Irresponsible broker advertising contributing to high percentage of failure?

syusuf66

Junior member
35 2
Hi all

I'm new to this forum (this is my first post) and completely new to trading. My experience, if you can call it that, is limited to 2/3 months casually reading up about it and listening to podcasts.

Anyway, one thing I noticed already (not sure it'd been discussed before) is how similar trading platforms/brokers advertising style is to that of betting websites, such as Ladbrokes, Bet365, etc. I live in the UK and I am constantly seeing trading platforms offering "FREE £25" for new customers. Just today I saw an advert on twitter that read "#CSI300 is down 7% & traders need to act! Trade now with £25 FREE!". Even yesterday I was watching a football match and see "EZTRADER.COM" advertised on all the sideboards.

Basically, my point is.. do any of you think that the style in which trading platforms are being advertised (many of which are like sports betting platforms) is contributing to the famous statistic I keep seeing so many times... 95% of traders fail.. ?

Just wanted to know peoples thoughts. This will in no way influence my decision as to whether or not I begin trading, but purely out of interest.

Cheers
syusuf
 

mlawson71

Active member
154 3
This is why newbies should make extensive research before committing to any given broker. Read up on them online, check their demo account, and if you open a live account don't invest a large sum right away.
 

syusuf66

Junior member
35 2
Thanks for the reply.

It seems as though their advertising campaigns are targeted toward people with little experience, in an attempt to lure them in by offering them incentives. Surely this style of advertising is making a lot of people think trading is just like betting, but on the financial markets instead of sport? Not saying it is or it isn't, but it could be tricking people into thinking the level of knowledge you need to succeed is similar.
 

hhiusa

Senior member
2,684 138
Thanks for the reply.

It seems as though their advertising campaigns are targeted toward people with little experience, in an attempt to lure them in by offering them incentives. Surely this style of advertising is making a lot of people think trading is just like betting, but on the financial markets instead of sport? Not saying it is or it isn't, but it could be tricking people into thinking the level of knowledge you need to succeed is similar.
It is pretty much as @mlawson71 said. I would say that tricking someone involves two parties. If there is nobody to be tricked, then a trick does not work. You are partially to blame for allowing it to happen. If something sounds too good to be true, it probably is. The same can be said for the housing bubble in the US. Banks were giving mortgages to people who could not afford them. Both parties were at fault here. Ignorance is not an excuse for sidestepping the responsibility of due diligence.

What is even sadder to me, is that they would not be advertising in this fashion if people were smarter. They would never keep any customers and they would go bankrupt. Since this is not the case, it does not bode well for the intelligence of the general populace.
 
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MajorMagnuM

Legendary member
9,284 887
Thanks for the reply.

It seems as though their advertising campaigns are targeted toward people with little experience, in an attempt to lure them in by offering them incentives. Surely this style of advertising is making a lot of people think trading is just like betting, but on the financial markets instead of sport? Not saying it is or it isn't, but it could be tricking people into thinking the level of knowledge you need to succeed is similar.

you have to wonder what the trade plan, of someone who signed up cos of the 25 free, would be
 

tomorton

Legendary member
7,250 969
you have to wonder what the trade plan, of someone who signed up cos of the 25 free, would be
Why, its to double it of course. Then to double the 50. Then to double the 100. Easy money.

But your point's good - do they see themselves in 5 years' time as traders making a wage from trading, or as wealthy retired winners who suddenly got lucky? My guess is the latter, same as lottery ticket buyers.

And that being the case, so many of the 90% who fail at trading never intended to be traders at all, they just wanted to be lucky winners and stop trading asap. Makes me feel actually a bit better about the high loser percentage - they didn't fail at concientious industrious dedicated trading, they failed at trying to get lucky.
 

syusuf66

Junior member
35 2
Yeh, thanks guys. Your completely right about a lot of people getting into trading without the giving it the respect it deserves, and treating it more like a lottery. From the little I have seen it already seems to be the case. That definitely makes the 90% failure statistic less daunting.
 

highbury fx

Well-known member
338 114
you have to wonder what the trade plan, of someone who signed up cos of the 25 free, would be
A demo platform has similar functionality to most live platforms but the execution of a demo trade does not go through the same tolerance checks that a live trade goes through. The £25 bonus should be used to gain some experience trading on a live environment at the expense of the broker rather than demo trading.

The upside to the broker is they now have a live account client instead of a demo account client. The upside to the client is they can trade live money, albeit micro stakes, and gain some experience about trading for real as well as seeing how differently their real money pending orders are executed after major announcements (NFP for example).
 

MajorMagnuM

Legendary member
9,284 887
yes. The key diferrence i noticed between ALL demo and live accounts is that on demo, stops survive close calls
 

highbury fx

Well-known member
338 114
yes. The key diferrence i noticed between ALL demo and live accounts is that on demo, stops survive close calls
the big difference is the slippage.

a stop loss order on a demo account will still be triggered if the price touches the order level. The main difference though is that it will probably be filled at the actual order level unlike a live account stop loss order at the same level which may be slipped to where the market moved to.

that's why its not realistic to run a strategy on a demo account, you wont have the same fills as you will on a live account.
 

syusuf66

Junior member
35 2
But surely the slippage isn't so drastic it would make practising a strategy on a demo account pointless? I have heard that demo accounts don't take into account slippages, etc, but never heard this was significant enough to make it pointless practising on one.
 

syusuf66

Junior member
35 2
I see. So, this may be a silly question, but does an account like IG mirror the exact underlying asset price of the stock you are betting on at all times? I know spread betting is a derivative and is based on actual prices, but wondering whether or not the price moves exactly the same as the actual market price at all times.