Forex Brokers Exposed
Many people start trading forex without knowing the games their forex broker can play with them. Choosing a right forex broker is very important for you. Dont get stuck up with an unscrupulous forex broker. Know the tricks a forex broker has for you.
Retail forex market where small traders like you and I trade forex is different than the interbank forex market. Interbank forex market is where big banks, corporations, hedge fund and other institutional investors exchange currencies. It is only open to big players.
With the advent of internet, retail forex trading became popular. Forex brokers work as intermediaries between the retail traders and the interbank market. Forex brokers popularize retail fx trading by offering online margin accounts. But beware retail forex market is not highly regulated. Due to poor regulation forex brokers can do what they want with immunity.
You need to know the games; a forex broker can play with you. If you dont know what games a forex broker can play with you, you will never succeed at forex trading. Understand how the broker can trick you:
Nontransparent pricing: Since, forex market is over the counter market with no clearing central exchange, the prices that your forex broker quotes to you is the price that you get. It is really difficult for you to know whether the quoted price is fair or not. You have to just accept it.
Leverage: Forex brokers let you trade forex with a high leverage like 100-1 or 200-1. Rather they will encourage you to use more leverage. Using leverage allows you to make high gains with a small price movement but it destroys you when you are on the wrong side of the market. Since most of the forex traders dont know how to trade. Giving you high leverage lets your broker gain when you lose.
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.
Practices that are unfair: Forex brokers and Casinos have the same mentality: they dont like winner. If you are winning too much, the house will be stacked against you. Your forex broker may make the execution of your trades very difficult or start denying the service to you. Your trade may not execute due to slippage. There are many games the broker will play against you so beware.
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. - 23217
Retail forex market where small traders like you and I trade forex is different than the interbank forex market. Interbank forex market is where big banks, corporations, hedge fund and other institutional investors exchange currencies. It is only open to big players.
With the advent of internet, retail forex trading became popular. Forex brokers work as intermediaries between the retail traders and the interbank market. Forex brokers popularize retail fx trading by offering online margin accounts. But beware retail forex market is not highly regulated. Due to poor regulation forex brokers can do what they want with immunity.
You need to know the games; a forex broker can play with you. If you dont know what games a forex broker can play with you, you will never succeed at forex trading. Understand how the broker can trick you:
Nontransparent pricing: Since, forex market is over the counter market with no clearing central exchange, the prices that your forex broker quotes to you is the price that you get. It is really difficult for you to know whether the quoted price is fair or not. You have to just accept it.
Leverage: Forex brokers let you trade forex with a high leverage like 100-1 or 200-1. Rather they will encourage you to use more leverage. Using leverage allows you to make high gains with a small price movement but it destroys you when you are on the wrong side of the market. Since most of the forex traders dont know how to trade. Giving you high leverage lets your broker gain when you lose.
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.
Practices that are unfair: Forex brokers and Casinos have the same mentality: they dont like winner. If you are winning too much, the house will be stacked against you. Your forex broker may make the execution of your trades very difficult or start denying the service to you. Your trade may not execute due to slippage. There are many games the broker will play against you so beware.
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. - 23217
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in stock and Forex Trading. Read more about Forex Broker Scorecard.
posted by X - Men @ 9:23 AM
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