Sunday, April 28, 2013

"Micro Trading" racket invades New Zealand (OTC spot FX, reality, problems)

The New Zealand population is generally uneducated in areas of financial derivative trading, and now exploited for it by a wave of bucket shop (illegal in the US) "micro trading" BS campaigns. It has probably drawn a good number of desperate, lazy locals in search of fool's gold, and I hope to help those on the fence make a more informed decision about dumping money into these things.

Would it work, and make money?

Highly unlikely. 

Given that they have spent all this money on this aggressive marketing campaign, hints that they expect to make a higher return on the software sales effort than actual trading with the capital. Successful PROPRIETARY trading firms keep trading strategies discreet because inefficiencies become less profitable if they become exploited at higher volume. Nobody making good money trading would ever think of selling or making their trade(s) publicly known.

Those who are looking to raise money to trade proprietary, self-developed strategies tend to approach family, close friends, or take shots at smaller institutions.

About automated financial trading

Ironically, software automation often adds to operation liabilities than value due to bugs, crashes, hardware incompatibilities, etc. At the institutional levels, automation is only applied where manual trading isn't viable due to things such as speed requirements.  

About Spot FX trading 

These are some of the most liquid, efficient products in the world, and that is undesirable for the professional trader. The space is filled with smart institutional money, what little inefficiencies found are barely worth the work. Given the OTC nature of spot FX, the implied transaction costs alone would kill any profit potential for any serious trader.

0 Reflections: