He, too, was felled by leverage, and so were many of his trading buddies. Default strategy used in a simple double up and get out technique. Trading gives them cash flow and. Half Grid - Half martingale, so not crinks so risky. What is your refund policy? But therein, he says, lies an opportunity.

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Reports to clients by the two biggest publicly traded over-the-counter forex companies -- FXCM Inc. These kinds of losses make for investor churn. The average OTC forex investor drops out of the market after just four months, according to the National Futures Associationan industry self-regulatory group.

Retail forex investors, many of whom are well educated in fields other than finance, enter into a market that is lightly regulated, opaque and rife with conflicts of interest. They are enticed by pitches from coaches like Martinez, saying people can finance their retirements trading forex. And they are allowed to supercharge their bets with the kind of leverage -- as much as -- that investors in other asset classes can only dream of.

That kind of juice can lead to wins, but more often than not, it leads to big losses. Investors can have their entire investment wiped out in a matter of days. Forex trading is like gambling at a casino because the odds are always stacked against you, says Michael Greenberger, who was director of the Division of Trading and Markets at the Commodity Futures Trading Commission from to Brokers may offer any currency prices they wish and can give different rates to various customers at any time, the CFTC-required disclosure says.

For the past two years, regulators in Europe and the U. The great lure of forex trading has less to do with the movement forex traders millionaires drinks the currencies themselves and more to do with leverage. That means traders can double their investment on a 2 percent currency move in their favor. With leverage on a currency trade, a 2 percent move against the investor would mean a percent loss. In September, the euro lost 2.

Forex traders millionaires drinks theory, investors can lose more than percent if a currency continues to move against them. In practice, brokers close out trades to prevent further losses. The investor borrows the amount leveraged from his broker. The trade is forex trading is a game or business xfinity, meaning the investor can close it and collect gains or take losses at any time.

If an investor wagers the yen will rise, the broker bets it will fall. WHEN YOU SELL, THE DEALER IS THE BUYER. WHEN YOU BUY, THE DEALER IS THE SELLER. He recommends using no more than leverage. Most clients, he says, useand some use much more. The CFTC has tried -- with mixed results -- to clamp down on leverage. Untilthe NFA set the limit at Then, as part of the widespread financial rule-making overhaul that followed the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFTC proposed slashing allowable leverage to The industry and its customers fought back, flooding the agency with letters of protest.

In response, the CFTC set the limit at Before that, exchange rates among major currencies were set in reference to the U. When President Richard Nixon ended the gold standard for the dollar in because the U. InCongress passed the Treasury Amendment to the Commodity Exchange Act, exempting all forex trading from regulation. That was intended to smooth currency transactions between banks, which had their own regulators. But it created the opening for OTC forex trading.

Inthe CFTC won the authority to regulate forex trading when Congress passed the Commodity Futures Modernization Act. The CFTC now has on its plate a proposal to tackle another controversial element of the OTC forex market: the use of credit cards. The combination of leverage and credit cards can be a perilous brew.

By funding a trading account with a credit card and making a losing bet using leverage, an investor can find himself paying a 3 percent upfront fee, as well as a debt with an interest rate as high as 25 percent. The NFA, which is empowered by the CFTC to help regulate forex trading, has asked the CFTC to ban the use of credit cards. In the same letter, the NFA noted that 72 percent of U.

Martinez, the Market Traders Institute CEO, tells students the odds of losing in forex trades are even worse. But therein, he says, lies an opportunity. He says he became a millionaire trading forex after growing up dirt-poor in Whitefish, Montana, on the Blackfoot American Indian reservation. He displays a photo of a 5,square-foot square-meter mansion with a pillared portico and a semicircular driveway. Martinez, whose school has forex traders millionaires drinks, says in an interview that before he opened MTI, he imported and sold high-quality postcards from Japan.

When the dollar fell more than 40 percent against the yen from tohe suffered losses in his postcard business. So he trained himself through trial and error -- and then launched his academy to pass on his knowledge. About 1, students have received three college credit hours for MTI trading courses, Martinez says. He forex traders millionaires drinks no apologies for MTI graduates who lose money trading.

Abrams, 58, says he was a stock trader for more than 20 years. He got into forex in because he was looking for a new challenge, he says. Abrams places about a dozen trades a week with FXCM as his broker. He usually uses technical analysis in an attempt to recognize patterns, which he learned from MTI. The school teaches what it calls the ABCD method.

The technique trains students to identify zigzagging lines in currency-price charts, the first three of which are dubbed A, B and C. Those lines move down, up and down like the start of the letter W. Martinez tells investors to speculate when the C line hits bottom and then trade when they think the currency price will rise, which would be the D line.

Abrams says Martinez mentioned that trade opportunity in a group online mentoring session -- part of the package he bought. You can do it in the morning before you go to work. Forex firms such as FXCM and Gain Capital make money from trading volume, with small markups on many transactions. FXCM, co-founded by Niv inwent public in December As required, it did report that in the last two quarters of Those numbers dropped to Forex OTC brokers woo potential clients by offering them what they call practice accounts.

These dummy accounts draw people in by allowing them to see bid and offer prices and make trades while not putting up cash. The demonstrations can make forex trading appear like a simple way to get rich. Michael Scalia, a used-car dealer, got great results trading in the practice account he opened with FXCM. It was a different story when he opened an actual account. Scalia says he had used leverage until When the CFTC changed the rules, he used leverage.

Royce Barron, a retiree in Spanish Fork, Utah, opened a practice account 14 years ago and then moved on to the real thing. He, too, was felled by leverage, and so were many of his trading buddies. Leverage has blown out a lot of OTC forex traders. So have broker conflicts, enticing pitches, practice accounts, credit card debts -- and taking risks in a market dominated by professionals that may not be suitable for amateurs. Even with those, no matter how large the disclosures about leverage and conflicts are written, millions of people take the OTC forex plunge every year.

Global Startups Cybersecurity Digital Media Bloomberg Technology TV Hello World Studio 1. Leverage as High as Lures OTC Forex Traders Who Most. November 12,AM EST. The Lake Mary, Florida, company that Martinez founded in says it has educated 30, amateur foreign-exchange investors. The most important market news of the day. Before it's here, it's on the Bloomberg Terminal. All Rights Reserved Careers Made in NYC Advertise Forex traders millionaires drinks Choices Website Feedback Help.

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