Poxy Ponzi schemes - FX Trading

roundthebend

I don't know if it's because I now have adult teenagers, or because of Covid lockdowns, or just because it's the 2020s, but everywhere I look I see Ponzi schemes of one sort or another and the current flavour of the decade is FX Trading.

My eldest son kicked it off - he was trying to do FX Trading which I think is a perfectly fine investment hobby, then my youngest was interested - but mainly in a Ponzi scheme. Eldest is now involved in some kind of Ponzi himself, but masquerading himself as a knowledgeable FX trader. Thing is, they both know the logic but neither has been able to turn a decent profit themselves.

Next up, one or two friends and associates on social media have recently posted saying to get in touch if you want to find out how they have been earning some good pocket money lately. Turns out it's an FX Trading scheme. Of course, you have to "invest" to start with, and they haven't provided much info about where the earnings come from but the fact that they are trying to recruit more people into the scheme whilst not really talking about how FX trading itself works is enough to convince me that the earning is purely from people joining the scheme.

It does my fucking head in. These are people that I think are smart enough to know better. And you can't argue with them because FX Trading is logically a good idea. The reality, as proven by my eldest, is that you have to work really hard to get a little return. Or, you have to get lucky.

Anybody else noticing this?

Kittyfrisk

Thought this was going to be about novel guitar pedal schemes, turns out to be foreign exchanges. Disappointed...

DefaultM

Someone tried to get me to do one. He said that you deposit and then they take the money and trade for you, and you get the profits. The second part is that you need to recruit new members and get them to deposit.
I said that they could be doing nothing and just sending him back bits of his own cash pretending it's profit. Then one day when enough people have been recruited and deposited they'll be off to Panama with everyone's money. He was having none of it though.

merlin

Yeah, I also thought from the thread title that this was about kids entering the bedroom trader/flipping market. I was about to tear my hair out. 

DefaultM

I've not had time to look in to trading forex myself. After giving it a general overview I thought it seemed like a great way to lose a lot of money.
The fact everyone wants a £2500 course fee to teach you how to do it suggests to me that making courses is more profitable than actually trading yourself. When you read the reviews to these courses very few people are saying that they went on to make a profit.

m_c

DefaultM said:

I've not had time to look in to trading forex myself. After giving it a general overview I thought it seemed like a great way to lose a lot of money.
The fact everyone wants a £2500 course fee to teach you how to do it suggests to me that making courses is more profitable than actually trading yourself. When you read the reviews to these courses very few people are saying that they went on to make a profit.

Funnily enough, that's my thought whenever I see some ad from somebody who wants to "teach" you how to be successful like they are.
I'm pretty sure if I was as successful as they try to make out, I sure as hell wouldn't be teaching others how to take away my profits.

Sassafras

I'll teach you how to do it for £2000.

roundthebend

DefaultM said:

I've not had time to look in to trading forex myself. After giving it a general overview I thought it seemed like a great way to lose a lot of money.
The fact everyone wants a £2500 course fee to teach you how to do it suggests to me that making courses is more profitable than actually trading yourself. When you read the reviews to these courses very few people are saying that they went on to make a profit.

You don't need to do the course etc. But yeah, my son tells me how it's so easy to make money, but then I ask why he hasn't and he says he'd rather focus on helping other people. Hmmmm, yeah, right!

Basically, the trading software will let you set up trades, you can configure where you want to cash out and also where you want to cut your losses (stop loss).

e.g. I invest £10 in something, and when that deal reaches £11 I could trigger to sell automatically so that I make a pound and avoid any negative swing that happens after. I might miss out on a better deal, but trading is usually about making small and reliable and regular profit. I can also set it to sell at £9.75 (for example) so I don't lose too much. But, with the volatility of the markets you can easily trigger that too soon, so you might go a bit more risky with that. Of course, there's fees involved, so it's difficult to it all balanced out and still win. The software even helps with that.

As far as learning the patterns goes, there is probably value in paying for training for that. But it's all bollocks in my view. My son talks about graphs bouncing between highs and lows and inverted ice cream cones etc. Sounds great, and is probably very valid, but I don't care unless he can show me that he can make money from it.

EDIT: I've decided that what my son is involved in is also a Ponzi scheme of sorts, so would advise against being involved. Info kept here for the intrigued.

If you're really interested, his current thing is offering a free trading community where they tell you what they think is good to go for. On the back of that, they hope you will use their affiliate link to setup an investment which they will get some commission from. I can put you in touch, I think there's minimal risk in joining, hence why I'm mentioning it but, personally, I think it's not a very ethical thing they are doing. And, yes, they pose for instagram photos in their smartest suits with their MacBooks and fancy watches pretending they're wealthy, when in reality they are scraping an earning 9-5 like the rest of us.

Heartfeltdawn

It's no different to those schemes you saw in the back of magazines 30 years ago telling you how you could make money working from home. Send £2 to Frank, he'll tell you how to do it. 

yocky

God. Run away.

The chance any of these "courses" are going to teach you anything that will give you an edge in the FX markets is zero, as as you've already indicated the costs are extreme. A tiny proportion of exceptional people make money out of this sort of trading, usually down to a combination of natural talent and utter dedication to putting in the hours back testing strategies and observing markets in action. This isn't that.

hollywoodrox

I thought. It was people trading pedals lol

ThorpyFX

You'd be better just doing this yourself on trading 212..... 

m_c

FX trading is essentially gambling, a bit like day trading on normal stock exchanges.

Nobody can predict what any given currency is going to do, and if somebody knows something that's going to affect the market, plenty other people will also know that something.


At least with conventional shares, you can judge how a company is performing, and is likely going to perform, and you can get some dividends if you invest in suitable shares. You're not just tying your money up in the hope your gamble is going to pay off when you finally need the money back.

roundthebend

Eldest son is now banging on about NFTs. I'm not completely sure I understand these, so shouldn't form a strong opinion yet. Essentially, it sounds similar to cryptocurrency, in that it is a blockchain based technology, but rather than currency it is used to create unique digital assets - perhaps digital collectables like Pokémon cards.

He's telling me that you can invest into the technology itself rather than specific collectables, and if the tech gets adopted by firms like Nintendo then it will become valuable. He'll be a millionaire and I'll regret not getting involved.

I've just asked him to clear our mortgage and debts if he gets over £1 million.

newi123

Yep - have experience of this in my day job, and it`s a complete minefield, even if its not an out and out ponzi scheme.

You can make alot of money trading currencies, just like equities, but it`s not easy and is certainly not a part time job.

The real winners are the companies you are trading with - usually you`re not buying actual currencies, but simply betting on which way currency pairs will move. It should work that you place the bet with the platform, and they take a margin (spread) plus costs for doing this. Many rely on opening accounts for amateur traders who are so bad they know they will lose out on the positions placed - when the platform sees this happening, they will often stop actually placing the positions. This of course means that they are liable for any profit traders make, but if the position goes against the amateur trader, the platform has essentially made a 100% profit on the money placed, rather than just a small margin.

This is simply one way you can lose out.......... Best not to get involved unless you really understand it, have a proper high risk outlook and can afford to make significant losses!

Lots on the FCA website about FX trading and specific firms to look out for, but the list is by no means exhaustive.

 

strtdv

Sounds basically like multilevel marketing.

@roundthebend an NFT basically allows you to make a digital artwork (can be visual or audio or whatever really) artificially scarce. 

If I make a digital artwork and upload it then it's very difficult to avoid people copying it or prove that mine is the original. An NFT basically makes my digital artwork a one-off, and uses Ethereum Blockchain to underwrite it effectively.

It turns a digital artwork (for simplicity, say a cat photo) from something which is fungible (ie it doesn't matter what copy you have, much like gold) to something which isn't

DefaultM

I don't understand NFTs. How is the picture a one off if I can just screenshot it and I've now got exactly the same image? 
With a real life painting you can go up to it and see the textures etc and its different to having a print. How is an original digital image any different than a copy though?

Emp_Fab

I love the naive yet arrogant passion these kids have in believing 'get rich quick' schemes.
I'm sure it's been the case for every such con trick throughout history.  The allure of 'easy money' is powerful enough to affect people's judgement to the degree where ironically, the get rich quick scheme actually start to work - but only for the tiny handful profiting from the greed of the gullible masses.
  

olafgarten

DefaultM said:

I don't understand NFTs. How is the picture a one off if I can just screenshot it and I've now got exactly the same image? 
With a real life painting you can go up to it and see the textures etc and its different to having a print. How is an original digital image any different than a copy though?

The main difference is that whoever buys it can prove they own the original version. 

77ric

Emp_Fab said:

I love the naive yet arrogant passion these kids have in believing 'get rich quick' schemes.
I'm sure it's been the case for every such con trick throughout history.  The allure of 'easy money' is powerful enough to affect people's judgement to the degree where ironically, the get rich quick scheme actually start to work - but only for the tiny handful profiting from the greed of the gullible masses.
  

Is it naivety or arrogant passion, that many of that generation have no option but to dream of get rich quick schemes, if they want to achieve something that there parents generation have. 

When my parents bought there first house it was 1.75 (give or take) times the amount of my dads salary, my own home is 3.25 times the combined salary of my wife and I, and we got that cheap, as it needed a lot of work. 

Many a generation younger, that is just a pipe dream, the cheapest houses in the shit piss poor deprived area I grew up in are now 5-6 times the national average salary. Just how many actually ear that national average. I know I sure as hell don’t, thankfully my wife’s salary is more than that, so it averages out. 

I think these kind of schemes/scams are truly an indication of the generational imbalance in our society. 

It’s a very sad state of affairs I’m afraid. 

monquixote

olafgarten said:

DefaultM said:

I don't understand NFTs. How is the picture a one off if I can just screenshot it and I've now got exactly the same image? 
With a real life painting you can go up to it and see the textures etc and its different to having a print. How is an original digital image any different than a copy though?

The main difference is that whoever buys it can prove they own the original version. 

Except you can't because you could make an NFT of the Mona Lisa but it wouldn't mean you own it.

It's still only enforceable if some centralised body agrees that you own it which removes the advantage of a distributed  ledger.

Adding a hash of an artwork is a good way of establishing a precedent date especially if you don't want to reveal the work publicly yet.