Let us for a moment put aside the "ponzi" scheme talk. I don't have enough information to substantiate this belief, so I won't comment on it. I would like to address the forex issue though.
I consider this to be a wholly inappropriate investment for many of our crew and this is why.....
The returns are great and I have no doubt achievable. I have traded forex for several years and understand the market better than most. The returns, however, are meaningless by themselves. You need to consider them in the context of risk.
The risks here are :
1. trading system, which may or may not produce long term results, and its associated risk. Given the 56% loss in January, raises some serious questions about the risk profile of this trading system.
2. Regulation......I believe regulation is way over-rated. It gives an air of respectability to something that is little more than gambling. Regulation means nothing other than you may have a shot at launching a court action should things go wrong. It doesn't protect you if things go wrong and it won't foot the bill or help you recover lost funds. You need to cough up $$$$$ big time to have a shot.
3. Accountability. Carry on from point 2, regulation does not bring about accountability. Anybody with a bit of tech know how can set up a PAM/MAM account with a broker and start trading with other people's money. When it goes wrong, they can simply walk away because they are not held to account. At least a big wall street firm has reputation to think about. Here we have some anonymous traders doing their thing......
4. The retail FX market is a mug's game. It has no use other than as a hobby. There is simply too much systematic risk. Things like stop losses are not guaranteed. I had a broker miss my stop-loss once by 112 pips. Look at how many traders were wiped out by the CHF debacle in January. Black swan event??? The FX market has such events on a regular basis making it totally unsuitable for a long term investment. Institutional FX is possibly a different matter, but here you have experts that spend millions of $ to shave 1 millisecond off the latency experienced by their trading servers. So here we have a few weekend warriers trading with Metatrader and a VPS trying to compete with the institutions.......it is HIGH risk, make no mistake.
Michigan777flyer, you made reference to 7.5% on a stock trade. Thats nice. You are classed as a sophisticated investor. You know what you are doing and understand the risks. Presumably your trade was leveraged and coud just as easily have gone against you? Even then the stock market does not come close to the risk profile of the FX market.
Given the above info, surely it must be obvious that FX is not suitable as an investment, especially for people that do not understand the risks?? Knowing, or being told the risks, is meaningless without UNDERSTANDING the risk. It is simply not prudent or wise to "invest" what amounts almost a full years' wages in such a high risk activity? Or even worse borrowing the money
I don't have a horse in this race and it is not my job to "stop" people from doing this, but I do think that the more experienced amongst us need to provide a reality check to our younger colleagues that may blinded to the risk by their emotions and greed. If they still elect to go for it, well, then they will learn in another way.