Reading an article recently published by FT titled “Time for regulator to move on retail FX trading” you can’t avoid the feeling that quality investigative financial journalism era is over.
It’s a unique article in a sense that it is probably one of the most superficial and unprofessional articles published about the fx market in recent years. But apparently this is lately systemic to the financial newspapers industry: few months ago WSJ published an article which may even be worse than FT’s one. Just like an extremely terrible movie you can’t stop reading and appreciating the sub-par quality of the content, realizing it is so bad – that it is special.
Without getting into too many details it’s clear that FT’s author spent no more than 5 minutes ‘researching’ the subject he wrote about, probably reading comments of traders venting out frustration at trades gone wrong. The author doesn’t realize the not very fine difference between a market maker and an actual broker and perceives all forex brokers as stop-loss hunters going after client deposits while offering high-leverage. The author may want to Google the words ‘broker’ and ‘market maker’ and then read about STP and Agency models as well as understanding that high-leverage is available in many other instruments, not just forex, being a must for many professional traders.
Not to say that the author got the forex market completely wrong, it is true regarding many small unregulated brokers, but such an unbalanced article causes much more damage than “500-1 leverage”.
If ‘respectable’ newspapers such as WSJ and FT allow themselves to publish such poor articles it means that they are aiming for the lowest common denominator of their readers – lack of knowledge. Just like political speeches aimed at simpletons such articles use shallow description of incidents to which almost all the people can relate thinking it’s what the whole forex industry is about. Such large newspaper sharing an unbalanced one-sided opinion with its mass audience is equal to village elderly screaming ‘burn the witches’ during the Middle Ages.
Dozens of commentors thanking the author for ‘explaining’ how the forex market works is the unavoidable result of such ‘mass-journalism’. However one persistent commentor named Gerald Clemente did have a different opinion: “Wow, Paul. Since when does a poorly researched bombastic opinion passes as news story? you sound like someone with an agenda, are you a journalist?”
A moment of irony: the opening part of this article was sent to me by email and had this in the footer: “High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article.”