THE retail forex trading market is a mug’s game, that one too many South Africans have been sucked into. There is only one good reason any retail investor would want to trade foreign currencies, and that is to hedge out foreign exchange risk. But I reckon 99% of those who trade forex are doing it on the belief they can trade their way to a profit.
There is no chance. All they are doing is making the hoard of forex trading bucket shops rich. The standard strategy for a broker is to churn clients: bring them in knowing it will take a few months for them to burn up their capital, and then let them out the other end.
But last week, the market saw a nuclear explosion. The Swiss central bank induced the biggest movement of a developed market currency since the First World War when it announced it was abandoning its efforts to prevent the franc from appreciating. Within moments, the franc jumped 39% against the euro.
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