Forex brokers truth (Part 1). Introduction. Forex brokers’ tricks: Innocent ways to outsmart a client.
Every few weeks a new Forex broker joins the market offering online currency trading.
Some brokers do business in straight forward, honest way, while others try to “invent” additional rules to maximize company gains.
Think this way, a broker doesn’t come into the market with the self purpose to help you earn profits in Forex. Forex brokers, first of all, come to make money for themselves.
I won’t dive into the details on how brokers make money using common industry standards. I’m going to talk about the OTHER rules, invented by Forex brokers. These “other” rules are also fair, nothing illegal, with the exception that “other rules” make Forex brokers slightly more richer.
Illegal brokerage practice remains illegal and is prosecuted by the law worldwide. Again, we are talking about legal methods of making extra profits (often than not, at clients’ cost), those methods that not every trader is able to spot out without the experience.
These other rules are about:
- spread policies;
- position time limits;
- platform time zones;
- negative interest rollovers;
- affiliates commissions;
- and other..
This topic will consist of several separate publications, where we’ll talk about each of these rules in details.
My friends, let’s clarify the last important thing, before we move on:
I’m not trying to make you suspicious about brokers and their practice. I simply want you to be smart and aware of practices that exist out there whether we wish for it or not.
I’m not trying to teach you to hate brokers or stop respecting them; after all, it is you in the end, who will decide about signing a contract with them and accepting their rules. Some brokers choose not to overload clients with tons of details about trading; it is your duty to ask a broker about the rules and terms before you sign a contract and begin trading.
** Forex Dark Lord **
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well sometimes brokers are just taking the opposite of your trades, so will be your ENEMY !!
be carefull by selecting a decent broker, preferrable an ECN or STP , which have no dealingdesk and put your trades directly to the liquidity provider. spreads will be lower even when you additional pay commision.
and finally get you rakeback (as well known in poker) or cashback . best provider i found:
cashbackforex.info
Dark Lord,
Have you developed a list of brokers with some sort of rating system to warn your followers of pitfalls ? We have very little experience in this department since we are new. We are like sheep and the brokers appear to be the wolves.
Hm… I think I could start a page dedicated to “the darkest brokers” in the industry. Thank you indeed.
For now a rule of thumb is: to avoid being a pray make sure to do your homework - read reviews about Forex brokers before giving them your money.
Dark Lord,
I am doing my homework but honestly i feel that i can’t rely in any source. Any specific suggestion?
Whats really strange is even in say Futures where its all regulated and above board, the brokers trade against you.
But, the funny sad fact is, they tell you they are going to do this by registering with the NFA as a Broker/Dealer.
Most traders have no clue what a Broker/Dealer actually is and what kind of a huge conflict of interest it creates.
It means they clear customers trades(your trades), and trade their own account and other clients accounts for them.
They can even sell their customers trading position info to another company.
Beware of any Broker/Dealers they will trade against you.
There is many non BD’s who simply offer clearing services only and profit only from commissions yet most traders seem to never know about this.
forex trading its a complicated “game”,like many people see it as a game.the problem is that sometimes we cant do anything to keep our money and we definitely can learn from the bests.
There are many questions about where should i learn how to trade,but i guess that each place is offering us the same bonuses and the same conditions though,we need just to stick with that and not look at our friends tactics
I wish someone would list all the good ECN or STP brokers, that dont trade against us and take comissions only, and you dont have to worry about them playing games with your money, Only problem is, i heard you need at least $100k to trade with them???? any comments?
Try www.100forexbrokers.com