Ok, you may be asking why I am writing this when I work in the industry.
A few months ago, I bumped into a friend that I had worked with in the past in a well-regulated brokerage, he was in the dealing room and I thought he was happy there but he said he had left the company for personal reasons.
We went for a coffee, outdoors, and we ended having a long chat.
I asked him where he was working now and he was rather vague and he changed the subject. I thought that’s strange because this man can talk for England.
So we were chatting talking about the old days. Suddenly he said to me, “they make me wear black on Wednesdays”
Ok, I asked, what? , who does, and then he poured it out.
He got a new job with a brokerage. It transpires that it had lost its licence, therefore offering their services with no regulation.
He told me he knew they were a bit dodgy but he needed a job and wanted to make some decent commission.
So, in terms of not getting anyone into trouble, I will not mention the country or the platform.
I asked him what the day entailed.
Firstly, let me explain that in properly regulated online forex brokerages, the only people that can give any advice are the brokers who are licenced to do so, therefore professionals.
The rest of the people are in the background, such as compliance, risk. The people who contacted traders, in general, are customer support, to assist with onboarding, showing the client the platform etc.
Ok, so this company was full “Wolf of Wall Street” on cocaine.
The whole office, on the sales floor, comprised of two teams.
The conversion team and the retention team.
Simply put the conversion team called people to register and deposit, once that is done the retention teams take over.
So, in the morning, they started early, real sweatshop, the floor manager would have a meeting and address everyone in the hall, like a school assembly my friend said.
He was a big imposing figure of a guy, with a military background and a bit scary, my friend informed me.
He would begin the day by introducing new recruits, I guess there was a high turnover of staff, and the ethical people wouldn’t last a day.
He would big them up and tell them they have come to a place where they can make a 50k commission every month.
Secondly, he would praise the salespeople who brought in big money the previous day and then lampoon individuals who were not performing. Finding scapegoats, to put the fear of God in others.
There were leader boards everywhere, nothing to do with the markets, just boards showing net deposits, volumes and the name of the agent.
They wanted everyone to see the success of others, to push them to all.
So, succeed at what? Scamming unsuspecting individuals out of their hard-earned money, who thought they were investing in the financial markets.
My friend was given an old database, and told that if he can make money from any of these old leads, he will be rewarded with fresher, new ones, my friend, was in retention.
So the bell rang and everyone went on the phones, music blazing in the background, yes loud music, not market news.
He said, he heard some terrible conversations.
Guys and girls screaming at their clients, telling them to invest $20,000 because they had a margin call and if they didn’t, they would lose everything.
He heard the sales force, makeup stories about opportunities in the market, be it a specific stock, or commodity, complete lies. “This will rise 30% today, take the opportunity now”.
My friend went on about the activities, but to put it in a nutshell, they were pure scammers, taking as much money as they could, exposing the trader/client to the market and using specific tactics to get more and more money.
A common practice was, to get a new trader to make a bit of money, tell them to test a withdrawal, this would give the trader trust in the brokerage, and then they would fleece him/her for more.
I got it straight away, what happens on a Wednesday in Forex. Swaps!
So why wear black on Wednesday, this is the day of the treble swap, the money you pay the brokerage to hold a position overnight, a very legitimate and common practice. So, these scammers would concentrate on opening up as many trades for their clients, knowing that the treble swap would result in massive margin losses and therefore potential new reinvestments on Thursday.