We think trading forex on one’s own via the various ‘retail’ platforms is a bad idea. We’ve made that clear a million times over. Attain’s rules for forex are pretty simple (you can click here for a refresher). Basically- don’t do it.
As time goes on, we find more and more in our industry jumping on the forex hater bandwagon, and with good cause. So when we first stumbled across a new article warning retail forex clients to get out while the getting was good, we merely nodded our heads in agreement. Then we realized exactly who was issuing the warning (emphasis ours):
Oanda, one of the largest online currency trading platforms for retail investors, has some unusual advice for its customers: stay out of the market.
“We are encouraging our clients not to trade right now, but to watch the market carefully,” said Michael Stumm, president and chief executive at Oanda, in an interview.
Oanda this week sent an email to its clients, advocating that they move to the sidelines and watch the markets tussle over each new headline out of Europe…
The brokerage stands to lose revenue if customers heed its warning and trading volume falls. Online trading platforms like Oanda earn money on the spreads between the offering and asking prices in each transaction.
But if Oanda clients stay in the market and lose big, they’ll walk away for good, Stumm said…
During the financial crisis in 2008, Oanda saw a substantial drop in trading activity as clients, disappointed by losses or overcome by fear, withdrew from the market.
Oanda is seeing parallels to 2008. Volatility also surged just before the 2008 recession, cautioned Oanda analysts.
This week, seeing no end to the European debt crisis, and the currency market tumult it was causing, Oanda hit “send” on its cautionary email.
Hmmm… seems to us, if even the people making money off of disillusioned retail forex traders are telling them it’s a bad idea, it’s probably time for people to listen. Just sayin’.