Forex Broker Tricks
If you are serious about starting forex trading than you should know the games youre your forex broker can play with you. Most of the small forex traders dont know these facts and are easily taken for a ride by unscrupulous forex brokers.
There is a difference between the interbank forex market and the retail forex market. Interbank forex markets are where big players like banks, multinational corporations, hedge fund and other institutional investors operate. The size of the transaction in the interbank market is large due to which it is not open to small retail traders.
Retail forex market was developed after the advent of the internet. Retail forex brokers offer online margin accounts to retail forex traders like you and me who are small time players in a huge market. Retail forex market is loosely regulated that lets the forex brokers play games with small forex traders.
You should be beware of those games. You need to know the following facts while trading forex:
Unfair Pricing: Forex markets are Over the Counter (OTC) markets. There is no central clearing exchange. So whatever price your broker is going to quote to you, you have to take it. It will be difficult for you to find out whether the price quoted is fair or not. If you suspect that the price is not fair, choose another broker. But even with that broker there is no guarantee.
Use of Leverage: Your forex broker will love you to use a high leverage like 100-1 or 200-1 in your trading. Since most of the small forex traders are unsophisticated, they easily overexpose themselves and get wiped out in the market making gains for the broker in return.
Trading against you: Your forex broker will most probably will be trading against you! Since, most of the retail trades are too small in size; your forex broker cannot immediately offset this position in the interbank market. This gives them the opportunity to trade against you. The more you lose, the more your broker makes.
Non transparent Practices: Casinos and forex brokers have one mentality. They dont like you winning. If you have a winning streak, the house will get stacked against you. Your trades may not get executed due to slippage. The service may be denied to you. The forex broker may make it difficult for you to execute your trades.
Bill Poulos a veteran forex trader has developed a forex broker scorecard that you can find at my Blog. He will also teach the type pf question that you need to ask. - 23222
There is a difference between the interbank forex market and the retail forex market. Interbank forex markets are where big players like banks, multinational corporations, hedge fund and other institutional investors operate. The size of the transaction in the interbank market is large due to which it is not open to small retail traders.
Retail forex market was developed after the advent of the internet. Retail forex brokers offer online margin accounts to retail forex traders like you and me who are small time players in a huge market. Retail forex market is loosely regulated that lets the forex brokers play games with small forex traders.
You should be beware of those games. You need to know the following facts while trading forex:
Unfair Pricing: Forex markets are Over the Counter (OTC) markets. There is no central clearing exchange. So whatever price your broker is going to quote to you, you have to take it. It will be difficult for you to find out whether the price quoted is fair or not. If you suspect that the price is not fair, choose another broker. But even with that broker there is no guarantee.
Use of Leverage: Your forex broker will love you to use a high leverage like 100-1 or 200-1 in your trading. Since most of the small forex traders are unsophisticated, they easily overexpose themselves and get wiped out in the market making gains for the broker in return.
Trading against you: Your forex broker will most probably will be trading against you! Since, most of the retail trades are too small in size; your forex broker cannot immediately offset this position in the interbank market. This gives them the opportunity to trade against you. The more you lose, the more your broker makes.
Non transparent Practices: Casinos and forex brokers have one mentality. They dont like you winning. If you have a winning streak, the house will get stacked against you. Your trades may not get executed due to slippage. The service may be denied to you. The forex broker may make it difficult for you to execute your trades.
Bill Poulos a veteran forex trader has developed a forex broker scorecard that you can find at my Blog. He will also teach the type pf question that you need to ask. - 23222
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in investing and Forex Trading. Read more about Forex Broker Scorecard.
posted by X - Men @ 9:23 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home