We recently had a user on Twitter ask us our thoughts on forex, and it made us realize we probably have not been repeating our thoughts on the subject frequently enough. So here it is-

Don’t do it.

Forex is a dark and shady world that we’ve written about on multiple occasions. The regulators are feverishly trying to catch up, but it remains a largely unregulated and unsafe world in our opinion.  We’ve long said that if we, as licensed futures brokers, tried to do the same things that the forex firms do (booking customers trades, selling the order flow, creating their own bid/offer spreads to build higher profitability, changing the spread depending on market action, and so on…) that we would be arrested.

The latest evidence that there is something shady going on in Forex is from industry heavyweight FXCM – which without admitting or denying any wrongdoing settled with the NFA earlier this month for about $10 Million, with $2 million in fines and $8 million going back to customers. We’ve all been in trades where it seemed like the market was purposely moving against us, like someone was purposely causing us to lose money … Well in this case, looks like some FX traders weren’t crazy, and the machines were actually conspiring against them.

The summary from the WSJ:

The NFA’s problem with FXCM’s trading execution related to market moves causing the price of a currency to change in the split second between the customer pushing the button to execute a trade and the company’s system completing the trade. When the price moved during this time, FXCM would complete the trade at the original price and keep the difference if it could make money doing so, but would switch to the new price if the customer would make less money that way, according to the NFA complaint..

And FXCM is one of the reputable FX firms…..

As we’ve said before – ‘Just Say No’ to forex trading.