and business complies and ticks all… Read more »
part of the reason for the poor article writing is wanting to gain SEO attention by writing articles about forex. perhaps WSJ and FT do not need so much SEO, but a lot of spam garbage has been put out as ‘articles’ in many of the popular forex forums. 90% just a regurgitation of previous articles on over-leveraging, why new traders lose, etc
good idea, i’ll give it a thought
good idea, i’ll give it a thought
This is true. But the figures are also from a Retail broker and compare to a trading venue with Institutional order flow. While leverage makes a big difference for retail, among many institutional traders, leverage is calculated against a firm’s overall proprietary account which allows for greater sized trades among individual groups of traders.
But, overall, the chart emphasizes that FX is the main retail trading asset in Japan. This contrasts from other countries where stocks are the main attraction.
This is true. But the figures are also from a Retail broker and compare to a trading venue with Institutional order flow. While leverage makes a big difference for retail, among many institutional traders, leverage is calculated against a firm’s overall proprietary account which allows for greater sized trades among individual groups of traders.
But, overall, the chart emphasizes that FX is the main retail trading asset in Japan. This contrasts from other countries where stocks are the main attraction.
part of the reason for the poor article writing is wanting to gain SEO attention by writing articles about forex. perhaps WSJ and FT do not need so much SEO, but a lot of spam garbage has been put out as ‘articles’ in many of the popular forex forums. 90% just a regurgitation of previous articles on over-leveraging, why new traders lose, etc
I read the FT article. Indeed, very simplistic. It seems that financial newspapers prefer stocks, don’t understand forex, or both…
I read the FT article. Indeed, very simplistic. It seems that financial newspapers prefer stocks, don’t understand forex, or both…