Foreign Exchange (FOREX)July 23, 2008
Mark on the markets Mark Patterson
Foreign Exchange (FOREX)
Often times when I write my article, I attempt to make people aware of certain areas of investing that are not so clear cut as we would hope it would all be.
We have discussed Annuities, loaded mutual funds and other products often sold by brokers that have fees and commissions that are not disclosed or understood by the potential customer.
Another area that is worth examining is the forex or foreign exchange markets.
First you must understand that I am not against trading currency, stocks, futures or anything that has a legitimate exchange that bring together buyers and sellers, in person or electronically. These exchanges are regulated by buy the New York stock exchange, NASD, CFTC and more.
Much of the FOREX market is traded on the “Interbank market”, which are likely banks, investment banks and large corporations. The term “Interbank market” refers to simply to a loose network of currency transactions negotiated between financial institutions and other large companies.
The Commodities and Futures trading commission, (CFTC) offered this Fraud Advisory; Two kinds of forex fraud are common: Unregulated firms offering/ selling foreign currency futures and options contracts to the public, and forex fraud by registered firms and affiliates.
Be skeptical when promoters of forex claim their services or account management will earn high profits with minimal risk or that you can get wealthy quickly by working as a currency trader.
Be very careful if you are solicited by a company claiming to trade foreign currencies and be especially careful if such a company ask you to commit money for forex trading.
To read more, visit, www.cftc.gov.
There are very good and legitimate ways to trade currency or other vehicles, but you are not likely to be profitable at it without quite a few losses, experience and a lot of practice with real money. Paper trading can be valuable to learn the mechanics of your trading platform of whatever vehicle you are trading, however it does not prepare you for the emotional side of trading and money management, that is where the real value, in my opinion, of a really good trader is tested.
Mark Patterson is a registered investment advisor and commodity trading advisor, and can be reached at 447-1979 or Mark@MHP-Asset.com
MHP Asset Management, LLC
P.O. Box 460, Conway, NH 03818
Phone: 603-447-1979 Fax: 603-941-0904 |
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