When it comes to the stock market and trading on the stock exchange, the first thing that comes to mind for many people is forex.


ForEx scams Instagram Money: Master the game
Let's talk about Forex traders and scams on Instagram

Indeed, advertising of this type of investment (although such operations in this market can be called a stretch) penetrated into many areas of our life - successful traders who earn thousands of dollars in parallel with their main job or lying on the beach look at us from posters in subway cars , and from banners on the web. Meanwhile, everything is not so simple here.

The nature of the FOREX market

FOREX is short for Foreign Exchange, which stands for Foreign Exchange. The same word Exchange in English refers to the exchange or any other trading platform where the exchange of some assets for others takes place, for example, trading in stocks or futures contracts: futures and options. This is where the first misconception about the nature of this market comes from.

Forex firms persistently call the game on exchange rates - either trading on the stock exchange or investments. In reality, the lion's share of the market for the exchange of some currencies for others takes place on the OTC market between large international banks. This is a relatively "closed club", it is very difficult to get there. Trade is carried out for very large sums. The minimum lot is 1 million dollars or euros, the standard lot is 5 or 10 million dollars - and, of course, there emerged a number of ForEx trading Instagram scams.

Currency trading provides, first of all, export-import operations of bank clients, and secondly, but not least, the interests of the own trade and investment departments of international banks conducting their investment activities around the world. It is clear that in order to become a client of an international bank and start buying and selling currency in order to extract "income" from the movement of exchange rates, you need to deposit more than one million dollars into your account.

In this case, trading will be conducted, most likely, without leverage and at the quotes of the bank itself, and not the free market. And the bank's quotes will differ from the desired ones for the worse for the client. Well, this is natural: the bank must also earn money! Its traders will not work for free. Hence follows the second and main misconception of people involved in forex. They think their trades are indeed being brought to the market through a clever "inter-broker relationship" system. However, it is not.

Most transactions in the real interbank market are made through a limited number of private information and dealing networks (for example, such well-known companies as Thomson-Reuters or Bloomberg), where entrance from the street is simply ordered. Forex Instagram accounts and many networks do not have gateways that would allow connecting external dealing systems to them in order to route client orders to the market. And it is expensive and therefore not advisable to "drive" each client's order into such a system.

Each transaction, which is made by currency dealers of banks through such systems, is then processed by the bank's back office and on the third banking day, the settlement for the delivery or acceptance of the traded currency is carried out. Look, for instance, at the Edward Ricketts Instagram. It is naive to believe that orders from clients of domestic forex brokers for 3-5-10 thousand dollars (and even for 100 thousand) are sent to the real market. No one will make, confirm, process the transaction, or make settlements on such a small amount. It's just not cost effective.

Thus, it can be stated, and forex brokers are well aware of this, that no transactions that they conclude with clients are listed either on the stock exchange or on the interbank OTC market. Where, then, are these transactions executed? And who is the opposite party to such transactions?