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Forex brokers obtain currency price quotes from key commercial banks and publish the rough estimate of these values on their platforms. Forex brokers act as middlemen between the interbank market and the Forex retail market and get paid commission. There are many globally respected Forex Brokers https://topbrokers.com/forex-brokers, nevertheless, not all brokers carry out honest business. Some brokers' main intention is to scam traders in various ways and others are out to take advantage of foolish and inexperienced dealers.
Below are ten obvious and outrageous tricks of Forex brokers to unsuspecting traders:
1. Gaining the trader's trust with the use of a very attractive and officially looking website of a FX broker
A scam broker can get the trust of traders by developing a professional website which targets ignorant traders. The broker can leverage on this ignorance to push traders to trade on margin and set stop loss orders which permits the market makers to close out trades practically anyhow they want when the market is moving in favor of the trader.
2. Forex companies charge extra immediate interest rates
Brokers charge and pay unequal swaps based on the breach between quick-fix interest rates connected with currencies pair's position by central banks. This breach is not fixed; if the broker uses the swap from the client, it charges extra and when the broker shells out the swap, the amount it pays is less than required. When the breach is tiny, the customer pays the swap in any of the directions whether long or short on the currency pair.
3. Engaging in spread widening and Re-quoting
Brokers mostly widen spread when the market is very volatile. The broker may not succeed to assign your position, at its price quotes, and saves himself by applying a broader than standard spread on the client. Re-quoting is also a trick used by market maker brokers on traders. When the price is moving up in a fast moving market and the trader make the right choice, the broker may delay the trader's order and take a different position for the trader, offering a fresh price above the price the trader want to enter the market.
4. Engaging in Forex over-leveraging
Leverage is a great capacity that assists traders to trade huge sum of money with a minimal account, and assist them to make larger profits than they would have made without any leverage. Nevertheless, they can work against the trader. Forex brokers trick traders by offering them excessive leverage and some of these traders are trapped by these huge offers if their trades go the wrong way.
5. Slippage and Markup of Forex Brokers
The liquidity providers of a Forex broker may alter their pricing at any time and the broker may be forced to execute the traders order at a slightly worse price. But a few brokers utilize slippage to their benefit and book the trade at a minimally higher price. Traders can readily spot high spreads on the platform because of added markups by finding out how the bid and ask prices vary. On the other hand, they may not be able to recognize easily when a broker is manipulating prices which will usually work against them.
6. Avoiding broker's clients or traders
Occasionally, brokers even avoid traders and try to restrict them from trading with them entirely. This mostly occurs when a trader is making good profits. Whenthe traders profit history is excessive, brokers try all sort of tricks to prevent the trader from making additional gains from their platform. Although it is not professional, many brokers do it because their motivation is to make money for their company and not the customer trading.
7. FX brokers providing clever software technology to entice traders
When you look for a broker, you will discover limitless web results for online brokers trying to assist you all the way through their "exclusive" software technologies. Some online brokers utilise specific forms of software that assist them to scam traders of their invested funds. Their main aim is to move your funds into their own account through their online websites.
8. Providing great first customer service
Customer service and support is extremely essential for any form of business, which includes a Forex broker. To be successful in your trading, your broker must be able to answer all your queries. If your broker cannot react to your messages and help you to sort out your issues, they are not worth investing with.
9. Stop-hunting
Forex brokers use stop-loss hunting to rip traders of their money. If you see that a currency is showing a strong position, you enter a position at 123.40 and set your stop at 123.05, a little bit underneath double bottom. Sadly, the trade starts to move against you and breaks down via support. And the next thing you know is that your stop is activated and you go out of trade.
10. Forex Brokers working as bucket shops
Bucket shops are deceptive brokers that "book" trader's orders but fail to execute those trades in any exchange. Forex brokers in this way dishonestly and illegally rip off their client's traders.
Conclusion
In order to learn more about Forex companies, we advise you to read brokers' reviews and compare forex brokers. This is the safest way to get a reliable company to work with on the Currency Market.
Good luck with your choice!
