If you are in the market searching for a forex broker, chances are that (thanks to Google ads) you have come across some, if not many ads from forex brokers, enticing you to join them. The bottomline of every forex marketing campaign is to get you to sign up to them and deposit money in order to trade.
Having come across many such ads myself, here is my compilation of the five most silly marketing messages used by forex brokers (and some reputable ones as well). Let me also dispel some of the myths of these forex marketing messages that you often get to see.
#1 Download our trading platform absolutely Free!!
Anyone who knows something about forex knows that forex trading platforms are indeed offered for free (atleast for the trader). It is the broker who pays a fee in order to license the trading platform. MT4, cTrader are some such platforms that are free for traders.
Come to think of it, do you actually see a sound business model being built wherein a forex broker charges a fee for using the trading platform? Not so!!!
I still wonder why I come across so many ridiculous ads that focus on ‘Free trading platform’. Here’s the take… trading platforms are for free, and if the broker doesn’t have anything better to advertise, you might want to be a bit more careful in evaluating such brokers.
#2 Download our free Forex trading eBook
Thanks to search engines and tons of forex related websites, there is no shortage of knowledge for those who want to learn about trading forex. There are loads of eBooks, both free and paid that offer some/same information and well, you don’t have to part with your phone number, or address. And if you really want to learn, spend some time on the forums and I’m sure you’ll learn a lot more from them than from the silly ebooks that forex broker provides you.
I’m not sure how using a forex ebook as a marketing bait really helps the brokers. In way such ads convey the message that the broker doesn’t really have anything unique to offer.
And if you do take the bait and download the eBook, more than 90% of the time, the ebook is filled with bull, typically starting with the “trillion dollar business” blah blah.
The truth is that, in this “trillion dollar business” retail traders such as you and me are miniscule. The “trillion dollar business” they refer to is the volume generated by institutional banks.
#3 Tight spreads on EURUSD
I often wonder if forex brokers assume that potential traders are stupid. For what other reason than this can explain why almost all forex brokers tend to advertise their “tight spreads” on the EURUSD?
We all know that EURUSD is one of the most liquid currency pairs and tight spreads is but obvious. Well, if a forex broker really wants to stand out from the crowd, maybe they should advertise the spreads on other pairs such as the AUDNZD, NZDUSD, EURGBP.
#4 Forex Bonuses
As a principle, i’m not a big fan of bonuses. For all the hype, bonuses tend to lock in your initial capital and is released only when the trading volume is met. From a personal opinion, I prefer to trade with my own money and cash out whenever I want to. For a couple of more dollars of extra capital, I wouldn’t want to be tied to the terms and conditions or have to ‘over trade’ within a stipulated time frame in order to get the bonus. Thanks, but no thanks.
#5 Get a $100,000 free practice account
There is a reason why you are called a ‘retail trader’ and that is because of the capital and volume that we usually trade. Certainly, if you had $100,000 to trade forex, you would rather trade directly from the bank or from an institutional platform.
This makes a $100,000 practice/demo account quite useless as it doesn’t bring any sense of practicality. I would rather prefer to trade with a demo account with $3000 which is more realistic than compared to a $100,000 demo account. There are various factors that come into play. Higher the capital, the more risky and impulse the trades get to be. Add to this the factor of 1:500 leverage and I bet even a 10 year old would start BUYing and SELLing. Click here to read my article on the my preferred brokers for demo accounts.
Bear in mind that forex marketing messages with “learn to trade forex” or “free ebook” don’t really serve the purpose. The moment you sign up for a demo account, you can be sure to receive a call from customer service, eager to find out when and how much you intend to deposit.
To conclude my rant, the Internet has given rise to many business models, forex being one of them. As competition continues to grow among forex brokers, some tend to go easy with ridiculous marketing messages that really add no value.
The next time you come across such ads, well just ignore such brokers and walk away.