Are you tired of your mundane 9-to-5 life? Hate your boss? Want to swap that Vauxhall Astra for a brand spanking new Ferrari? Then I’ve got just the career for you - become a foreign exchange educator!
Whether you’re online or in the classroom, all you have to do is market your services to a bunch of financial illiterates, promise them the ability to make millions in minutes and you can charge them thousands of dollars for the pleasure of seeing you stroll around in a suit as you spew nonsense about technical analysis.
Now before you get too upset, yes I am being slightly hyperbolic. But not too hyperbolic. Peruse Google, YouTube, Twitter or Telegram and it won’t take long for you to find a wide constellation of hucksters, chancers and wide boys all claiming to be ‘FX Educators.’
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Anyone who has a modicum of knowledge about financial services is unlikely to buy into what these people are selling. In fact, some of them are so ridiculous, FxLifeStyle comes to mind here, that it’s amazing anyone would be willing to hand over money to them.
True, these people have been around for a while but things in the retail trading world are changing. Over the past twelve months, we've seen the introduction of the European Securities and Markets Authority's product intervention measures and, from various European regulators, a heavy emphasis on protecting retail traders.
As of yet, regulators haven't stepped into the FX education space and, for now, it doesn't look like they will. Still, with the retail industry under so much scrutiny and so many Gucci-clad FX educators trying to hock less than reputable services, it's in brokers' interest to address the problem before it gets out of hand.
Get rich quick
By and large, dodgy FX educators, whether they are running huge operations or a single Twitter account, have one marketing strategy; look at how rich I am. Do you want to be this rich? Well guess what, all you have to do is learn how to trade FX and - even better - trading FX is really easy to do, just take my $5000 course to learn more.
Another easy way of raking in the cash is for hucksters to sell their trading signals, which, as you can imagine, are guaranteed to make you cash 95 percent of the time!
Arguably more lucrative is to act as an affiliate marketer for a broker. That means the educator encourages a trader to join a certain broker and then gets paid a commission for the volume of trading that they do. Of course, that also means the broker, if they themselves aren’t just running a scam operation, has to put in wider spreads to pay that commission.
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Alternatively, they’ll pay the ‘educator’ an upfront fee. According to the Guardian, infamous binary options huckster Elijah Oyefeso, who also did work for AvaTrade, was paid between £40-80 for every client he signed up.
"A dream and an easy short-cut to the blissfully ignorant"
To give a better sense of what actually happens when you buy into one of these courses, here are some first-hand accounts of a couple of different FX education programs.
“[Greg Secker, owner of Capital Index,] is offering a dream and an easy short-cut to get there to the blissfully ignorant, some of whom will part with £2500 or so for a pile of anecdotal comments, a dodgy charting package and handful of videos, all lasting a few days, which is somehow meant to prepare them for a relaxing life of big money in Trading Foreign Exchange Markets based on a limited set of specific events he details in his strategy.”
Paul de Souza, Founder & CEO IQ Systems UK Brands, writing on Quora.com about Learn to Trade
“[FxLifeStyle] is a scam. I joined his [c]ourse before and [it’s] nothing but garbage. His course is very basic and covers things that even novice traders will already know. His signals were even worse because every single signal that was sent was a loser. Not one winning trade. I contacted for a refund and never got any reply so I reported the website to the FCA [Financial Conduct Authority].”
Abigail White, Forex Peace Army user, writing about FxLifeStyle on Forex Peace Army website
The real deal
All of this might give the impression that there are no legitimate FX educators. That’s not the case. In fact, for genuine educators, these conmen are extremely frustrating. Not only do they give the education side of the industry a bad name, they actually take clients away from them.
That latter point may sound surprising but return to your baser instincts for a moment and think; what’s more appealing? Someone that tells you trading is hard work, time-consuming and may yield a small reward or a Louis Vuitton wearing, golden Porsche driving salesman who tells you that you’ll be a millionaire in five seconds using his trading strategy?
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“We get several calls every week from people that really want to learn and have just been ripped off - usually for several thousand pounds,” said James Lawrence, CEO of Knightsbridge Trading Academy. “It’s extremely frustrating. We’ve put a huge amount of time and effort into getting accredited and these people, who are essentially marketers and not educators, are running amok.”
For Lawrence and Knightsbridge Trading Academy, accreditation meant getting the thumbs up from the British Accreditation Council for Independent Further and Higher Education (BAC) as a Short Course Provider. The firm has also managed to establish a partnership with the London Stock Exchange - something that isn’t easy for any company to do.
On top of this, some of the firm’s courses are themselves accredited by the Chartered Institute for Securities and Investment and all courses are accredited by the Body of Continued Professional Development. That means that the company is itself recognized as a legitimate educator by the BAC and the courses it provides have the seal of approval from a major professional investment body in the UK.
The problem is that, even with these sources of legitimacy, people are still turning to dodgy educators. It’s very much akin to the problem that exists in the brokerage world where traders open accounts with unregulated companies and end up losing all of their cash.
Time to bring in the FCA
What can be done to fix the situation? Unfortunately, there’s no easy answer here. Regulators stepping in might cause negative knock-on effects but, if nothing is done, nothing is going to change.
“I think the person providing education needs to have some form of regulatory certification,” Rod Martenstyn, the Founder of OSS Consult and former CEO of GKFX, told Finance Magnates. “Educators are, in a way, a form of investment advice and investment advisers are regulated. We need to reach a point where educators are there to educate. The problem at the moment is there is no organisation governing them and, because they often work for brokers, there are huge conflicts of interest.”
Bringing in the FCA might help matters. Brokers, for instance, would be less likely to interact with dodgy educators who act as affiliate marketers for them. But the regulator isn’t likely to step in any time soon. For one thing, education doesn’t fall under its remit.
“We believe that providers which have education services that are directly linked to remuneration are stepping into unwarranted territory and could be in breach of Conflicts of Interests and Financial Promotion rules,” said a spokesperson for the CFD Trading and Compliance Forum. “The watchdog, can and should, play a more significant role in the way they supervise these firms to ensure they act in the best interest of customers, we can’t place all the risk on brokerage firms.”
Proper accreditation
Another problem is that there are plenty of legitimate people providing education who aren’t regulated by the FCA. On top of this, broadening the definition of investment advice to include educators could prevent potential teachers, who have a lot of experience but no regulatory stamp of approval, from passing on the lessons they have learned in their career to students.
“An accredited body like the BAC should take over,” said Lawrence. “I don’t think the FCA has to come in and pick things up. If it’s done properly, accreditation can be the way to separate the good from the bad.”
The sad reality is that there are always going to be con men and they will always have victims to pray on. FX education is a part of that reality. Unless human beings defy all odds and stop believing in get-rich-quick schemes, any solution to the problem of FX educators is going to be a mitigating one, not a comprehensive one.
A combination of making the public better equipped to identify scammers and a functional accreditation system seems the best way forward. It’s in the industry’s hands and, given the extremely poor reputation, the retail trading world has, in its interest to determine the optimal way of reaching that goal.
