DJ VINCENT CIGNARELLA: A Foreign-Exchange Trader's Lament --The foreign-exchange markets have become unprofitable to trade --I miss my MTV and my old FX market --Central banks have corralled the FX markets By Vincent Cignarella Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The market isn't wrong, it is just stupid! So said one veteran trader of the foreign-exchange markets, a statement that is no doubt echoed by many others who are frustrated with the lack of trending activity in the foreign-currency markets recently. More and more, those who are paid to play--seasoned veteran institutional foreign-exchange traders--are becoming disenchanted with a market that appears to them to be broken. The new age of currency wars with many governments attempting to keep their domestic currencies weak in an attempt to export their way out of slow growth has clamped down foreign-exchange movements and severely limited traders' opportunities to make money. That traders aren't making money is hardly going to bring central bankers to tears, but there are consequences to monetary meddling. When central banks artificially constrict market movements in any asset class, pressures build. An unexpected global event could trigger a violent rush for the exits, one central banks will be a loss to contain. Many of the largest banks that trade foreign exchange--from Bank of New York Mellon to State Street to Goldman Sachs --are reporting declining volumes as retail, corporate and professional traders sit on the sidelines waiting for the stalemate to end. As one trader put it, the EUR/CHF cross seems to sum up what is wrong with foreign-exchange trading these days. The cross goes nowhere, so it isn't worth the cost of capital to put on a trade in lieu of something else. This is all because the Swiss National Bank , in an attempt to weaken its currency against the euro, has instituted a floor of CHF1.2000. Though that is far above what the current anti-euro mood would suggest as fair value, the market doesn't dare challenge the SNB edict, so the pair simply stagnates just above CHF1.2000 and has all but ceased to trade. The problem is, there aren't many other trades to choose from. The EUR/USD is said to be so heavily optioned, locking the pair in a 1.3000-1.3500 range that it would take "the end of the world" to break to the downside. By the time you caught up with that it would be 500 points lower, making shorting the euro at 1.2500 useless, one trader moaned. Sterling? Forget it. As one former chief dealer of the central Bank of England put it, "Sterling is 1.6000." My personal experience: it was 1.6000 in 1983 when I first traded it, it was in 2003 when I stopped trading it, and it is 1.6000 today. MTV has changed but not the rate of exchange between the U.S. dollar and the British pound. The Brazilian real and the Turkish lira are basically central-bank-controlled, market participants complain. As for the South African rand goes, "I have no idea what to do with that," another trader said. As for USD/Canada, it has been in a 2% range for months. And the Australian dollar? That is just like trading Canada, but worse. You have to trade Aussie at night and it moves on Chinese economic data, which most traders deem suspect. Who knows if the figures from China can be believed. Even the diminutive New Zealand dollar is a lost cause, one trader groaned. If you take a position over NZD25 million, you are the market. Likewise with the currencies of Norway and Sweden. Take a position in those currencies and you'll have the same position as everyone else on the Street. They are merely a wonderful opportunity to lose money, as the slightest bit of news will have everyone running to the exits and stopped out all at once. It has gotten so bad that even FX traders who have left the professional game and now trade their own money won't touch FX. They trade equities instead. As one former bank foreign-exchange manager put it, "I trade Apple stock; it is like what trading the Deutsche Mark was like years ago. FX, I won't touch it. Too much risk and too little reward."