Hi guys, hi from Andrea Unger.
I've been asked about my opinion on Forex, which is not extremely positive, I got some enemies discussing this before and probablyI'll get some more today, but it's important to point out some truths that I see and mostoften are not seen by the mass of people approaching trading.
In my opinion, Forex has misled the worldof trading because many people today see trading like Forex, Forex on CFDs, and they forgotthe real essence of trading.
So it's like when.
we are now in lockdownbecause of Corona Virus situation and I see some advertisement about the possibility toget unlimited gigabytes for your connection.
This is something that for me with my cableconnection here is weird, it sounds weird, because I've always had unlimited gigabytes, but with a mobile phone normally you don't.
This offer is related to the perception ofthe internet which has grown through the use of mobile phones.
So many people today, actually surf the internet, browse through the websites just because they stay there with the mobile phone and the perceptionof the Internet is now through mobile phones.
That's why unlimited gigabytes is offered, which is normal here at home.
The same thing happens with trading.
Metatrader and Forex have sort of draggedthe minds of aspiring traders, making them think that that is trading, that that is thereal and only world of trading which luckily is not true.
Trading has been there before and will bethereafter.
But what is the real problem? The real problem about Metatrader and Forexis when this combination cut many of the obstacles to approaching trading, the obstacles thatyou are normally able to bypass through motivation, while if you don't have many obstacles andyou can easily access the markets, you take it's more like a hobby or a breeze, somethingsimple, something easy, which is not, obviously.
This causes problems in terms of losses normally, the main problems are losses in trading.
So the fact that you can easily access fromtoday to tomorrow, open an account, get even some bonuses and then you can trade all themarkets, currencies and through CFDs whatever you want, is something that pulls people insideon one side, but these people just jump into the game because they are looking for money, for easy money possibly.
Even the Gurus in the Forex markets are somethinglike I don't really understand.
Why? I want to explain to you.
Considering how limited Forex is in reality, because, believe me, it is very limited, if you forget CFDs, Forex itself is limited.
So when I meet a guy who claims to be a longterm investor, I mean investing for a long time, let's say, an investor trader in Forex, FX trader and all similar claims, sounds weird to me that he's still sticking to Forex.
So maybe the question mark comes: Are youstill there because in reality, you did not make enough money so you can't move from thereor are you there because you get more people into your educational system? Probably both can be true, but obviously, the truth is that if you are a really skilled trader, if you really are a wolf of Wall Street, you have to move forward.
If you move to a different scenario whichis a different market, you don't stick to Forex and to Metatrader, that's the truth.
The evidence I had through different tradersI met all over the world and it's sad to see that there are so many scams claiming to bethe next George Soros as an FX trader and so on.
By the way, many of these have been replacedby Cryptocurrency Investor or Bitcoin speculator and blah blah blah.
okay they have alreadydisappeared, but the concept is the same.
something that sounds appealing to the massof people who's looking for money.
Then about diversification, you can say: “Yes, but there are CFDs, they can actually diversify!”.
Well, if you run a good analysis of the costsinvolved in trading CFDs, compared to the cost involved in equivalent Stocks or futures, you recognize immediately that there is actually no match.
I mean, futures and stocks, the real marketslet's say, are extremely cheaper compared to CFDs and the CFDs world.
Obviously, because CFDs are an offer to thosewho don't have enough money to trade those markets so you clearly have to pay for thisbecause you get a service.
But, coming back to the concept before, theGuru, the wolf of Wall Street is not trading CFDs, he trades stocks or futures.
Now you might claim that George Soros mademoney on the currency markets, yes but very likely not through Metatrader anyway.
That said, the barriers to enter the marketlead people, the missing barriers in Forex, lead people to jump into in an easy way, justbecause they want to make money.
There is also another evidence, consideringbrokers with different kind of traders or, better said, a different kind of levels oftraders and attitude of traders, if you look at statistics, they are online you can browse, google them, and you will find the that I'm telling you the truth, most of the CFDs andFX retail traders, the brokers show that you have a percentage of profitable accounts whichgoes between, I may say, 20% to 35% which is much more than you expected probably becausewe always here 5% are profitable and 95% lose, no it's much better overall 20% to 35%.
This is normally the everyday average.
If you look at Interactive Brokers, whichdoesn't mean Interactive Brokers is better than for example Oanda or IC Markets no, I'mjust saying, look at Interactive Brokers where normally you have a different family of tradersjust because of the way they trade, of the level of capitalization and also technology, they don't trade through Metatrader, there you see that this percentage goes up closeto 50%.
In the first quarter of 2020, it dropped to42% and something, but it has been between 45% and 50% for a long time.
So, actually, you see that also in that case, more skills necessary, more capitalization, so a different level of trading leads to betterresults.
I mean not because of the broker, but becauseof the way those traders, trading there, have approached the world of trading.
Another evidence, if you look at the WorldCup Trading Championships and look at the results of the winners or the leaders' board, you will see that the futures division shows normally better results than the Forex Division.
This has maybe two explanations.
The first is that the traders trading futuresare more educated in trading compared to those in Forex so they get better results, one possibilitywhich might be true, again because they have more challenges to get there.
Second, the trading in the world of futuresmight be easier than trading the world of Forex, and this is something that I also believebecause of my personal experience and the experience of many students in the Unger Academy.
Now I want to tell you that I have nothingagainst anybody approaching Forex, be careful I am not saying this, but I am saying that, if you want to approach Forex you have to do so by taking care of your proper educationin the same way you approach any other market in the world, with the same care about yourstructure, your education, and your trading plan.
I have, in the Unger Academy, several studentswho trade Forex and only Forex and they are happy, they are profitable.
So there is nothing wrong, I am not tellingthem: “Stop trading that stuff!”, no, of course.
If their capitalization, if their attitude, if their mindset is pushing them towards Forex, it's fine, provided they do it in the properway.
This is what we teach, what we recommend andwhat we want everybody to be careful about.
So it's more a matter of being aware of what'sgoing on, so Forex it's not a regulated market, that's another reason why grown-up traders, let's say, prefer to quit from that.
It's normal, that's why I don't believe inthose gurus on Forex, it's nonsense in my opinion again, but you can trade Forex, ifyou wish, provided you approach it in the same way you would approach trading the miniS&Pfor example, the future miniS&P not the CFD.
That's it, guys.
It's very important that you are aware ofwhat you do.
My personal experience is that futures areeasier, they offer for sure a completely different possibility to diversify your approach, yourtrading, your markets which is not possible in the number of currency pairs out there, in the Forex market and if you do so on futures it's in any case cheaper than doing so onCFDs.
I mean, probably some forex broker is willingto kill me now, I'm just telling you some tips of common sense of course.
If you can't open a futures' account you canopen a Forex account.
I discussed that, I mentioned some of thebrokers which I trust, I mentioned that it's not bad as a start, but you have to be carefuland aware of what you do.
My recommendation is to study and to approachthe markets as a serious business.
If you want to know more about trading andspecifically automated trading which is what I do, you can find a link here below to getmore information about this world, the world inside the Unger Academy and whatever yourexperiences and whatever you want to add to my video here about Forex, what you know, what you've heard of, please feel free to comment here below, we're here to discusswith you.
Ciao from Andrea Unger.
See you next time ciao.