Learn More Forex Broker Tricks
You as a retail forex trader need to understand that forex brokers are in the end above all marketing machines. Since more than 90% of the new traders dont survive long and give up trading after losing their hard earned money, forex brokers need a constant flow of new clients.
You as a retail forex trader need to understand that forex brokers are in the end above all marketing machines. Since more than 90% of the new traders dont survive long and give up trading after losing their hard earned money, forex brokers need a constant flow of new clients.
To entice new traders, vast sums of money are spent on advertising. Just Google, any keyword related to forex and you will find so many ads by forex brokers giving you so many incentives to start trading forex.
Most popular way used by forex brokers to make you trade more and more and burn your money is to announce monthly Forex Trading Contest. Cash prizes of $2000, $1000 or $500 are announced.
Most of the traders get wiped out trying to win the contest. This trick is almost like a lottery. Only a few win, rest loses! But in the end its your forex broker who makes the most money.
Forex brokers are free to offer any price to their clients. Most of the brokers get price quotes from the interbank market with a 1 pip or even lower spread. To this pip spread they add 2 or 3 or even more pips as the price quote to their clients.
Just imagine by acting only as middlemen between the interbank market and retail forex trader, forex brokers make risk free profits of 3 to 4 pips on a round trip trade.
Price shading is another practice used by forex brokers. If the broker thinks that price of a particular currency is on a rising trend, the broker will add a few pips to the currency quote in anticipation of that move. You cant do anything.
One of the classic tricks used by many brokers is to trip stop losses with a single momentary blip. Brokers have all the information about stop losses placed by their clients. So, if he finds many stop losses at a certain level, there will be a momentary spike in the price feed that will trip most of the stop losses.
Naturally you cant complain. It was a momentary blip not enough to trade but enough to trip most of the stop orders.
You can never complain, your broker will always say there was sudden big transaction in the interbank market or his price feed is faster and better in reflecting the interbank rates.
You as a retail forex trader need to understand that forex brokers are in the end above all marketing machines. Since more than 90% of the new traders dont survive long and give up trading after losing their hard earned money, forex brokers need a constant flow of new clients.
To entice new traders, vast sums of money are spent on advertising. Just Google, any keyword related to forex and you will find so many ads by forex brokers giving you so many incentives to start trading forex.
Most popular way used by forex brokers to make you trade more and more and burn your money is to announce monthly Forex Trading Contest. Cash prizes of $2000, $1000 or $500 are announced.
Most of the traders get wiped out trying to win the contest. This trick is almost like a lottery. Only a few win, rest loses! But in the end its your forex broker who makes the most money.
Forex brokers are free to offer any price to their clients. Most of the brokers get price quotes from the interbank market with a 1 pip or even lower spread. To this pip spread they add 2 or 3 or even more pips as the price quote to their clients.
Just imagine by acting only as middlemen between the interbank market and retail forex trader, forex brokers make risk free profits of 3 to 4 pips on a round trip trade.
Price shading is another practice used by forex brokers. If the broker thinks that price of a particular currency is on a rising trend, the broker will add a few pips to the currency quote in anticipation of that move. You cant do anything.
One of the classic tricks used by many brokers is to trip stop losses with a single momentary blip. Brokers have all the information about stop losses placed by their clients. So, if he finds many stop losses at a certain level, there will be a momentary spike in the price feed that will trip most of the stop losses.
Naturally you cant complain. It was a momentary blip not enough to trade but enough to trip most of the stop orders.
You can never complain, your broker will always say there was sudden big transaction in the interbank market or his price feed is faster and better in reflecting the interbank rates.
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. Download Forex Scalping Cheat Sheets. Discover The Best Forex Signal Service! Read about Trend Forex System.