Should Retail Traders Require a License?

[Tradewinds 12]

(@grandwiz I have to disagree with the idea of needing a license to trade your own funds - they are you funds to do with as you see fit including blowing them on bad trading, . . . . - we are very fortunate to live in an age where we have that choice at all.

 

How true. Licensing is all about protecting OTHER people. The government requires trades and professions to get a license to make sure that the customers are getting some level of competency. If you are trading your own funds, then you don't have a customer.

 

I would hate to see the age of everyone in the world being totally manipulated and controlled by big government. But that's a whole other subject.

[Ingot54 13]

How true. Licensing is all about protecting OTHER people.

The government requires trades and professions to get a license to make sure that the customers are getting

some level of competency. If you are trading your own funds,

then you don't have a customer.

 

I would hate to see the age of everyone in the world being totally manipulated and controlled by big government.

But that's a whole other subject.

 

That would be a legitimate view for sure. I know that had I been faced with the prospect of having to complete a course

at the time I was beginning to invest in stocks, I would have been quite annoyed. It's a free (well it used to be) country

as far as investing goes at least, regardless of where you live (I suppose the world does have exceptions).

 

But even in restrictive regimes, money speaks loudest - even above idealism.

 

And that brings me to my point.

 

If we have been paying attention in class, we would be noticing that the world of investing is really not a very nice

place. The system is designed to use newbie traders as fodder for the experienced. Indeed, the system NEEDS new

money coming into the game all the time, in order to continue growth.

 

Much of this money comes from Institutions who can barely out-perform the Index, regardless of their "management

skills." But a lot of it also comes in the form of the "sucker bets" made by the naive and greedy/hopeful/fearful new traders

"having a go" at making some "big money."

 

If you have a ruthless mindset, you will say: "tough titties" to the newbies who get their anatomy handed back to them on

a plate. The consensus is that 90% of these new chums will be disillusioned and "retired hurt" within 12 months, so who cares?

 

Well ... I do actually. I have a problem with an industry that takes your money first and takes names later. This has been

my theme from day one in trading, going back 7 years now. Not that I have a whistle to toot for my ego, but I have found

that the more I share, the more I am able to consolidate what I am learning.

 

In my profession we have a saying: "Watch one ... do one .. teach one!" regarding invasive bodily procedures.

I believe this principle could be applied across-the-board ... and is ... in most professional pursuits.

 

So why isn't it in trading?

 

Well ... it is actually ... except most of us are too proud to accept that we might truly need some assistance with

something as simple as "buy-low-sell-high." It is only after a few failures that newbies enter "Stage II - The Quest

for the Holy Grail" starring ... themselves.

 

Once again ... they are on the wrong track ... second mistake. They try systems, signal services, indicators, chat rooms

and trading rooms, different instruments, leveraged and unleveraged trading and so on, until they fall and fail, utterly

exhausted and disillusioned by the wayside.

 

Note that the "wayside" is a far cry from the "high road" they undertook from the outset.

 

Remember? Dreams-in-hand, plans for the Condo and Ferarri, early retirement, and sailing boat on the open blue

sea, heading for a port where their private Lear jet awaits, to whisk them off to the next exciting wonder of the world!

 

So, Tradewinds ... we are beginning to turn around here a little bit.

 

We have to wonder which is the lesser of two evils ... the choices now appear to broaden a little:

 

totally manipulated and controlled by big government

 

or: totally manipulated and controlled by big trading institutions and gun traders.

 

Look ... not everything the regulators do is bad, or should I say 'bad for the retail trader.'

 

I agree that the regulators frequently make decisions that they have no freaking idea about - never been involved

in industries personally, that their job description requiress them to administer. But my own view has come around

180 degrees now, and I am actually in favour of traders needing to show some acumen in their chosen instrument

before being let loose to blow their 401's or retirement nest eggs.

 

There is a saying: "If you think education is expensive ... try ignorance!" (attributed to Derek Bok

former president of Harvard University) and it has never been truer than in its application to the trading world.

 

I think that forums like this one are filling a very big gap - but if we (on these forums) only chatter about what we

have tried in the past - engaging in "market speak" as I like to call it - then the situation remains "the blind leading

the blind" with the outcome we frequently leave off "resulting in both falling in the ditch."

 

For support of my point of view, I offer this from Wikipedia:

 

1. Unconscious Incompetence

The individual neither understands nor knows how to do something, nor recognizes the deficit, nor has a

desire to address it.

 

2. Conscious Incompetence

 

Though the individual does not understand or know how to do something, he or she does recognize the deficit

without yet addressing it.

 

3. Conscious Competence

The individual understands or knows how to do something. However, demonstrating the skill or knowledge

requires a great deal of consciousness or concentration.

 

4. Unconscious Competence

 

The individual has had so much practice with a skill that it becomes "second nature" and can be performed easily

(often without concentrating too deeply). He or she may or may not be able to teach it to others, depending upon

how and when it was learned.

 

Wouldn't it have been far better for a person wanting to augment income through trading, to complete an accredited

course first? That course could cover a specific market, risk, money management, leverage, random outlier events and so on.

 

Wouldn't it also be far better to have accredited trading teachers, instead of the rabble we are trying to deal with today?

There is no way of knowing who is or isn't a good coach/mentor, blogger, except by word of mouth.

 

And in a virtual world, of instant transmission of knowledge (and a few dollars to pay for it), easy is it to deceive the unskilled

and unknowing?

 

Wouldn't you rather tolerate a little

regulation, where the marketing wizards were accountable, or lose their accreditation; where the system seller had to be

registered; where brokers were disallowed from operating in jurisdictions where they do not have a physical, functioning

branch office; and where traders are required to demonstrate basic knowledge of Fundamental and/or Technical

Analysis, along with an understanding of the Sentimental Factors that are also known to move markets irrationally?

 

Someone is more than $60k better of at my expense today, because of my ignorance.

 

I am slowly beginning to claw that back now - but oh! don't I wish I had understood back then at least 40% of what I do now!

 

Wouldn't you?

 

Is there a case in favour of Retail Traders requiring a Trading License? I hope I have answered that question.

[Tradewinds 12]

I would not be against retail traders needing to be licensed in the sense that the process was meant to give them the whole truth, and force the industry to tell people things like what the failure rate is. So, in that sense, I'd be all for it.

[Tradewinds 12]

Wouldn't you rather tolerate a little

regulation, where the marketing wizards were accountable, or lose their accreditation; where the system seller had to be

registered; where brokers were disallowed from operating in jurisdictions where they do not have a physical, functioning

branch office; and where traders are required to demonstrate basic knowledge of Fundamental and/or Technical

Analysis, along with an understanding of the Sentimental Factors that are also known to move markets irrationally?

 

For system sellers to be registered. Absolutely. And for everything else you mentioned, yes, I would like to see that.

[Ingot54 13]

For system sellers to be registered. Absolutely. And for everything else you mentioned, yes, I would like to see that.

 

It's a difficult question, to be sure.

 

If the system sellers and industry participants were registered (in the jurisdiction in which they have a physical, functioning office)

then immediately we should see a vast hoovering of the rubbish retailers and vendors, who beguile the unwary, as they currently are doing.

 

Same with brokers, coaches, mentors, psychologists. But once you pay your money, with whom is a complaint lodged? Unless you have

prior knowledge of the integrity of the operator, you are up that famous creek without a paddle!

 

I live in Australia, where we have (thankfully) a strict regulatory authority - miles ahead of the USA and the UK. I will NOT use an overseas

broker, who does not have an Australian office. I live by the adage: "If you don't deal at home ... you're alone!"

 

Consider this: If I send $12k to a broker in the USA, and "something goes wrong" (see Forex Peace Army for examples of "something going wrong")

how can I expect to get my money back? Am I going to jump on a jet and fly 12,000 miles to New York to knock on their door to try to wring

the neck of some wet-eared office hack, to get a cheque written? Chances are the office is only a "virtual one" and I am out of luck ... I might

have to fly to The Caymans or Corfu in the Greek Islands, to try to get the money!

 

Where would we be without regulation? I prefer Australian regulations.

 

Note: We have no need for Forex Peace Army in Australia.

 

Now ... why would we want every section of our industry regulated, EXCEPT ourselves?

What is it about education that is required of us,

that we have difficulty with?

 

Are we losing any freedom by participating in training?

 

No ... I don't think so, unless it is in the freedom to blow up an account.

 

Here's the rub: Eventually we are forced to accept education. Either we get it at the hands of a callous market, or at the hands of unscrupulous

operators, bucket shops, system vendors, shoddy coaches and psychologists, at the cost of one or more trading accounts ...

 

or ...

 

we get it in an early and structured manner, for a competitive price from accredited trainers, properly skilled in the market business they teach.

 

In Oz we have the ATAA (Australian Technical Analysts Association) which have a good reputation for the courses they run. If you find a vendor

in Oz who can say they are a member of the ATAA, then you are ahead to begin with - the quality should be class.

 

I regret not doing one of their courses much earlier in my trading adventure. And today, I can assure you, I have a very strong bias towards the

view that traders should not be allowed to participate in trading, without this kind of training, or its equivalent.

 

If it's freedom of choice that bugs people - then what is it about choosing the wasteful way of freedom to blow up an account, against freedom

to ensure trading success, that attracts people?

 

It is like the Constitution of the United States of America, which has a statute I believe, that guarantees the right of citizens to bear arms.

 

As long as they don't want to bear arms on an aircraft flight!

 

Trading is the same - you can trade all you like - just don't whinge when you are losing, because you have the right to lose if you wish.

 

You have the right to trade without skill

You have the right to blow your account

You have the right to not remain silent if you didn't know you were being fleeced

You have the right to persist in this foolish venture until you come to your senses

You have the right to wear the responsibility for your failure

 

or

 

You have the right to be educated

You have the right to trade correctly and skilfully

You have the right to grow your account

You have the right to become profitable in a fraction of the time an ignorant trader might take

You have the right to implore others to get an education before trading live money

You have the right to accept the responsibility and accolades for your success

 

My career profession took me years to achieve registration, and requires me to undergo an annual regulatory "proof of ongoing education" audit.

 

Why should it be different for a trader, who risks vast sums of money that, strictly speaking, his spouse and heirs might also have a stake in?

 

Is that fair? Or is that exercising freedom of choice - even to the extent of violating the freedom of choice of concerned others at the same time?

 

Example: In Australia we are heavily regulating the tobacco industry. Yet we still hear cries of "It's my right to smoke."

 

It is indeed.

 

But it should then be the responsibility of the smoker to pay for his own smoking-related cancer, don't you think?

 

The point is, we want our rights, but when it goes belly-up, we want others to bail us out.

 

When I worked in a cancer unit in 1989, the figures at the time were that for every $1 the government received in tobacco excise, they paid

out $23,000 in caring for patients with smoking-related disease.

 

True story: My (once) sister-in-law used to be a heavy tobacco smoker (as was I back then). I discussed with her the dangers of smoking

(after I quit) and she stated "You have to die of something."

 

To which I replied: "Yes, but do you know HOW you will die from smoking-related illnesses?" She shrugged.

 

A few years ago she developed cancer of the throat at age 48, and sought treatment very late. Miraculously, the surgeons were able to

isolate and remove all of the tumour. Later she developed a breat lump, and later still more unmentionable complications.

 

I refrain from pointing the finger at her folly, because mine may yet catch up with me. But there are always consequences if we ignore

the responsibilities that accompany every activity.

[MightyMouse 12]

Equities brokers in the USA are required to profile investors to assess whether they can handle the risk of trading or not. They are supposed to approve the type of vehicles an investor or trader can make. These are FINRA requirements. If you are not experienced at trading, say, options, then your account will not be approved to trade options. A broker who approves an account to trade options for an individual who is not an experienced option trader can be held liable for the losses on the account and fined or worse by FINRA.

 

Its not only experience that matters, it is also capital. If you do not have enough net worth and liquid net worth, your account will not be approved for more speculative trading.

 

I cannot speak for futures or forex brokers, but I assume that futures brokers in the usa have similar standards. So, though not a license, there are prudent standards that help weed out the innocent.

 

If you are not an accredited investor and lied about it on your account application, you get what you bargained for.

[Tradewinds 12]

But it should then be the responsibility of the smoker to pay for his own smoking-related cancer, don't you think?

 

The point is, we want our rights, but when it goes belly-up, we want others to bail us out.

 

Yes, I do believe in that principle. Which brings up the issue of how interrelated we all are. People may want to believe that we are our own autonomous units, responsible for ourselves, but our actions will almost always effect someone else.

[Tradewinds 12]

When I worked in a cancer unit in 1989, the figures at the time were that for every $1 the government received in tobacco excise, they paid

out $23,000 in caring for patients with smoking-related disease.

 

It would be interesting to know what happens with the 90% of traders that don't succeed. Are there any costs to society and the government for those traders who don't succeed? I don't know.

 

With smoking, if smokers and the tobacco industry had to pay all the costs of smoking-related disease, I'm wondering if the industry would go out of business? Either that, or smokers could sign a legal agreement that they won't be given any health care. I'm not against people smoking, but if they get throat cancer, then just go away and die, don't bother me or the rest of the people who don't smoke. But I doubt the smokers would sign an agreement like that. So, if pushed right to the limit, the hypocrisy would come out.

[TheNegotiator 13]

I personally have taken a trading qualification in the past and I believe you do still have to trade your own account at many exchanges. However, the custom among retail brokerages is that you trade through them and their account so they in effect take on the risk as far as the exchanges are concerned. As far as I am concerned, this is not a great way of doing business. I don't believe you should have to be licensed as such, but you should have to give evidence to the broker that you have a minimum level of understanding of trading and the markets you wish to participate in.

[SIUYA 11]

I am sorry Ingot....you live in Australia as I do...how quickly you forget the Opes prime, Storm Financial allco, Babcock, Tricom. Sonray.

 

There are two things you cannot regulate for .....

1) stupidity

2) fraud

 

Legal and compliance is already making things as difficult as possible for people to open accounts after the recent above mentioned debacles. They are now causing more problems than they are solving.....

and after twenty years trading, and helping set up trading firms - in Australia and the UK, and having my own licence....so I know compliance.....the worst thing is....

1) Compliance in most places does not really know what its doing....it is box ticking.

2) compliance is not there to protect the retail guys.....it is there to protect the firms from the retail guys being able to sue them, or the government closing them down.

 

There is already enough information out there - go to any bookstore, read a paper, do a course. Even if like many forums some of it is crap....what makes you think that an academic is going to be able to give you any better insight into the markets.

 

Experts constantly disagree, loose money and go broke.....thats right experienced experts. So why should a retail person feel that armed with a couple of courses they can then be better informed. Remember the debates about efficient market theory and random walks and perfect information? This is the same for EVERY profession from legal, engineering, plumbing and farming.....and yet in the markets people expect more certainty.....come on - the nature of markets is about uncertainty and risk.

 

so in a nutshell......I say No regulation, and the best education is one you will get yourself. ( Read the Zurich Axioms for a simple guidebook to investing) Most people wont even get off their butt to read a book let alone do a course.

 

If you study economic history you will find that most booms, busts and retail fleecing occur either due to fraud - which is impossible to regulate by its very definition, or by excessive leverage. So if you really want authorities to help most retail mums and dads out, it can be solved with one regulation......dont let people have excessive leverage.....and to me, excessive leverage is anything over 4-5 times.

 

you sound like you want big sister government to hold your hand

[MightyMouse 12]

It would be interesting to know what happens with the 90% of traders that don't succeed. Are there any costs to society and the government for those traders who don't succeed? I don't know.

 

With smoking, if smokers and the tobacco industry had to pay all the costs of smoking-related disease, I'm wondering if the industry would go out of business? Either that, or smokers could sign a legal agreement that they won't be given any health care. I'm not against people smoking, but if they get throat cancer, then just go away and die, don't bother me or the rest of the people who don't smoke. But I doubt the smokers would sign an agreement like that. So, if pushed right to the limit, the hypocrisy would come out.

 

 

Personally, I believe that the media should be held accountable for the BS they allow fraudsters to advertise. When you turn bloomberg radio on in your car and you hear about a guy selling a trading system who claims to have made $7,000,000 in 3 months trading his system and is now offering a free trial, someone should be held accountable. The BS disclaimer after the fact is not enough. As if you actually hear the quickly read disclaimer after the announcer creates an image of millions in your mind.

 

 

And, yes there are lot of real costs. Some social, but a lot of the costs are paid by the individual or his family or both. Should someone

[Ingot54 13]

I am sorry Ingot....you live in Australia as I do...how quickly you forget the Opes prime, Storm Financial allco, Babcock, Tricom. Sonray.

 

There are two things you cannot regulate for .....

1) stupidity

2) fraud

 

Legal and compliance is already making things as difficult as possible for people to open accounts after the recent above mentioned debacles. They are now causing more problems than they are solving.....

and after twenty years trading, and helping set up trading firms - in Australia and the UK, and having my own licence....so I know compliance.....the worst thing is....

1) Compliance in most places does not really know what its doing....it is box ticking.

2) compliance is not there to protect the retail guys.....it is there to protect the firms from the retail guys being able to sue them, or the government closing them down.

 

There is already enough information out there - go to any bookstore, read a paper, do a course. Even if like many forums some of it is crap....what makes you think that an academic is going to be able to give you any better insight into the markets.

 

Experts constantly disagree, loose money and go broke.....thats right experienced experts. So why should a retail person feel that armed with a couple of courses they can then be better informed. Remember the debates about efficient market theory and random walks and perfect information? This is the same for EVERY profession from legal, engineering, plumbing and farming.....and yet in the markets people expect more certainty.....come on - the nature of markets is about uncertainty and risk.

 

so in a nutshell......I say No regulation, and the best education is one you will get yourself. ( Read the Zurich Axioms for a simple guidebook to investing) Most people wont even get off their butt to read a book let alone do a course.

 

If you study economic history you will find that most booms, busts and retail fleecing occur either due to fraud - which is impossible to regulate by its very definition, or by excessive leverage. So if you really want authorities to help most retail mums and dads out, it can be solved with one regulation......dont let people have excessive leverage.....and to me, excessive leverage is anything over 4-5 times.

 

you sound like you want big sister government to hold your hand

 

Good points, Siuya - and no, my noise is not about getting gov't to bail me out if I fail (hand-holding) ... but avoiding the need for bailing out in the first place. The markets are very tough for professionals - why should an amateur think he can open an a/c and beat them at their own trade?

 

I agree about the leverage - more than 4 or 5 times is excessive and really unnecessary. If not for the leverage available, I believe more traders would make more effort to understand what they are doing. Eventually they will.

 

As far as I can see, we agree on almost everything. If the industry thinks compliance regulations are a nightmare, then who does it have to blame? Only itself, because the industry has been far too willing to pick the easy fruit (sucker the retail trader) and who would have expected it to be otherwise? The industry has attracted the attention of the regulators, and who can they blame for that?

 

When I began trading CFD's in 2004, there was a certain company widening spread, triggering stop-loss orders, and sending cascades of selling through the markets, taking out stops and then when done, contingent buy orders were triggered, driving the prices back up to near the initial trigger point. Remember the "kangaroo tail" pattern in the charts? I think BlueScope Steel was one of the companies whose stocks were affected by this, and Macquarie Airports, from memory.

 

I belonged to a forum whose members took on this company, and we succeeded in getting several of these CFD positions restored. The company eventually ceased this practice, and today I believe they are using only the standard "delay-and-requote" tactic (slippage) to sucker the retail trader. Who knows what else - it is not all above board that's for certain - we are talking about money here! A level playing field would need to involve the (shudder) 'H' word (honesty). And that's where the sucker trader is at a disadvantage - he doesn't know the tricks.

 

Then there was Opus prime, as you mentioned.

 

The son of a prominent market official was used by a disbarred person, to run a company. I am not in a position to confirm, and do not suggest that the company was Green Frog Nominees. You will have to read the Google information on that. I am happy to send you the link to my own research, still posted on an Australian forum about that whole issue.

 

Even ASIC did not act on the information that was widely available in the financial press - at least not to public satisfaction. The class action involving the ANZ bank are still en train I believe. There is a reason that ASIC has not acted against the Board of Opes Prime - if you haven't figured it out from my above statements, I can privately make that clear. I do not want to be drawn into defamation issues or place this forum at risk, but the facts scream for justice.

 

There was no overt stupidity involved from the public side, who were investing in a regulated market. So under your scenario, the second thing you can't regulate against has to have occurred ... fraud. Maybe it did ... maybe it didn't ... the reader has to interpret the facts, and the facts are available. The Australian Financial Review, and the tabloids had good reporting at the time, but it all cooled, and the carpet is bulging where the sweepings ended up!

 

It is exactly because of "Opes prime, Storm Financial, Allco, Babcock, Tricom, Sonray" that I say investors should be required to receive some training. I am not in favour of more regulation - they are not the same thing, though the same outcome would be desirable, if it protects investor's money.

 

At the end of the day, 90% of investors will probably lose some or all of their money, if the widely-believed stats have any cred. I think that with some training and education, these figures could be made a little more respectable. However, whenever money is involved, corruption trails.

 

I won't go into money laundering and the criminal side of markets - but you have to agree that SOME regulation is needed. If taken to the 'nth degree' regulation will kill a market. So irregularities are tolerated. Just look at the insider trading on the ASX - shares rise/fall for three days before an important announcement, yet no one is ever held to account. I have discarded now the emails I sent to the ASX about this - all they ever say is that they will investigate, but the results will not be made public.

 

Why bother!

 

My whole point is that Joe Schmloe can stump up 500 bucks and open an a/c without even having an idea about the market he is going to trade. He just has to say yes in the right places, and tick the box. He just has to provide ID, and state that he has money to play with, and enough "assets" to satisfy the regulations. No one actually requires proof of anything he says - it is just, as you said, to protect the counter party against claims that they took candy from babies.

 

Be assured - they are still taking candy from babies, but the regulations now say that it is ok because baby Joe Schmloe ticked the boxes that allow them to take his.

 

MightyMouse is correct -

 

Personally, I believe that the media should be held accountable for the BS they allow fraudsters to advertise.

 

When you turn Bloomberg radio on in your car and you hear about a guy selling a trading system who claims to have made $7,000,000 in 3 months trading his system and is now offering a free trial, someone should be held accountable.

 

The BS disclaimer after the fact is not enough. As if you actually hear the quickly read disclaimer after the announcer creates an image of millions in your mind.

 

The disclaimer is just the legal cover to allow something sinister to occur - selling the sizzle when there is no sausage! In my day we called this "Lying". Today it is called "Marketing." If you get caught it is called "Fraud."

 

I stand by my position that in order to participate in the financial markets, traders need licensing ... something that at least guarantees they received instruction and knowledge. I think you might have taken the issue further when you brought in the regulatory side of the industry - but I know that it is toxic and broken - no amount of regulation can fix it, without destroying what it is. The regulators have NFI what they are doing anyway!

 

And that is why traders need to be aware of just how dangerous to their financial health the markets really are. Only enlightenment before the fact can help the wise. The uneducated/unknowledgeable will always be separated from their candy.

 

Traders do need accreditation. As for the regulation of the opposite party - no amount of accreditation will fix that - I will always see it as them sailing as close to the wind as they can get away with. After all - they have their targets to reach and their bonuses to protect!

 

The counter to that? Education of Joe Schmloe! Don't let them take your candy without a tussle. Better still ... don't let them take your candy ... period.

[Tradewinds 12]

If the regulations should be world wide, then who will regulate it? The U.N.? :rofl: Are there trader organizations that get involved in lobbying politicians? Because this is what we are really talking about here. We can discuss it for the next hundred years on Traders Laboratory, but that probably won't get the actual laws passed and enforced.

[SIUYA 11]

Ingot - ""I stand by my position that in order to participate in the financial markets, traders need licensing ... something that at least guarantees they received instruction and knowledge. I think you might have taken the issue further when you brought in the regulatory side of the industry - but I know that it is toxic and broken - no amount of regulation can fix it, without destroying what it is. The regulators have NFI what they are doing anyway!""

 

I miss your point Ingot.....on one hand you want licensing, guarantees, but then you agree with me that even the experts cant fix a lot of it as it involves fraud, overselling, overleverage; etc; and/or the regulators dont know what they are doing.....

 

This is exactly why I dont think we should have regulations - it will just cause more problems and people will mistakenly think they are better armed with information, and in the meantime it will just add to costs and administrative rubbish.....and will solve nothing.

 

Best let the market do what it does best......educate some, and fleece those that dont want to do the work, think they know better, or as is usually the case - take on excessive risk and pat themselves on the back when it goes well and cry poor when it goes badly.

History shows this will always repeat, and regulations wont change a thing. Most people dont read the pds and disclaimers as it is, and you want to introduce more??? Better to get rid of them, have one - "YOU ARE LIKELY TO LOOSE", and then if people choose to ignore this, limit how much they can loose by limiting the leverage...... and I would bet you, people will still ignore it and loose more.

 

Think to the last scam run by the institutions - a ban on short selling.....what a joke. the regulations dont help the traders.

 

(Re the CFDs - if people actually look at what they are - they are bets. It is then entirely dependant on making sure you have a good bookie who is honest or at least runs a straight shop. If you are an investor in these without understanding how they work then........run to mamma. Otherwise, go to a regulated exchange traded market.....this info is here, its available...people choose to believe the hype rather than use their brains)

 

By the way - I know many brokers, I think most of them a snake oil sales men - even if they are my friends . Many are good and resposible, but they are compensated by comissions

...but I also know that ultimate responsibility is with me.

Edited March 15, 2011 by SIUYA

[Ingot54 13]

Ingot - ""I stand by my position that in order to participate in the financial markets, traders need licensing ... something that at least guarantees they received instruction and knowledge. I think you might have taken the issue further when you brought in the regulatory side of the industry - but I know that it is toxic and broken - no amount of regulation can fix it, without destroying what it is. The regulators have NFI what they are doing anyway!""

 

I miss your point Ingot.....on one hand you want licensing, guarantees, but then you agree with me that even the experts cant fix a lot of it as it involves fraud, overselling, overleverage; etc; and/or the regulators dont know what they are doing.....

 

This is exactly why I dont think we should have regulations - it will just cause more problems and people will mistakenly think they are better armed with information, and in the meantime it will just add to costs and administrative rubbish.....and will solve nothing.

 

Best let the market do what it does best......educate some, and fleece those that dont want to do the work, think they know better, or as is usually the case - take on excessive risk and pat themselves on the back when it goes well and cry poor when it goes badly.

History shows this will always repeat, and regulations wont change a thing. Think to the last scam - a ban on short selling.....what a joke.

 

(Re the CFDs - if people actually look at what they are - they are bets. It is then entirely dependant on making sure you have a good bookie who is honest or at least runs a straight shop. If you are an investor in these without understanding how they work then........run to mamma. Otherwise, go to a regulated exchange traded market.....this info is here, its available...people choose to believe the hype rather than use their brains)

 

By the way - I know many brokers, I think most of them a snake oil sales men - even if they are my friends . Many are good and resposible, but they are compensated by comissions

...but I also know that ultimate responsibility is with me.

 

I think you misunderstood me, Siuya - I don't see an issue with your point of view.

 

My point is solely directed at the trader (client) requiring some training and certification of competency.

 

I haven't really got a beef with the provider side of the industry at all - we all know they will do as little as possible to comply with whatever regulations there are, and my statement that they are "toxic and broken" but that is what it is - none of us will change that. By trying to regulate THAT side of the Industry is just going to push poor behaviour further underground. I am happy to leave the brokers alone - as is.

 

My point was that traders (clients) need to be made aware of the dangers of dealing with them - that is all. And to accomplish that, some structure on the trader (client) side is required - there is currently NONE! Or at least what does exist, is water weak and rice-paper thin.

 

By "traders" my definition is the retail wannabe get-rich-quick cashed-up and dreamy client, not the provider (broker) of the retail markets. I think that is where we have crossed wires.

 

The industry already has regulations to guide responsible behaviour. As you said - some of them can remove your socks without disturbing your shoes - slippery snakes! But Joe Schmloe is not equipped out of high school to cope with them.

 

He needs to be brought up to speed a bit before being let loose with his $500 - $5000 - $50,000, or he won't get past Wednesday!

 

I hope I have clarified my position.

[Tradewinds 12]

My point was that traders (clients) need to be made aware of the dangers of dealing with them - that is all. And to accomplish that, some structure on the trader (client) side is required - there is currently NONE! Or at least what does exist, is water weak and rice-paper thin.

 

Are you talking about an association run by and governed by traders? A group that is independent of the government? How would that work?

[Tradewinds 12]

Morally I have to agree with grandwiz. Many wannabe traders need to be "protected from themselves". A license would save a countless number the heartache and wallet-ache of blowing up. This business is like a meat grinder, chewing up and spitting out the noobs.

 

However the businessman & trader in me asks, "If new traders suddenly had to pass a license exam to qualify, who would take the other side of my trades?"

 

 

evil laff heh-heh-heh-heh

 

:security:

 

Good question. I would think that there are traders from big institutions that have a longer time frame outlook, who need short term traders as a sort of intermediary. Traders add liquidity to the market. Without short term traders, big institutions would have to trade amongst themselves. Which I guess they already do, in the "dark pools".

[SIUYA 11]

Hi Ingot, ..... I get your point and we do agree with a lot of things.... but

what you seem to be suggesting is more regulation/protection for the trader/individual.

 

I think we have too much regulation already that is not necessarily that effective.....and extra regulatory training wont help.....especially given that the information is already there.....largely free.

the disclaimers and information are there.

the education is there....see the exchanges, internet, the snake oil sales men.

people choose to ignore it already.

we dont need the thin wedge of extra regulation and ''çertification''..... it will give too many people another excuse

[Ingot54 13]

Are you talking about an association run by and governed by traders? A group that is independent of the government? How would that work?

 

There is no point, Tradewinds.

 

I doubt enough traders would humble themselves to enrol in any course.

 

But as Siuya said, there is plenty of free and good quality stuff "out there" already, that traders are not utilising.

 

The only "education" most newbies want is "what is the best broker" or "what is the best trading platform".

 

They want "curry-in-a-hurry" ... well, I suspect they will get it, but not the hot stuff they were hoping for.

 

Eventually traders come to their senses - usually it is about 2 accounts down the track, but by the they have suffered most of the kinds of psychological damage there is to suffer in trading, it will take the next 2 accounts plus tax, to begin to make headway into "fixing" the damage.

 

I think I will set up an educational blog, free, and see what sort of business it drums up!

 

EDIT: While I still think all traders need to have a grasp of the basics of trading and the risks, requirements and the pathway to rewards, I think it will need to be a private school. The regulators will not offer such a curriculum, although the ASX does offer some pretty good courses. I attended an information evening in Hobart run by the ASX in 2004. It was a teaser to sell their ten-step preparation course for new traders, and the bones of it were excellent. I can only imagine what the quality of the full deal was - but I didn't attend ... I regret not attending now.

 

Oh yes - I was too lousy to cough up a few dollars for the information!

Edited March 15, 2011 by Ingot54

[Tradewinds 12]

I think I will set up an educational blog, free, and see what sort of business it drums up!

 

My opinion is, that the biggest problem would be getting your blog site to come up in a web search. If you search, "trader education", your blog would probably be 999,999 in a list of 1,000,000. Nobody would ever find it.

 

There is already a "Beginners Forum" in this group. When a new person makes a post in that forum, send them a personal email, and tell them you have a blog on this site that you have dedicated to informing new traders of what they are up against.

[Ingot54 13]

When a new person makes a post in that forum' date=' send them a personal email, and tell them you have a blog on this site that you have dedicated to informing new traders of what they are up against.[/quote']

 

This site has regulations against that!

[SIUYA 11]

plus with a trader education site you may need to be licenced......

[Tradewinds 12]

This site has regulations against that!

 

You can't send someone a personal email? You wouldn't be directing them to another website. Your blog would be part of Trader's Laboratory. Unless you are trying to sell somebody something. But I thought you wanted to create a free resource. Even if your website is separate from this website, and you can't promote it, you can still put a link to your website on your profile page. You are not actively promoting it, but if someone happens to look at your profile, they can see a link to your site.