The text quoted by roberk gives some examples as to how this book misleads newbies who don't know any better.
If we are to minimize transaction costs, as the book recommends, then we need to trade in a competitive market. This means we need to have more than one potential counterparty or market-maker, and we need a broker to find us the best price on each and every order. Brokers play a valuable and necessary role, because they have the expertise and the technology and the relationships to find us that best price.
This awful book totally denies that brokers play any useful role, and teaches newbies to see them as nothing more than middlemen getting in the way. This awful book teaches newbies to deal with just one single market-maker, thereby eliminating competition between counterparties, a crucial ingredient to the minimization of transaction costs. This is not education. This is brainwashing, which encourages newbies to just sign up with a bucketshop, and to allow the bucketshop to play a rigged game of setting prices without competition from other potential counterparties.
The comparison this book makes, between transaction costs for equity trading, and those for FX trading, are false and misleading. She exaggerates the cost of equities commissions. She depicts bucketshop FX trading as purely electronic and equities trading as non-electronic, when in reality, the opposite is far closer to the truth; and Nasdaq trading really is purely electronic. She also compares $100,000 equity positions to $100,000 FX positions, when in reality, you would need a much larger position to achieve your desired level of risk, thereby increasing transaction costs, for FX than for equities, because FX doesn't fluctuate as much as equities. She also completely ignores the hidden costs resulting from all the games that FX bucketshops play, like freezing, requoting, manual quoting, spread-widening, shading, individualized pricing, stop-running, anti-picking rules, not paying interest, charging excessive interest, mishandling of customer funds by putting them into bad investments, broker bankruptcy risks without deposit insurance, etc., etc., etc.
This book ignores the alternative of trading FX thru a non-bucketshop broker, like Interactive Brokers. This book just assumes that the only alternative, for trading FX, is a bucketshop. If the argument could be made, that bucketshops are better than the alternatives like IB, then this book fails to make that argument.
The table of contents and index are totally devoid of any mention of the need to protect against broker bankruptcy and fraud risks. The book ignores these issues, despite warnings from CFTC that:
The United States Commodity Futures Trading Commission (CFTC), the federal agency that regulates commodity futures and options markets in the United States, warns consumers to take special care to protect themselves from the various kinds of frauds being perpetrated in today's financial markets, including those involving so-called "foreign currency trading."
http://www.cftc.gov/opa/enf98/opaforexa15.htm
The table of contents and index don't even mention the issues of protecting against broker bankruptcy, which one can do by trading through IB, since it has SIPC and Lloyds' insurance protection, while the bucketshops have little or no protection.
I think that this whole bucketshop promotion thing is just diabolical and repulsive.
P.S. If you want to read a book that really has some value, and which will teach you a thing or two about the history of bucketshops, read the classic "Reminisciences of a Stock Operator".
