Tatsiana Ketrar
How many traders make profit at Forex market, and how many lose their deposits? What is the average “lifespan” of deposits, belonging to Forex traders? These and other questions make up Terra Incognita and closed “private information” of brokers for millions of traders worldwide. Fragmentary data, which enters media, social networks, and Forex forums is very different. Thus, according to
- a famous American trader Bill Williams, he earns about 3% of traders at Forex;
- unofficial data, provided by a number of brokers from Russia and CIS countries, this number is 8-10 times higher: the number of “successful forex traders” in their companies amounts to 25-35%;
- a number of independent Forex forums, there exist such broker companies, where no-one can ever make profit at Forex market. Thus, the Blacklist of Brokers and DCs, made up by Masterforex-V Academy, includes more than ten “Forex brokers” (traders call them “kitchen-type DCs”), which have failed to pay the profit to listeners of “the best Forex studying project in Europe in 2009-2013”.
According to the deputies of the State Duma of he RF, the process of Forex market regulation in Russia, according to which by July 01, 2015 Forex brokers are to undergo “certification”, is supposed to drastically change the uncontrolled situation of brokers’ relations with millions of traders – Russians. On Thursday, November 28, 2013, the Central Bank of Russia suggested to introduce an additional requirement to Forex brokers that work in the territory of the RF: they are obliged to reveal information about “lifespan” of forex traders’ deposits. What is known about the decision of Russian Central Bank, and what are the experts’ views on the issue. These questions have been studied by the Analytics Team of the “Market Leader”.
What is Known about RF CB Decision to Reveal Information on “Lifespan” of Forex Traders Deposits
“Financial Markets Service of the Central Bank of Russia is intended to harden requirements on advertising around the RF for forex brokers by implementing an obligatory norm of revealing the average ‘lifespan’ of their traders’ deposits at Forex currency market,” informed the First Vice-Chairman of the CB, the head of Financial Markets Service Sergei Shvetsov at the meeting on development of financial market.
“Forex clubs will be obliged to reveal information on the average life of their clients,” said Shvetsov, “it concerns the duration of clients’ game at the market until they run out of money.”
According to him, such requirement is to be included in the draft bill on regulation of Forex companies by the second reading, which may be regarded in spring 2014. As stated by the Russian official, “it would be wrong to bring Forex companies into a grey zone, access to which is allowed only to highly qualified investors”.
Pluses and Minuses of Russian CB Innovation as Viewed by Forex Traders
The Analytics Team of the “Market Leader’ has questioned experts on their first impressions of the Russian CB innovation of obligatory revelation of the average “lifespan” of their traders’ deposits at Forex market.
- “Market Leader”: what pluses and minuses do you find in the suggestion of RF Central Bank?
- Yevgeny Olkhovski (trader and financial analyst, Toronto, Canada): this certainly is a positive step from Russian financial regulator; to some extent it will:
1. put a barrier on the way of a number of “kitchen-type DCs”, whose planned “overflow” of traders’ deposits is close to 100%;
2. save Russians from doubtful investments into the “highly profitable type of business called Forex” in order to decrease fraud at the currency market, when, for example, a pensioner Sarova deceives Forex investors by 100 mln. rubles, making use of no objective information about the market.
- “Market Leader”: however, you consider this measure to be half-faced, why?
- Yevgeny Olkhovski: “average term” of a deposit is like “average temperature” of patients in hospital. Deposits of Forex brokers start at 1-10 dollars and may reach millionth PAMM accounts. As a result, a broker opens 99 account for 1 dollar and 1 account for 1 mln. dollars. A million deposit is lost, and the Forex broker is obliged to inform about the record of 99% of “successful traders” in his comapny.
- “Market Leader”: which norm is more logically to be revealed?
- Yevgeny Olkhovski: balance: the sum that a broker has received from Forex traders during a reporting period (quarter, year), the sum that has been lost, and the sum output from the company as a profit. However, cheating in such situation is also possible.
- “Market Leader”: in other words, there are no universal monitoring systems in our world?
- Yevgeny Bobrov (RF, Moscow): and there will never be. Cheating in the sphere of finance, banks, exchange, and Forex is typical not only in the RF, but also in the USA and the European Union. Let us recall
- 2006 – bankruptcy of a famous Swiss broker Refco after years long forgery of financial documents. And this has happened in Switzerland, which is the example of financial business accuracy in Europe and worldwide;
- arrest in 2008 in the USA of the founder of a broken financial pyramid, former head of American stock exchange Nasdaq Bernard Madoff, who has caused a 50-billion dollar loss.
- on September 25, 2012 Americans and Japanese have been shocked by the news that the head of the world-famous camera producing corporation Olympus Tsuesi Kikukava was concealing losses.
- “Market Leader”: какой срок жизни депозитов на фондовом рынке России?
- Ivan Kurapov (stock market trader, RF): This measure of RF CB is unlikely to change anything drastically at Forex market. One of the specialists, working for OTKRITIE broker company, has recently informed that within 1-year time 20% of clients leave the company. Therefore, within 5-year time the client data base of stock market is fully updated, and even several traders are rarely left. I think that situation at forex market is no better.
- “Market Leader”: what disturbs Ukrainian traders in the project of the Bank of Russia on forex market regulation?
- Nikolai Kirech (trader, Ukraine): we are disturbed by the term “game” in the quote of RF Bank official concerning work of traders and brokers at forex market. “Forex clubs will be obliged to reveal information on the average life of their clients. It concerns the duration of clients’ game at the market until they run out of money,” said Shvetsov. As a result of financial illiteracy, Russians and Ukrainians again consider exchange and forex as a platform for gambling with resulting consequences. As we read: “duration of clients’ game at the market until they run out of money.”
In fact, one of the most highly authoritative institutions – the Bank of Russia – brings down market participants that form objective prices for trading instruments (trading at exchange market is held not only by currency futures, but also stocks, options, indexes, obligations, and other securities) to the level of thimble-riggers and other swindlers, who coax out money from simpletons for another “game”.
“Situation in the West is different: by warning about financial risks, regulators form the image of an investor (not a gambler) for Americans, Canadians, and Europeans; as a result, citizens of the USA and the EU invest their capitals and savings. The difference between these two approaches is drastic: being a gambler on the one hand, and an investor who invests money in development of economy and financial markets on the other. So, should there be any surprise about discussion in media and social networks on the topic “Should MK call forex a ‘currency roulette’ ” if similar opinion is expressed by the Bank of Russia,” explained the expert.
The “Market Leader” and Masterforex-V Academy hold a questionnaire in Masterforex-V Academy discussion club: Will the decision of RF CB to make brokers reveal information about “lifespan” of Forex traders save Russians from “kitchen DCs”?
- yes, the measure of RF CB is effective against kitchen DCs;
- it will partially cool the enthusiasm of beginners to carelessly invest in Forex;
- no, fraud and Forex will continue walking alongside of one another.
Tatsiana Ketrar
