Over a hundred Australian foreign exchange traders fight to avoid millions in losses

Here in Australia – and around the world – foreign exchange firms are selling the dream of instant riches. It is a booming trade which has doubled in size since 2007, and is now turning over $380 million a day.

But for hundreds of Australia's 51,000 mum and dad retail forex traders, that dream has turned into a nightmare.
The ABC can reveal that more than 100 retail foreign exchange traders in Australia – often small investors who dabble in the forex market in their spare time – have suffered massive losses on their trading accounts.
Several are in the hundreds of thousands of dollars and, in at least two cases, those losses have climbed above $1 million.
Now, some of them are being chased by their foreign exchange brokers to pay out those losses.

Swiss franc turmoil

On January 15, the Swiss National Bank sent foreign exchange markets into a spin when it unexpectedly removed a cap on its exchange rate.
The cap was in place to stop the Swiss franc appreciating too much. The franc was seen as a safe haven, and an overvalued currency would make its domestic economy uncompetitive, and hamper economic growth.
When the cap was unexpectedly removed, the franc appreciated by 30 per cent in an instant against the euro, and foreign currency traders holding the franc made windfall gains.
But those on the other side of the transaction were left scrambling to cover their losses and, in the case of some of the world's biggest foreign exchange trading firms, exposed to hundreds of millions of dollars in losses.
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