Two big brokers are encouraging ordinary people to try their hand at trading currency — buying and selling dollars, euros, yen and the like, in hopes of making a profit.
The brokers, FXCM and Gain, are doing well. Their customers, not so much.
From the LA Times:
At FXCM, 75% to 77% of customers lost money each quarter last year, according to newly required disclosures to the Commodity Futures Trading Commission. At Gain, which operates through http://www.forex.com, the number of unprofitable customers hovered between 72% and 79% every quarter last year, according to its filing.
The firms' response:
Executives with both firms say that they simply provide a conduit for people who want to trade currency, and that customers are given full disclosure of the risk.
"The majority of people today are on a quarterly basis not doing well," Drew Niv, FXCM's chief executive, acknowledged in an interview. "There's lots of education showing, 'Here's how to do it right.' ... Do most people heed the advice? No, of course not."
Hat tip: Felix Salmon