Forex brokers should not promise returns at all, small or large. Simply put, if a broker is promising to make you money, it is a scam. Other. The Forex market is a legitimate trading market where the world's currencies are traded. It is not a scam in itself. Without the Forex market it would be. The forex market is volatile and carries substantial risks. It is not the place to put any money that you cannot afford to lose, such as retirement funds. HEAD AND SHOULDERS PATTERN FOREXPROS Book Contents Book. The IP address past the failed protect file, secure my events easy. You can use display that is course provides all. Clicking the mouse not want to in Section The to leave a.
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While trading, you may experience technical problems regarding your platform, trade orders, and other broker-related concerns. You may have just opened a big position and then your internet went down. You may need to resolve this quickly by calling to your broker for help.
The way they respond to your concerns can be a key in gauging the credibility of your broker. If this it the case for you then you may want to research another broker. The Forex market has many unique features that many brokers use to entice traders to open a live account with them. Some promise no regulatory fees and exchange fees, others present no data fees, and most common to all, no commissions.
However, no matter what type of Forex trader you are, you are always subjected to transaction cost. Every time you enter a trade, you are always required to pay for either the price spread or a commission. Some brokers just charge the spread, others charge commissions per transaction made, while other brokers charge you both.
The lower the spread, the greater the hypothetical profit a trader can make. Different brokers charge different number of spread pips. However, paying a 10 pip spread on major currency pairs is a sign that there is something odd with the broker.
Most brokers present the lowest spread they can offer because traders have a higher chance of profiting with lower spreads. You may choose the broker with the most affordable and cheapest spread. However, you have to balance broker reliability and low transaction costs. Choosing the broker with the lowest spread is important, but it should not override the most important factors in choosing a broker.
A competitive spread is useless if the other factors are poor. Depending on the broker and account type they offer, there are three commission structures used by brokers:. With the variable spread , the spread may be as low as 0 pips or as high as 3 pips on most major currency pairs. Spread also varies depending on the financial instrument that you trade and volatility of the market. Most brokers charge a 2-pip spread in a less volatile market.
However, if the volatility increases, the spread may also increase, which means higher transaction cost for variable spread accounts. Also, spreads between different currency pairs may change as the liquidity level of that certain currency pair changes.
Every time you enter a trade, you will always start with a negative profit even if the price moved in the positive direction. The price has to change enough in order to cover the trading cost, the spread. Some forex brokers will publish their spreads live on their website. Here is an example from one broker called FinFX.
Most brokers who offer the least spread charge the transaction cost on every executed trade through commissions. Commissions are either fixed or variable. As the name implies, a fixed commission charges the same transaction cost regardless of the trade volume and size.
A variable commission is most common for brokers. Transaction cost is calculated based on the trade volume and size that you executed. Generally, the cost is calculated from a fixed dollar value per million. Trades held overnight are subjected to overnight rollover or interest fees. Every currency pair that you trade has its own overnight interest rate. Overnight interest rates are determined at the Interbank level, not by the broker, and it varies between 1.
This trading cost is calculated based on the leverage, which means the higher the leverage a trader uses, the higher the overnight financing cost. Rollover fees on currency pairs depend on the difference between the interest rates of the two countries whose currencies are paired. If he was shorting the pair, then he would be charged with 1.
Some brokers apply inactivity fees if you do not make any transactions within a set period of time. There are some brokers that require a minimum amount of trading activity that must be met each month, quarter, of a year. A very volatile market condition and lack of liquidity can force a broker to apply a slippage on the currency price. This occurs when a position is executed away from the average spread. This usually happens during major new releases because of increased market volatility.
Some brokers protect their clients from slippage by effectively handling news releases, others do not. Fixed spreads may protect you from this unwanted cost. Although fixed spreads are slightly higher than the average spread, your trades will be filled at the desired price even if the market volatility increases. There are certain brokers that cheat their clients by manipulating the bid and ask spread.
Typical spreads of major currency pairs among regulated brokers on normal market conditions ranges from 1 — 3 pips, but may reach as high as 6 pips during highly volatile market. Scammers would have spreads around 4 to 8 pips on major currency pairs on normal market conditions, and may reach as high as 10 pips or more during high volatility. Another way that fraudulent brokers cheat their clients is through stop hunting. Brokers know where their clients place their stops. Suppose you opened a long position at 1.
Unfortunately, the trade initially went against you and almost hit your stop loss price. However, your position was closed, but the market did not even touch your exact stop loss price 1. Then the market begins to take off to your desired direction.
There are still brokers that claim to be regulated but practice spread manipulation and stop hunting, especially during times of high volatility. The speed at which your orders get filled is very important and it is mandatory that brokers should fill orders with the best possible price. Your orders should be executed at that price, or within micro-pips of the price. Reputable Forex brokers offer a hassle-free method to deposit funds and withdraw earnings.
Whatever methods they use, brokers have no reason to deny withdrawal of your funds and profits because they only hold your funds to facilitate trading. Note: the amount of paperwork required by brokers has increased much in recent years to protect against money laundering and other illegal practices. Some brokers will require more paperwork than others, depending especially on the country they are in. Almost all brokers offer two or more account types, which depends on the size of lots traded.
The most common type of accounts are micro-accounts, mini-accounts, and standard accounts. The micro and mini-account allows you to trade with a very low minimum initial capital, while the standard account requires a higher minimum capital. Minimum capital for each account type varies from one broker to another.
New forex traders tend to choose brokers with higher leverages. Although higher leverage can lead to bigger profits, it also magnifies your losses in exactly the same way as your gains. A relatively small movement against your position can result to an immediate and large loss which can be greater than your initial investment capital. Traders who get attracted by high leverage end up benefiting the broker and harming themselves.
If the market moves against your position, margin levels are increased and you may be called upon to deposit additional funds into your account to maintain your position. The final aspect in choosing a forex broker is reputation. Only a few brokers have well deserved reputations and are loved by their clients, while some brokers are despised by many.
Disreputable brokers often use high spreads and slippage to prevent huge losses. Others cancel the trade if it turns against the broker. The moment your profit history becomes consistent, dishonest brokers do whatever they can do to stop you from gaining more profits through them.
The only way to protect your investments and money is to keep and an open mind and make smart decisions. You may join up with a bad broker from time to time, but just try and get your money back if they are doing underhanded things and research better the next time by visiting sites like the broke review page of FPA: Forexpeacearmy. But do not just stop with this one site. Research and read all that you can about all the brokers you researching.
Try to find out the truth about them and when you do select a broker make sure you start with a small deposit at first. You may even try to withdraw profits on the account first before deciding to keep more money with them. A broker will always be tested at the point of withdrawing profits. Contrary to the beliefs of most losing traders, Forex brokers are not designed to make retail traders lose money. Forex brokers want to do business with you, and not to lose your trading business.
If you lose all your money in trading, they too will lose clients. But then again, this is not true of all brokers. Although most brokers that are regulated by financial authorities conduct business ethically, some brokers usually unregulated only wants your money rather than seeing you succeed in the trading business.
As a general rule, a broker will only help you when your interests are aligned with theirs. A broker who contacts you many times in order to convince you to deposit money or open an account with them, is a sign that the broker only wants your money, not to help you succeed in your trading career. The best criteria are the size of the company financial stability , speed of their platform and as well as their credibility and honesty.
Also, security of your funds and as well as the assurance that you are in good hands are the most important considerations. One of the best places to start when looking for a good broker is a review site like ForexPeaceArmy. They have some great reviews here on this site from traders just like you. You can find some of the answers online with their websites but otherwise you can get on with their live support or call them on the phone to ask these questions.
Make sure that you get solid answers, not just wishy-washy ones. And this one really looks very useful. Broker Comparison Guide should really help you with your decision when choosing a broker. Trading directly with the exchange market and avoiding the intervention of the Forex broker on the trading process is nearly impossible for retail traders.
Brokers act as mediator between the interbank market and retail market, in return for a commission. These two major categories of brokers conduct business oppositely, but no type of broker is better than the other because it all depend on your trading strategy and type of trader you are.
Trading with the right broker is very critical to trading success. Many brokers help their clients succeed, while some brokers are setup to make traders fail. The choice of broker you make will influence your ability to make profits month by month. Make sure that you trade with the broker that you prefer the most. Giving your time and effort into investigating the factors outlined above can save you from much heartache and grief. No broker is perfect for every trader, but by considering the key factors on choosing the right broker, the chances of your trading success can increase substantially.
Do you have a good broker? Share it here if you think that others would benefit from it. I am also a Forex trader, a programmer, an entrepreneur, and the founder of ea-coder. I have created two of the most popular trade copiers and other trading tools for MT4 that are already used world wide by hundreds of currency traders.
As usual, very comprehensive and educational article that every new trader should read. Having been trading for quite a few years now, I have seen some very suspicious activities with various brokers, including some of the better known ones.
I do feel sorry for my US trading buddies though as their govt treats them all like little kids, with all their restrictions in place. Just too risky for my liking. Stick with the more popular better known brokers that have been around for a few years also.
Not sure about your overnight rollover interest calculation, as I always seem to get charged more than I earn when trading the same pair in opposite directions with the same position size. I think it is a money spinner for brokers. Thanks for the article Rimantas. Jim, I am glad you like it. Definitely U. Very comprehensive article. There is not enough transparence in their calculation. Moreover, you end up paying higher interest to hold a spot pair overnight than an equivalent futures contract.
Overall, I prefer futures to spot rates. Robert, glad you like this information. Interest rates can be mysterious for sure. I agree with you. If you are getting close to a margin call they will delay processing your deposit to cover the call. This is a nasty trick, I experienced it before my own eyes.
They waited for my margin call and stop out, then appx seconds later my funds went in. Needless to say I no longer trade this way. I also used to be quite common for brokers to change your leverage during high volutiliy to cause margin calls. Do you ever whatch the market moved against you immediately after placing your trade? Meanwhile all other pricing does not make the same move. Conway, those are golden stories. I really love reading them and it is so good to learn about them.
The one with oil positions is the funniest. That is a great snippet of news about broker tricks.. Can you let us know which Broker tricked you which allowed you to get ASIC to help as I have also been relieved of all my funds by a broker in AU and would be interested in knowing who did this to you? Hi Garry, Although it would be easy for me to name the 2 brokers who tried to scam me, it would serve no purpose in helping you in your situation, indeed you could even be involved in broking yourself and looking to getting your own back on me for naming fraudulent services.
If you have actually encountered a problem with a broker which you think is carrying out fraudulent practices, you need evidence by way of screen shots and statements and any other hard copy details which clearly show corrupt activity. Your evidence must in most cases condradict the brokers P. Hearsay verbal comment is not evidence.
They usually take 30 days to assign you a case officer, it is not a fast process, but if you have been done wrong like I had, you stad firm and follow through providing logical honest replies to all their answers with evidence. When you do make a complaint it gets recorded against the broker, so they want to settle as well.
Usually as soon as a case officer gets involved, the broker will want to discuss the matter with you and settle without 3rd party involvement. I was fortunate in one case to have the details directly on the screen in front of me. I took screen shots showing trading disabled on one chart but activ on others, showing all my open positions on the chart and showing live activity taking place, then backed up with time captured statements.
I even took a copy of their P. Here is a snippet from one PDS, which are even more full of catches to clear the broker of any wrong doing while ripping you off. TF Global may at an time without Notice to the Client suspend, withdraw or deny access to the Online Platform for any reason including but not limited to security, quality of service, failure by Client to pay and amount when due or breach by the Client of any provision of this Agreement.
Very good article. Well done. I had deposited funds in a new account and had started to talk with the account manager Alan Levine. By the time that I logged on in China I had most of my account wiped out. Wiped out. I will never forget that. I reported it to the police, but nothing has happened so far. Leaves a bad taste in your mouth. John, that is quite a story. I never though that this could happen when an account manager working for the broker is trading your account.
Thanks for sharing and hope your future investments will be ma success. Hi Rimantas I have a story. Recently was trading with MT4 app on my iPhone. My strategy was to stick to one currency pair the eurusd. About 2 months into trading I opened some positions in other currency pairs, following this, the MT4 app displayed the negative value of trades as a positive in the free margin.
In all the confusion I would have lost about 10 grand. The broker is Tallinex but because the malfunction was only on my app it would seem meta quotes are responsible. Thanks for sharing. It sure sounds like a MT4 malfunction. Sorry to hear you had such a big financial loss. I have personally witnessed brokers trading against clients by using order delays. I have also seen brokers delay withdrawal requests past 1 business day.
This business is quite something. I am using an indicator that shows me what the spreads are and tonight, I will not consider trading period, because all the spreads are a complete rip off, and they keep changing by the minute. And I could go on and on. It was hard to find any pair that had a spread of 0. Notify me of followup comments via e-mail. You can also subscribe without commenting. Skip to content Share on Facebook. The role of Forex brokerage firms Not all major commercial banks have the same quoted price.
Dealing desk vs. By charging extra overnight interest rates Brokers charge and pay disproportionate swaps based on the gap between short-term interest rates associated with currencies pairs set by central banks. By engaging in spread widening This mostly occurs during times of high volatility.
By encouraging over-leveraging One way brokers trick traders is over-leveraging. By offering good initial customer service Customer service and support is incredibly important for any type of business, including a Forex broker. By stop-hunting Suppose you think a currency is heading up.
It is all done automatically and through some special settings of the platform. If you ask them why this happened, they will answer that it is because of the market situation, volatility and…. In contrast, they want you to win, grow your account and keep on trading with them, so that they will also make more money in long term. Although this is done automatically and electronically, but it takes some time and it is possible that the price changes during this time, specially when the market is moving strongly.
So you will enter with a different price than what you saw on your platform. Re-quoting is another trick made by market maker brokers. When the price is going up strongly, and you choose the right direction to enter you click on the buy button , the broker delays for few seconds, and then instead of taking the position for you, gives a new price which is higher than the price you want to enter because the price is going up strongly.
They do it when you choose the right direction. Then you will have to click on the buy button again to enter. It is possible that they re-quote again, and repeat this process for a few times, to either stop you from entering the market, or make you enter with a much higher price. They just want to sabotage your trading. They cause you to enter with a lower price to prevent you from making a good profit from your short position. If you find out and complain, they will say they have no idea, and re-quoting is just the result of the markets volatility, and they have no control on it, and….
Whereas this is absolutely a big lie. They do the re-quoting through some special software and settings they apply to the platforms. It will have no advantage for them. It is a market maker broker. Swap has to be calculated through a special formula, and as each currency interest rate is clearly stated by the related central bank, the swap has to be a constant amount with all of the brokers, banks and liquidity providers.
However, the swap you actually pay is different from broker to broker. Swap can cause you to lose a lot specially if you hold your positions for a long time. Leverage is a good facility that helps us trade large amounts of money with a smaller account, and make bigger profits compared to the time that there is no leverage.
However, it is a two-edge sword that can cut our own throat, if not used properly. Most of the novice and inexperienced traders misuse the leverage and take huge positions that their account balance is not high enough to handle. So that when the position goes against them, they get margin call and stopped out very easily and the whole account will be wiped out.
However, market maker brokers can offer any leverage they want. I see that nowadays some of them offer which is crazy. Why do they do it? A higher leverage makes them take bigger positions, lose more and wipe out their accounts faster and easier. They think about making more money within a shorter time. This is it about the ways that brokers can cheat you. I will never do it. I have good reasons for that. It is a very important article for us beginners. Now am thinking of not doing Forex trading after reading this.
I have been practicing demo account and i made around USD in a month. Thank you opening my mind. When you post an article about Real brokers then I will think of coming back to this trading idea. I am a victim who has been scammed by Forex Trade Bulls. I invested R but they said I need to pay R more in order to get my profit. This had happen on the 22nd August This article was very interesting. You explain complicated information in a way that gives your reeaders opportunity to understand more of the techniques that makes you lose money on trading.
It cannot be said enough that if you want to trade forex or stocks you have to use a regulated broker. A broker that follows the governments regulations for trading and is approved by the authoroties. Your email address will not be published. Notify me of followup comments via e-mail. You can also subscribe without commenting. Table of Contents. Before you read the rest of the article, subscribe to our newsletter to keep yourself always at the top, and not to miss the great and legitimate opportunities we follow:.
Published by. The LuckScout Team "Whether you think you can, or you think you cannot, you are right. This industry has its fair share of scammers and cheats! Thanks for the enlightening article. Leave a Reply Cancel reply Your email address will not be published.
Forex cheating is true bartosz bielec forex exchangeI HACKED META TRADER 4 !
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Future brokers have gone broke, but no future customer has ever lost one cent of the money in his trading account because of a failed broker. Nor have they had to wait for their money. It is immediately available. Commissions are as low as one tenth per round turn depending on volume, through a regulated broker, trading electronically at an exchange where you know the true price of the currency. A forex broker can only give you the price of a currency as quoted to him by the bank through which he trades.
Banks have diffeing prices for a currency. You never know what the real price is because there is no central exchange through which all prices flow. Besides not knowing the true price from the bank, you can also be deceived by "leaning" or "skewing" of the real price at the bank. Forex brokers comonly lean the prices. They lure people in with hype and false advertising: "No commissions! While it is true that total forex volume is greater than in the futures, futures volume at the exchange is greater than the volume at your broker for the most popularly traded currencies.
The only place where the liquidity differential matters is in currencies like the Mexican peso, the Brazilian real, and somebody's drachma. Those thinly traded currencies may be more liquid in forex. But if you trade anything but the few most liquid and popular currencies, you are going to be paying at least 5 pips, and often more. Unless you have a particular comercial need to deal in Polish ziotys, Indian rupees, or some other thinly traded currency, you don't need forex.
This is one of their biggest and boldest fabrications. The truth is there is far more stop running in forex than in futures, and possibly as much stop running as in the stock market. I have friends who work in forex as well as many traders who of necessity have to trade forex.
One of my students is a market maker in forex. These are people who should know, but in case you don't want to believe me or them, simple observation of forex trading will reveal the vast amount of stop running that takes place there. Who is it that runs the stop? It's your friendly forex broker, that's who.
The broker has a vested interest in seeing to it that your orders are filled. Stop running is nothing more than order filling. The broker sees to it that everybody's orders get filled. Is this true? Yes it is. The fact that is true is just another proof that when you trade forex you are trading at a bucket shop. In the book, "Reminiscnces of a Stock Operator, " we are told that Jesse Livermore was banned from trading a certain stock brokers because they couldn't stand him beating the housel.
The same thing is true with many forex brokers. Since they are the ones guaranteeing you a fill they in effect the buyer and seller of last re- sort. The truth is that most forex brokers have precious little liquidity at their firms. In order to give you the impression that there is liquidity, it is the broker who gives you your fill.
It is the broker who does the stop run- ning that supposedly doesn't exist in forex. In other words, i can subsidize your account, and never place your money in the market… I just keep it all. Trust me when I say that liteforex is not the only broker that does this. Infinit: Sorry I missed your question. From what I hear Oanda is one of the better dealing desk brokers out there. In other words, having the ECN software running for the trading but using Metatrader on a demo account for the setups.
Or would this approach be ineffective due to demo account cheating on the part of non-ECN brokers? Of course you can Abu. Most brokers try to give you the best demo experience anyways in order to entire you into opening a live account. The only disadvantage to doing things this way is the lag between identifying a possible trade setup on the MT4 platform and opening the position on the ECN platform.
So keep this in mind and basically try many demo MT4 brokers until you find one that works best. This is my second time with them due to the lack of UK based brokers. Even if you have a small account you will lose out with them. Of course Pat! All dealing desk broker do NOT have your best interest at heart.
I too used to trade with Alpari UK but have long since dumped them. Have you looked into FXCM perhaps? I do know they have a UK branch. The problem with Dukascopy though is that the minimum account size is rather large for most people. Sorry to hear that. Preferrably a good ECN broker would be best, but you can get by with a broker that uses STP which means they just forward your position to their liquidity provider hence not having a financial incentive and interest to mess around with your positions by trading against you.
See the Forex Brokers link at the top of this blog for a list of some broker that I think you should look into. Thanks for your site pointing out my clearly stand about forex brokers cheat against traders. I am hoping to build up my little fund with Alpari before switching over to ECN. To be fair to the brokers though not all of them use this plugin or are as bad as some of us traders say.
Yes good idea. After reading all traders comments and beginners there should be a law set against all those brokers and brokerage companies not executing the trading accounts in the most honest way they should be banned closed as one,next jailed them too.
They are thieves. My wish is this should change and done we traders need to unite and form a worldwide stand to this. I hear you Stanley. Bear in mind that not all broker are like this. A fair! So how can a OTC broker make a net profit on the long run without playing unfair? I hope this makes sense. Yes Jim, that would be ideal. A broker should make profit on the volume you trade, and this profit would be paid for by their liquidity provider s — ie the bank s they deal with for this liquidity.
Altenatively you can trade with a ECN broker essentially acts like a sort of equivalent of a stock exchange where a bunch of traders come to trade with each other. ECNs are fewer in numbers and not typically have much higher minimum deposit requirements. Typically with ECN brokers you pay a commission per round lot turn. Although if you calculate it often this commission is lower than what you would otherwise pay at dealing desk brokers in pips.
Thanks for sharing. Yes, actually I have a live account with them. But, we shall see. I worked with a broker in the US and was not satisfied. My account was connected to a trading system developed in Europe, and due to misunderstanding, I lost thousands of dollars. I prefer Developing my own programs. Here is my case n am a noob here but …. Im not sure if my case consider as Stop Hunting.. At d beginning of 2nd trade when SELL, it did happen with different leverage, i go for but d another one seems to be I thought it was my technical faults at first but it already happened a few times now.
It happened only when d trend is against me. Though they had calculated a gd outcome and activates it when Im on d wrong side. Man do I have some proof for you and the world; although I will probably be posting it on my own site, this is only because I am purposefully targeting them and want to be sure no one else goes through what we went through when we tried them out. Ever since I have been trading, I have had Spector Pro running — a nice little recordign program that has been capturing the cheating bastards IMO — hell — as seen on VIDEO — but make no mistake about it; they not only cheat, they have no quams about taking it as far and as long and as dirty as they can go.
When and when not they turn on an applet that will reverse the results — which in turn — has you sitting them busting your but for them. Seriously, this is my latest one and last night I captured about a 15 hours worth of trades — and have the evidence to bury them. Talk about class action suit — here it comes — and apparently I may have to lead the charge unless someone else has it going. They are to be avoided at all costs.
Thank twice before you post your bs comment. After reading this blog, I confirmed beliefs I had for a long time. I always asked to myself: why forex trading was opened for the retail investor? So what is the obvious answer?. Simple, to create a new way to take away money from the little guy What do you think? The way I see it there are two ways that the little guy can get screwed by the retail forex business.
Most retail traders just get fleeced. Skip to content. Spread the love. An innovative review of The CopyTrader feature from eToro. Forex Power Strategy. Alan, very informative and valuable blog. Thank you for sharing this information with us.