Sergey Mayzus - Personal Thread. HOW-TO

[mayzus]

Hello my Friends!

I'm Sergey Mayzus, CEO & President of United World Capital, the person, who first bring FOREX to Malaysia market three years ago in 2006. First one, who created LiteForex - a sort of forex for beginners and cent accounts. Most of the oldest forex traders and members can confirm this.

The long time passed ago and there is a lot of companies created and joined Malaysia market later. While I'm reading your forum, I see a lot of scam - a lot of people, who are trying to defraud you, just because - THEY WANT MONEY!

This will be my personal thread, where I will explain you all the aspects of FOREX market - from beginning to the end. Here you will find everything - the explanation of the market, market inside, ideas to trade, and ideas to become a broker. I also will be open for you to discuss any political aspects of this activity - the most important analyzing tool.

I will continue in this thread in English, and I'm expecting to see your questions and comments in English. This language is common for us and do not requires to spend a time for translation. So, please let's continue in English, and you will know a lot of things previously closed for you.

Tomorrow I will continue with explanation of the operation of forex market. Please support me in this thread if you are interested.

 

[darkkiller]

Good you have your own thread.So everyone can ask you personally and anything about UWC and Forex.

Hope other CG's user can communicate in English even you use broken English,coz i believe Sergey will understand.

 

[bujal38]

thanks mayzus,
really appreciate this.

1. How does the FOREX market works? How our transaction (BUY/SELL) executed and who is our counterpart?
2.How to differentiate between scam broker and not scam broker?

 

[thegreathafiz1]

Hello my Friends!

I'm Sergey Mayzus, CEO & President of United World Capital, the person, who first bring FOREX to Malaysia market three years ago in 2006. First one, who created LiteForex - a sort of forex for beginners and cent accounts. Most of the oldest forex traders and members can confirm this.

The long time passed ago and there is a lot of companies created and joined Malaysia market later. While I'm reading your forum, I see a lot of scam - a lot of people, who are trying to defraud you, just because - THEY WANT MONEY!

This will be my personal thread, where I will explain you all the aspects of FOREX market - from beginning to the end. Here you will find everything - the explanation of the market, market inside, ideas to trade, and ideas to become a broker. I also will be open for you to discuss any political aspects of this activity - the most important analyzing tool.

I will continue in this thread in English, and I'm expecting to see your questions and comments in English. This language is common for us and do not requires to spend a time for translation. So, please let's continue in English, and you will know a lot of things previously closed for you.

Tomorrow I will continue with explanation of the operation of forex market. Please support me in this thread if you are interested.

Hello Sergey... can you explain ideas to become a broker??? how much capital need to open broker, procedure, and so on.

 

[lukpayat]

I am so glad that someone actually honest enough to come clean and represent the brokers to explain on the operation of forex brokers.
here are my questions Sir,

i have read about the structure of forex brokers.. mainly on the MARKET MAKERS. and REAL BROKERS.
you guys are welcome to read here. very very detail explaination on the structure of forex "brokers"..
http://www.forexfactory.com/showthread.php?t=7484

actually, our money never leave the server, it is just numbers. please confirm this..

how do we distinguished between these two?
how many liquidity providers required to ensure all orders are filled?
why does market makers give fixed spread while the real quotes are actually fluctuates?

about regulation,
how strict is the enforncement done on the brokers? how often do they audit the operation of the brokers?
what will happen if the broker violates the regulation?

thanks

more questions coming soon

 

[lukpayat]

any comment on this Sergey?
http://www.carigold.com/portal/forums/showpost.php?p=2980167&postcount=6

FOREX DEALERS VS CLIENTS

Default How the retail Forex works. Dealers vs. clients.
Here is the question I just got in my PM :
“Hello Igrok,
I would like to know one statistic result. How many traders lose money in Forex? Is it really 90% - 95% ?”

I guess someone else might be interested in the info as well. So, I’m posting it here now. This is my article written about the issue long time ago and also posted on my amazon blog:

“Have just found an old laptop with some actual statistics provided to me by a couple of some major international FX dealing companies back a few years ago. The data was extracted directly from their back office systems and is accompanied by a bunch of their own analysis and comments. I guess some of these numbers could be of interest to public.
But first, just a few words about how retail FX business works. Usually, when I was asking my students if they know how dealers make their money the answer was always the same: “On dealing spreads. The difference between bid and ask is what a dealer usually puts in his pocket.” Such naïve belief still persists among the general population of retail FX market traders.
In fact, this business works quite differently. Because cash currency market in its origin is an interbank market it operates in large contracts. Much larger than the contracts traded by an average retail customer. Because of that, the companies providing services to retail clients have no other choice but to bucket small positions of their customers inside the house. Some of such client’s positions are becoming offset by one another but obviously not all of them. When the general sentiment about market’s direction is particularly strong among small-size traders then the total number of open longs and shorts becomes largely disproportional and shifted one way or another. When the “bucket” becomes “too big to carry” the dealer passes it into the market covering house’s exposure. However, because only a couple of percent of traders are actually making money in the Forex market over a longer time, such statistics provides dealer with pretty good opportunity to make a lot of money just keeping their clients’ positions inside the house for as long as possible. In this case a dealing company business is little different than a business of Las Vegas style casino where every customer is betting against the house. In our case it is virtually the same and client’s losses become dealer’s profits and vise versa.
Some of the dealers, especially those with deeper pockets and consolidated management routinely carry very large exposures on daily by betting against their customers. Some of them routinely carry inside the house an exposure in excess of hundreds of mio. USD.
In order to prevent some unnecessary risks and to get some protection from possible bankruptcy if the things go ugly for a dealer, every dealing company has some guidelines and internal policy with the idea of limiting their risks.
Here is what they usually do:

1. Limit their exposure to a certain size. After reaching the preset limit, the position gets covered in the market or hedged. Customers with large capitals and big trades are also treated differently than the rest of the clientele.
2. They also make customers’ profiling. They filter out those clients that could potentially beat the odds and trade profitably. So, they don’t bucket such customers and usually immediately pass their contract to a larger counterpart like the clearinghouse or another bank. Sometimes even to another dealer. The rest of the customers with lack of brains or a lack of experience and relatively small trading capital get bucketed inside the house.

I remember myself trading through a major Europe based dealer, which began to cover all of our positions only after paying us a few mio USD of trading profits out of his own pocket in a couple of month trading period. Then they even established a dedicated telephone line for our two-way communications and greatly improved their services since.
So, here is some approximate statistics for “A Dealer vs. a Trader casino style game” from the dealer’s point of view, which I believe should be true for the industry in general. (Over 24-month period)


Winning months – 15. Losing months – 9.

1. Total annual profit – 63% (of the total amount of all the customers’ funds in trade).
2. Average monthly profit – 5%.
3. Max monthly gain – 37%.
4. Max monthly loss – 10%
5. Total customers’ loss (USD) – 41 mio. Average customer monthly loss – 1,8 mio.
6. Roughly 40-50% of customers’ losses can be attributed to spreads and slippages.
7. Average “life expectancy” for an active individual trader without him adding more funds into the account ~ 2 months.

There could also be some dirty tricks that some of the dealers practice for increasing their profits and minimizing the risks. Some of the most common are:

1. Skewing quotes away from the real market price. Usually shifting them in the direction of the immediate trend. (Doesn’t happen with the most reputable dealers nowadays)
2. Executing stops before the market has reached them or outside actual trading range. (Pretty common for small “bucket-shops”).
3. Suddenly increase dealing spreads to hit the stops or do not execute limits even if the market has traded there. (Happens sometimes even with reputable dealers. Limits execution problem is my most frequent problem that I have to deal with on a regular basis).
4. Executing stops with unreasonably large slippages. (To me happens mostly only if trading large contracts. Even with banks).
5. Canceling executed trades. (Have never seen it personally but have seen lots of reports from others).
6. Re-quoting market orders in a slow market for a worse price. (Extremely common practice on all levels).
7. Constantly re-quoting every order in the fast market without offering an alternative price and thus not allowing making a trade at all. (Only those dealers whose trading platform is intentionally programmed to perform such a trick).
8. Disconnecting internet-based trading platform at the moments of increased market volatility or just freezing it for a while. (Usually, right before or during a major economic news release) (Normal practice for smaller “ bucket-shops” but now also becomes relatively popular among larger guys too).

Sometimes “honest mistakes” also take place, but since the dealers usually (if everJ) not very eager to admit them, it might also cause some major headache. The most common “honest mistake” (especially if trading on the phone) that I have seen over the years of my professional trading career would be a wrong quotation that is traditionally equal to one big figure. Normally, a very fast market is the one to blame. I saw it several times to happen but only once got actually caught into it. That time it initially cost my client a few hundred grand of unrealized profit in just a matter of seconds. Fortunately, the dispute was settled to everyone’s satisfaction after a couple of weeks of fierce arguments."

 

[fising]

This is a good thread, if the owner of Forex Broker willing to transparent with trader here.

Just 1 thing, this thread will become hot if we go deeper into difference from ECN brokers and bucket shop broker that's lots here in this forum.

Soalan2 korang tanya pulak tu panas-panas.. hahaha.. tunggu apa jawapan si Mr Mayzus. Selepas dia jawap soalan2 korang.. aku lak nk tanya.

 

[mayzus]

First of all, I'd like to explain what forced me to start this thread. Frankly, I was shocked by the height of cynicism, which came into the Malaysian market with company actcfx.com - such cynicism, arrogance and deceit - I did not expect!

It is clear to understand that the operation of such companies poses a real threat to the market as a whole, as the credibility of the forex market and its participants. And me, as a person, invested a few million euros in the establishment of the company United World Capital, very sad to see how incompetent people scamers and fraudsters - their ill-considered actions of killing the industry.

First of all, I'm going to tell you - how to become a BIG FOREX BROKER, - one of these, which are represented in the Malaysian market and in this forum.

Step one - find somewhere $ 100,000. Nowadays it is not a very large amount, and it is quite easy to get. This amount is enough for us to become a GREAT FINANCIAL INSTITUTION!

Step two - go to www.google.com and search for "BVI Company Formation" or "Seychelles Company Formation" - find thousands of proposals with costs around 1,000 - 1,500 US Dollars. Invent a beautiful name, which gives a high status of our organization, such as "Presidential Investments Corporation". Already great status, is not it? We register the company with one of the registered agent, indicating share capital in the amount of U.S. $ 10,000,000 for example. We wait a week, and get a nice piece of paper that the Presidential Investments Corporation created with authorized share capital of $ 10,000,000.

Step Three - open our company's bank account. We will again go to the www.google.com - searching for "Offshore Bank Account". We find lots of offers and prices from 500 dollars to 1,000 dollars. The same registered agent who created a corporation for us, also can arrange a bank account for us, typically, they offer a such service.

Step Four - invent our company's history, and nice looking brand name, for example - "presidentfx.com - Forex for Presidents!". We register domain, are spending for this $ 10, for example at www.godaddy.com

Step five - make a beautiful web site. If you do not know how to do yourself - go to www.getafreelancer.com - where you can find free lancers, who will be able to make a web site for a small price. It cost about $ 5,000.

Step Six - buy MetaTrader platform - go to www.metaquotes.net and contact the sales department. The price of platform is the subject of negotiations and could cost around U.S. $ 80,000. Install it to the server from one of the web services providers and.... BECOME A BIG BROKER!

So, at this time we have spent 87,000 U.S. dollars. We have additional 13,000 which we will spend for advertising. We will also register our nick name on all the known forums and write posts about this this company, for example like this: "I found a new company - www.presidentfx.com, I want to open an account with them. Anybody worked with them before?" Woo-a-la, we have filed crowd suckers in our mega-company suffered their money.

But crowd suckers recently become very clever, they ask questions - is your company regulated or not?... So, back to the second step, and instead of inventing the name of the company - take one of the names from http://www.nfa.futures.org. HURRAY! We - regulated forex broker, member of the NFA. This is exactly what made the scamers from actcfx.com!

 

[thegreathafiz1]

First of all, I'd like to explain what forced me to start this thread. Frankly, I was shocked by the height of cynicism, which came into the Malaysian market with company actcfx.com - such cynicism, arrogance and deceit - I did not expect!

It is clear to understand that the operation of such companies poses a real threat to the market as a whole, as the credibility of the forex market and its participants. And me, as a person, invested a few million euros in the establishment of the company United World Capital, very sad to see how incompetent people scamers and fraudsters - their ill-considered actions of killing the industry.

First of all, I'm going to tell you - how to become a BIG FOREX BROKER, - one of these, which are represented in the Malaysian market and in this forum.

Step one - find somewhere $ 100,000. Nowadays it is not a very large amount, and it is quite easy to get. This amount is enough for us to become a GREAT FINANCIAL INSTITUTION!

Step two - go to www.google.com and search for "BVI Company Formation" or "Seychelles Company Formation" - find thousands of proposals with costs around 1,000 - 1,500 US Dollars. Invent a beautiful name, which gives a high status of our organization, such as "Presidential Investments Corporation". Already great status, is not it? We register the company with one of the registered agent, indicating share capital in the amount of U.S. $ 10,000,000 for example. We wait a week, and get a nice piece of paper that the Presidential Investments Corporation created with authorized share capital of $ 10,000,000.

Step Three - open our company's bank account. We will again go to the www.google.com - searching for "Offshore Bank Account". We find lots of offers and prices from 500 dollars to 1,000 dollars. The same registered agent who created a corporation for us, also can arrange a bank account for us, typically, they offer a such service.

Step Four - invent our company's history, and nice looking brand name, for example - "presidentfx.com - Forex for Presidents!". We register domain, are spending for this $ 10, for example at www.godaddy.com

Step five - make a beautiful web site. If you do not know how to do yourself - go to www.getafreelancer.com - where you can find free lancers, who will be able to make a web site for a small price. It cost about $ 5,000.

Step Six - buy MetaTrader platform - go to www.metaquotes.net and contact the sales department. The price of platform is the subject of negotiations and could cost around U.S. $ 80,000. Install it to the server from one of the web services providers and.... BECOME A BIG BROKER!

So, at this time we have spent 87,000 U.S. dollars. We have additional 13,000 which we will spend for advertising. We will also register our nick name on all the known forums and write posts about this this company, for example like this: "I found a new company - www.presidentfx.com, I want to open an account with them. Anybody worked with them before?" Woo-a-la, we have filed crowd suckers in our mega-company suffered their money.

But crowd suckers recently become very clever, they ask questions - is your company regulated or not?... So, back to the second step, and instead of inventing the name of the company - take one of the names from http://www.nfa.futures.org. HURRAY! We - regulated forex broker, member of the NFA. This is exactly what made the scamers from actcfx.com!

deleted post

 

[mayzus]

thanks mayzus,
really appreciate this.

1. How does the FOREX market works? How our transaction (BUY/SELL) executed and who is our counterpart?
2.How to differentiate between scam broker and not scam broker?

First of all, you must know that FOREX is de-centralized market - OTC (Over-the-counter) market. This means that there is no central place, such as exchange, where the market trades.

You see the quotes in the platform and decide to buy or sell. When you BUY, your brokers SELL and when you SELL - your broker BUY. Your counterparty is your BROKER.

When the company is well established with good capitalization, there is allways people who buy and see the same instrument and your broker just receives a spread from all of them. When the broker is new with few clients and few trades, they are happy every of your trade because they want only one thing from you - LOSS. Because of they do not have sufficient money to pay your profits.

Regarding brokers... How to choose. First of all, you must know the country of incorporation - this is most important thing. Most of the well-developed countries have their regulatory infrastructure for such kind of activity, and regulatory body have a very strict requirements for such companies.

I will explain on the sample. Let's consider to look at the United World Capital, which is regulated by CySEC (Cyprus Securities and Exchange Commission).

So, In order to start such activity, you must become licensed. In order to obtain a license, you must have sufficient capital (this is minimum EUR 1,000,000 for Cyprus company) established at all the times and not less. You must have prepare a business plan, corporate infrastructure, create sufficient office space (around 300 square meters), hire experienced personnel, who passed the examination with CySEC and Ministry of Finance. You must develop Internal Operations Manual, Risk Management Policy, Booking Policy, Anti-Moneylaundering Policy, Best Execution Policy, Conflict of Interest Policy, Client Agreement, Application Kits - everything must be approved before you will be granted a license. The capital of the company must come from legal sources and must be locked on the bank account of the company. You must clearly show the shareholders, directors, employees - you must discover their background, criminal records, non-bankrupcy proof. Everything. All the persons must be approved by the CySEC.

So, the licensing process will take about 6 months to 12 months. Once license will be granted, you must activate the company within 6 months - the activation is also subject of approval - you must implement all the business processes in accordance with your company infrastructure. You must separate each department by a Chinese wall.

You must appoint a third-party internal auditors (who will internally audit your company every three months. You must appoint external auditor company who will make your annual financial audits. You must every month submit a capital adequacy report to the CySEC.

And you must be allways member of the Investor Compensation Fund, which will insure your client's deposits in amount of EUR 20,000 per client for the case of bankrupcy of your company.

You must follow a lot of the Laws - the most important is Law 144(I)/2007 - "Investment Services and Activities and Regulated Markets Law of 2007", Law 188(I)/2007 - "The Prevention and Suppression of Money Laundering Activities Law of 2007
" and Law 138(I)/2001 - "The Processing of Personal Data (Protection of Individuals) Law of 2001".

You must maintain a mechanisms to protect your client's private information. Only authorized persons must have acces to this information. It is very serious...

So, as you see, the regulated brokers - are very serious companies who keep their business as their life.

As for me - I invested EUR 2,500,000 to the United World Capital, so you understand how it is important for me, how is important for me to keep the company allways in accordance with the law.

And, you must allways approve with CySEC all of your advertisments!

Now, let's compare this with Mauritius license... First of all - this license will not allow you to deal with the Mauritius citizens, you can not establish Mauritius office and no one Mauritius bank will open a bank accountfor your company. Your license is a GLOBAL BUSINESS LICENSE, what means - pay us money and do whatever you want - outside of our country. The total cost of this licenese (including share capital) is around EUR 20,000. You see the difference, right? You do not need to have any audit, you do not need to maintain a capital adequacy, you do not need to have qualified personnel, you do not have any restrictions in advertisment... So, you can just say - WELLCOME TO MY FOREX COMPANY AND BECOME MILLIONARIE.

Let's compare this with unregulated company - you do not need any approval, you do not need any qualified staff, you do not need any policies, you do not need any capital, you do not need anything. Just pay 1,000 dollrs for your business formation and do wahtewer you want. You also do not need to show your name as a shareholder and director. You can use John Doe as shareholder and director.


So, as told to you - the first what you need to look to - THE COUNTRY OF INCORPORATION. Next, as I told, each (almost all) country has a regulatory body. So, your company must be ONSHORE (local) company and must be authorized with this country's regulatory body.

What you need to look next - the BANK DETAILS. Your company must have corporate account in the country of incorporation. Remember - bank will not open your company local onshore account if you company is not authorized for the business it provides by the relevant authorities.

Offcourse, the license information and registration infurmation must be shown on first page.