17.9 million. No, unfortunately, it’s not quite our profit margin for this year! It’s actually the number of results that are returned in just a split second when conducting a simple Google search for forex education. Talk about having plenty of choices out there!
Perhaps equally noteworthy, though, is that the search results connect users to a literal “who’s who” of forex brokers from all over the world. And, on the surface, that seems great, doesn’t it? It’s like we’re finally trading in an era where brokers are aiming to help retail clients achieve success and longevity in the markets, and that the age of forex scams and broker swindling is over.
That’s really a great thought, but like all other things that just seem too good to be true, it probably is. You see, broker forex education courses may be expertly designed, produced, and marketed, but that doesn’t mean that the strategies these courses contain are good solutions for all traders. Quite the contrary, actually.
Remember that every broker out there exists for one reason and one reason only: to make money. And, yes, many now offer free forex education to clients, but that’s not necessarily because they want to help you achieve more knowledge, consistency, and success. Here’s why they really do it…
Think for just a moment about how brokers actually work and you’ll see why broker forex education always makes sense for them, but not necessarily for you, the retail trader.
As you probably know, there are generally two main types of brokers, market makers and electronic communications networks, or ECNs. These operate using slightly different structures, but both give retail traders access to the forex market that we wouldn’t have otherwise. It’s a viable and necessary service they provide, but above all else, these are proven business systems that exist to make money!
Market makers actually provide liquidity to the market by setting the bid and ask prices that traders see on their quote screen, and because of the fixed spreads they “made” themselves, market makers stand ready to take the other side of your trades. That means when you lose, they’re the ones who win, and that glaring conflict of interest alone should make you think twice about automatically trusting this kind of broker forex education!
ECNs, on the other hand, help connect retail traders with third parties including big banks and market makers. The ECN will offer multiple quotes, allowing traders to select the best price among the different parties connected to the network. For their services, ECNs charge a commission, so for them, it’s not really whether you win or lose, but just that you play the game and trade often since they turn a profit with every transaction. No real surprise that ECNs would love to teach you a nice high-frequency trading strategy, now is it?
I want to be clear that this isn’t intended to be one of those conspiracy theory articles or yet another story of “How your broker is out to get you.” It’s not even to say that broker forex education isn’t reliable, because without testing it for ourselves, how would we ever know that for sure?
However, this is to say that broker forex education is now part of the business. Your broker has a job to do, and that’s fine, because so do you. That’s the point here, and the most important takeaway is this: choosing a forex education provider is just like choosing an investment or trading strategy in that you have to carefully consider the merits and risks yourself beforehand.
Make sure that any strategy you select and any forex education provider you choose fits your specific needs, risk profile, lifestyle, and portfolio objectives, and if it does, then have at it! Just don’t automatically trust broker forex education, because as you can see, no broker’s objectives are truly aligned with yours. As the saying goes, “It’s nothing personal, it’s just business!”
Also read: More Common Trading Myths Bulldozed
Brokers are necessary entities that connect traders to an otherwise inaccessible forex marketplace. For that, they’re invaluable, and reputable forex brokers aren’t going around actively trying to rip you off! In actuality, it’s in your broker’s best interests that you maintain a consistent level of account capital over a long period of time.
That being said, though, brokers are in the business of making money, and not in the business of forex education. So even though broker forex education is among the “value-added benefits” commonly offered for free to clients, no broker will ever be as invested in your success as you are!
Just remember that regardless of which broker you use, they could be winning each time you lose, or even winning each time you trade. That’s just what brokers do, so when it comes to broker forex education, you have to carefully consider the merits of that education just like you would an investment or trade idea.