I am sure a lot of people have heard that there is no way to make money in forex it is completely rigged against just like gambling or the lottery.
So is the forex market rigged? After hearing from lots of experienced traders I mean traders that have been doing this for 15-20 years my opinion is that it is “Rigged” in a sense that is it manipulated but on the other hand anybody can still profit from trading forex. Each person has control of when they make a trade and a decision to make. There are so many different ways to trade it is just a matter of finding what suits you when it comes to your mindset and leaving emotions out of it.
What do I mean by it is rigged in a sense? Just like most things in life the rich get richer and the poor get poorer. But when it comes to forex you are in charge of when you click to make the trade and when to get out. All markets including Futures, Cryptocurrencies, Stocks along with Forex are manipulated by the big players which include banks of course.
Any individual can have the opportunity to profit in the forex market it is just a matter of getting your VOT (volume of trades) along with the right mindset which I will get into a later time.
You can learn a lot about trading for free on youtube and simply demoing most indicators that you need are all free along with the MT4 platform. I personally do use MT4 for actually trading but do all my markups and analysis on TradingView which is lightyears ahead of most other charting platforms. It is also free to take to use TradingView and you won’t need to upgrade until you start making money.
Which banks manipulate forex?
Everyday in the Forex Market there is over $5.3 trillion dollars in transactions which makes it the largest financial market by far (around 80 billion in Stock Exchange). With it being a bigger market it like this it means only the bigger players can manipulate the market.
The major players are investment banks, hedge funds, private equity firms, big corporations, and central banks.
What is FX fixing?
It has been quite awhile since FX fixing has been really talked about in mainstream media. It still goes on but not to the extent it used to with banks colluding together to move the market. With a 5.3 trillion dollar market no one bank or big player is going to make a big movement in the market.
The Forex Scandal simply explained was a group of banks (including HSBC, Citibank, JPMorgan, Etc.) along with other big players manipulating the WM/Reuters benchmark rate which happens at 4pm london time. Basically the prices are frozen during this time so the banks would make a move a minute before this freeze that would cause a change which wasn’t a big change but when you have unlimited clients using you for FX trading that little bit adds up to a lot a bit. So any profit they are making comes right out of their clients pocket.
That is why it is still a good idea to stay away from opening trades at around the close of market sessions which the main one is 4-6pm EST for the New York session. You will see that spreads typically jump around this time frame.
FX Fixing Definition: Also known as the London Fix in Forex was where a daily exchange rate fix was held at 4pm London Time. WM-Reuters then calculated the fix rates based on the transactions at the time.
Forex Scandal Explained: The scandal happened during his time when the big players (Banks, The Cartel, The Mafia just names they used) would do what is called “banging the close” or get really aggressive with buy/sell orders to distort the fix which they would then profit from.
What was changed?
They moved the 1 minute window to 5 minutes now and banks are supposed to be held to an ethics code of conduct. The 5 minutes makes it hard to manipulate but again I would just stay away from trading at the close of NY session for starters.
Is forex illegal in USA?
No forex is not illegal in the U.S. Your banks still make money off your money you have in the bank everyday in the Forex Market.
Now is forex as easy to do in the U.S. as other countries like the U.K. of course not. There is this FIFO rule and governing bodies that are supposed to be there to protect retail traders like ourselves to not lose our money but in my opinion they do the opposite.
One of the rules for using a U.S. regulated broker is that you cannot hedge at all. Now you may not hedge and never want to hedge and that is fine. Myself I like to hedge when I am in profit. Which means I am in a long term trade and up many pips but there is going to be a correction so why not make money off that correction as well.
Even though I am in profit if I was to use a broker I cannot have a long and short open on a pair like GBPUSD. I really haven’t found any explanation for this but this is one of the many reasons I don’t use a U.S. regulated broker.
Other reasons are that you can’t have more then 50:1 leverage and I normally don’t need more than that but I use 100:1. This won’t affect traders that only take one trade at a time of course. The only positive for using a U.S. regulated broker in my opinion is that your money is a bit safer but with crazy spreads and fees is it really?