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Posted by: AJ on 2008-03-12, 22:08:05
Some time ago I read a transcript of a board meeting of one of the major Wall Street finance powerhouses. One thing that got my attention was a question someone raised about income from their Forex operations. The concern was that the entire division was a gamble with shareholder's money and presented an unnecessary risk and uncertainty. Lots of other very respectable participants confirmed that Forex trading in general cannot theoretically (regardless of strategy) bring sustainable gains in the long run unless you are either a broker who gets paid a comission for every trade or a market maker the size of a central bank who has enough mullah to manipulate the rates. This was talked about as a universally accepted truth. Reading the transcript further, it turned out the Forex operation in that company was basically a brokerage where their institutional clients did the trading with their own money and simply paid comissions and access fees without ever putting the company at risk. |
