Mako Forex Risk Warning

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"Member Secret Society FOREX Sharks since 2003"

Why MakoForex

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MakoForex

Our Daily GOAL

♦ Massive, Consistent Market Liquidity
♦ Largest Financial Market in the Solar System
♦ Trade 24 hours a day, 6 days a week if so inclined
♦ Totally Unregulated Global Financial Market
♦ No SEC insider trading crap to worry about
♦ No minimum account size or "Day Trader" rules
♦ Sell Short at will
♦ Leverage as high as you dare
♦ Need only track a handful of trading instruments
♦ The noblest of lifes three oldest Professions
♦ A Damned Risky Market

Marcus Locke rediscovered Spot Currency Trading in 2002, after several years absence from the Markets. The following is a unique Warning about the TRUE risks in the FOREX Market.

Do not invest money you cannot afford to live without in the Forex market. PERIOD

I am going to make this very clear. Trading currencies (Forex) has an inherent risk. Trading with leverage multiplies that inherent risk many times over. You should NOT trade currencies or hire someone else to trade currencies on your behalf if you cannot afford to lose your entire FOREX investment. This is NOT the market to put your entire life savings.......regardless what you might have seen on those damned "4XMade Easy" TV infomercials!!!!!!!!

Anyone telling you that there is little or no risk in Forex trading either has little or no actual experience in the market, or is lying through their teeth. Do not trust anyone promising you spectacular returns for little or no risk. In order to achieve those spectacular returns, all traders must increase their leverage and therefore the risk exposure will be much higher as well. Add in the factor of STRESS on the trader and human error multiplies the potential RISK even further.

So the Bottom Line is this: Leveraged Currency Trading offers opportunity for both extraordinary returns and devastating losses.

Having just made that perfectly clear, you might ask why bother? Well, as traders we can manage most of our risk exposure through our decisions, tactics, discipline and actions.

Sometimes SHIT HAPPENS. The Market has an uncanny ability to step on your Risk Management plans.

For example, the most basic risk management (and Broker Profit) tool around is the “Stop Loss” order. We all use them, in one form or another. But, if you have say a 30 pip stop loss order on a short USD-JPY position, and the BOJ / MOF (Japanese government) decide to do one of their massive surprise “Interventions” and drive the market against your position a few hundred pips (points), the market could GAP, and your “Stop Loss" may not be filled at your intended 30 pip loss level. In fact, it could be filled at the “next best price” which could be a 200-pip loss within a few minutes. It happens more than you' d think. You see, this market is a free for all, there are no rules against “manipulation”, "insider trading", "front running", etc. and believe it or not, that is the way we' d prefer to keep it.

Now, your choice of Clearing Party comes in play. Most reputable (word used loosely) online brokers and bank dealers will NOT guarantee that your stop loss and take profit orders will be filled at your specified levels. Many Brokers used too make that claim before the CFTC got involved and started fining them for false advertising (FXCM).

The NFA and CFTC are investigating Brokers who are still advertising guaranteed stop and limit fills for fraud. They have already fined FXCM for fraud and misleading advertising. So can you really count on a brokers promise to fill your order even if it means a certain loss for them?......Especially one Offshore and not really held accountable to ANYONE? I think not. So I am back to my Bold Red Statement above........ "Leveraged Currency Trading offers opportunity for both extraordinary returns and devastating losses."

At one time several years ago (yes this website has been around a long time) we ranted about the wisdom of choosing a very large Broker to trade with, one that had huge excess capitalization on the CFTC/NFA FCM reports. One that had a Rock Solid history of a Financial Industry leader.

Those Bastards were REFCO . We have still not recovered from the "REFCO Rectal Reaming of 2005" . Many of our friends and clients will never see their $$$$ again. We are talking about $numbers$ with six zeros and several commas in them. Our business was affected directly and indirectly by that disaster.

The Point of mentioning REFCO is simple. It could happen again. To You. With any Broker. And you will not see it coming either. It was mostly Offshore Funds and Unregulated Retail FX clients of REFCO that were screwed. They actually shifted funds around from those accounts into the SEC and CFTC regulated accounts before they went Belly Up to avoid Criminal Charges in US Courts.

If you learn one thing from this website, PLEASE let it be to trade with a regulated (in a legitimate jurisdiction) Bank or Broker. Your odds of getting totally screwed over are slimmer with a FSA or CFTC/NFA regulated Broker. How does one go about claiming a loss at TAX time on funds you denied existed in the past.... you see the dilema (and irony)?

For more information on the U.S. Forex Broker regulating bodies, here are links to the National Futures Association (NFA) , Commodity Futures Trading Commission (CFTC) and Financial Services Authority (FSA)

You need to think long and hard before putting your capital at RISK in the Forex Market. This market is not for everyone.

An Honest FOREX Risk Warning

MakoForex.com August 2003
By Marcus Locke