I just saw an ad about this on TV last night for the first time. Gave me the shivers. "Sign up now for a practice account!" I thought "Holy shit, sounds like a gambling site." Which is what it'll turn out to be for most people.

Aw. Boo!

...That sounds a lot like online poker, actually (I know Geirj just said something similar), and those ads are always up everywhere too. I guess people just don't understand the concept of "Fish" (or "Noise", in your parlance). Yes, there are people who walk away from online gambling having made a killing at it - but it's only going to be maybe 1 in every 4 people, and it's not a random process. Everyone who is not a natural mathematical wizard or who does not have the stat tools to pull ahead with is essentially just throwing their money to those who are the wizards at the (proverbial) table.

In the case of trading, the banks and brokerage firms are the wizards; the concept remains similar, but on a different order of magnitude (...you might also consider the banks to be sort of like The House, because they always win, even when they 'lose'. Just ask the execs at AIG).

I frown at the advertising at this time because it feel like they're trying to wring the last few pennies out of people they've already broken. A whole pile of Americans essentially just lost the money they were wisely attempting to put away into their 401(k) plans because the bankers decided to make losing bets with it. So, now some large percentage of these people think that perhaps putting their money into savings was a ruse (and why shouldn't they; it kind of was), and are looking to find some way of recouping their losses. They see a Forex ad and the Incandescent Lightbulb of Short-Sighted Doom goes off in their head: that's what those Wall Street guys have been doing! It says so right here. Why, I've been played like a sucker this whole time - here's where my money should be going...

And nom nom nom, whatever money they managed to wrestle away from the banks they have managed to coax him into happily handing back over.

Yes, Josh, I imagine that you're correct (...then again, I know finance like G.W. Bush knew how to tell the truth):

Suckers making bad bets through avenues like Forex is how Laissez-faire capitalism operates, and it's a non-sustainable trend (we'll see in about 4-5 years just how non-sustainable, depending on whether banks start to topple like the house of cards they are). I would personally prefer much more stringent controls on the market.

...I imagine (and I'm not trying to open a can of worms) that you think a contemporary communist economy would not experience difficulties like these?

Trading currency is not illegal, the government has no right to step in.

The best we can do is education so people know the risks involved.

I've never been to the site, but I do hope they illustrate what could happen to you.

This is circular reasoning. There's no way it could be illegal unless the government decided to step-in. You could make the same claim about anything ('Murder wasn't illegal until that damned government stepped-in! They had no right!' for example)

You're right, it would be.

(And here's where I feel like I'm trying to walk some very thin line between a total free market proponent and a proponent of communism)

I was just pointing out that your initial argument was fallacious.

...Or, instead of the government (as you suggest) basically running an expensive and perhaps not terribly effective counter-ad campaign, why not tell them that they can't advertise in the way the currently are because it is unethical?

I consider it one thing to simply be trading in currencies (or in whatever) and rather another thing altogether to urge people who have no knowledge about the financial 'rules of play', if you will, to throw their money on the pot. If I sit down with some friends to play poker at a party, and we all more or less understand the risks involved and are consenting with full knowledge that we might lose whatever we throw on the table, we're not doing anything (IMHO) unethical. Now, if we're set to play and I talk a younger brother into throwing his allowance on the table without explaining the rules or risks to them - and I do it because I can then safely bet that his money will shortly be my money - that's pretty darn unethical.

To be fair, there's lot of unethical advertising out there, so maybe singling out Forex isn't terribly fair.

It would be a nice start, however.

I've made quite a bit of money with forex trading.

 

As long as you understand it is a negative sum market (It never grows, it just changes hands keeping the same value out there...only every change of hands gets a small fee) and you understand that given a 50/50 chance you will LOSE money, unless you have a good understanding of how currencies are valued and how countries depend on eachother through what trades...as well as their current economic state, and monetary policies then you are fine.

But that is a lot to know. People make a living simply by studying this. The best I can do is keep track of three, maybe four countries....and vaguely follow other happenings in the world to try and make the best educated guess.

Just remember that someone is always losing money.

Well, I don't know. What outcome are you looking for? If you want to squash a direct harmful consequence of people being allowed to buy the foreign currency, then obviously it shouldn't be allowed.

Well, it's arguably what is needed to support the current model of perpetual growth and red ink accumulation (not that it will support it forever; there's only so many people to sell treasuries to). But I don't think capitalism necessitates constantly having an empty bank account (...well, I suppose Laissez-faire capitalism does, at least when it comes to government coffers).

What? A foriegn currency site showing foriegn currency in the ads?

Dishonest pricks

Currency exchange is extremely complex there is no math formula to calculate how much you will gain/lose.

A practice account is very useful here. It show just how much money you can lose [or gain] if it were real dough on the line, so you can determine how much you are willing to invest.

If I were to do a few practice runs at poker and realize that I suck at it, then I might think twice before putting too much money on the table if any at all.

What, the monetary system? Because it's better than barter. Or do you mean the system of foreign exchange? That might be a more complex question after Bretton-Woods.

I was objecting to selling retail forex to people by misleading them, but do you mean to object to the monetary system?

No. Capitalism only uses "growth" in the sense of a firm (microeconomics) or nation (macroeconomics), not an individual. Also, you didn't make a nickel that "didn't exist". A series of people gave up money for that nickel to be your profit.

Exports are a more complicated question.

Yes, it's true that expectations can play a part in the futures markets, especially with commodities like oil, which can be stored for long periods of time.

You mean me, personally? Yes. Most of my trading is in foreign exchange. The reason it has been so profitable recently (past few years) is the large influx of noise traders who don't know what they're doing. But I don't think that should be encouraged. I don't mind making a living off of this, but encouraging people to get into something they're not prepared for with empty promises is just wrong.