Shocking Details Of Forex Broker Frauds!
Forex market is an unregulated over the counter market
. As compared to the futures market that is highly regulated, there is very little regulation in the currency market. You see, in the futures market, there is a clearing house that enforces the execution of trades. Unlike the futures market, forex dealers and brokers also known as FCMs are free to do whatever they want. Many people start trading forex without the shocking forex broker frauds. There are many games and tricks that a forex broker can play with their clients. Many traders keep on losing without knowing the reason for their losing trades. If you want to seriously dabble in forex trading than you must know these forex broker frauds.
This unregulated nature of the forex market means that most brokers are free to quote currency rates of their own. What many brokers do is add 1-2 pips to the interbank rate that they get. In times of volatility, you will find that the spreads might suddenly widen. All these are forex broker games that you need to be aware of if you want to seriously dabble in the game of forex trading.
Almost all brokers now tell their clients that no commission will be charged like that in the stock trading. What they don't tell you is that commission is being charged in the hidden shape of spreads. 2-3 pips bid/ask spread is your trading cost and the broker's profit.
Now, if you are new to forex trading chances are that you will lose 99% of the time. You lose, your broker wins as the broker has to provide liquidity to the clients and most of the time cannot immediately offset the position in the interbank market as the size of the most transactions are usually small. What this means is that most of the time, your broker is trading against you. The more you lose, the more your broker wins.
Add leverage to this. Your broker will entice you to use a high level of leverage by saying that it will increase your profits. You are new, you don't know how to use leverage. You end up losing. The more you lose, the more your broker will make.
These are all games that your broker is continuously playing with you. Your forex broker can turn your winning trade into a losing trade by using blip or a sudden spike in the price feed. This is also known as stop hunting. Stop hunting is what many brokers continuously do. You suddenly find that your stop loss order has been triggered and your trade is closed. What you don't know is that the spike in the price action was artificially created by the broker. So my friend, if you are really serious about trading forex than know your broker first before you start dabbling in the game of trading forex.
by: Ahmad Hassam
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