How to Spot If Your Forex Broker Is Cheating You
Whilst Forex training is in anyone's reach, learning about how honest Forex brokers are is not. There are many blogs and forums where people can go and read about people's good and bad experiences but even then, it is not clear what the real scenario was. The person posting the blog post could be out to get the broker or even to make them look good on purpose as they have a connection to them somehow. You simply do not know. So unfortunately, experience is the real key to finding out if Forex brokers are cheating you. Sometimes, you simply need to do the research to find a suitable broker and then keep a watchful eye to see if they are keeping their €customer service promise'.
Market spikes
When we have big news or data releases, we tend to see markets spike up or down depending on the news/data result. However, spikes can be seen randomly in various Forex broker charts, even when there is no news or data to be released. You may find that this is happening late on a Friday afternoon or early on Monday morning. The reason for this is because some brokers tend to €make the market' i.e. put big orders against your own and everyone else's who is trading to take them out of the market by hitting their stop loss. This way they gain a guaranteed profit for the day/week, you lose and a new trading session will occur from scratch on the next working day. If this happens you are trading with a non-compliant Forex broker who is referred to as the €market maker'. Not all market makers are bad but it is worth keeping a watchful eye on them.
Unable to place an order
When we have high volatility in the market spreads tend to go out of control and market looses direction. It is at this point that some traders are not able to place an order no matter how often they click the buy or sell button. There are many reasons for this but they tend to mainly stem from brokers not being able to provide a price for your trade i.e. they are controlling their risk. This is not fair. You should be able to place an order whenever you want and no matter what the market conditions are. However, as the Forex industry is not heavily regulated Forex brokers can get away with it.
Un-natural market reversal
If you are consistently successful, you are putting your broker at risk. It is as simple as that. Once that risk exceeds their target they usually place a big order that essentially trades against you. This stops you from becoming profitable in a fair manner. It is tough to say that your own strategy was not at fault but this scenario occurs in the €market maker' world regularly. The way to spot this is to trade your strategies in the demo account successfully and then trade the same strategies on a live account to see if your success rate is the same. There are many more ways to make sure your brokers is not cheating you but the above should give you an idea on how to spot their usual and standard tricks.
Market spikes
When we have big news or data releases, we tend to see markets spike up or down depending on the news/data result. However, spikes can be seen randomly in various Forex broker charts, even when there is no news or data to be released. You may find that this is happening late on a Friday afternoon or early on Monday morning. The reason for this is because some brokers tend to €make the market' i.e. put big orders against your own and everyone else's who is trading to take them out of the market by hitting their stop loss. This way they gain a guaranteed profit for the day/week, you lose and a new trading session will occur from scratch on the next working day. If this happens you are trading with a non-compliant Forex broker who is referred to as the €market maker'. Not all market makers are bad but it is worth keeping a watchful eye on them.
Unable to place an order
When we have high volatility in the market spreads tend to go out of control and market looses direction. It is at this point that some traders are not able to place an order no matter how often they click the buy or sell button. There are many reasons for this but they tend to mainly stem from brokers not being able to provide a price for your trade i.e. they are controlling their risk. This is not fair. You should be able to place an order whenever you want and no matter what the market conditions are. However, as the Forex industry is not heavily regulated Forex brokers can get away with it.
Un-natural market reversal
If you are consistently successful, you are putting your broker at risk. It is as simple as that. Once that risk exceeds their target they usually place a big order that essentially trades against you. This stops you from becoming profitable in a fair manner. It is tough to say that your own strategy was not at fault but this scenario occurs in the €market maker' world regularly. The way to spot this is to trade your strategies in the demo account successfully and then trade the same strategies on a live account to see if your success rate is the same. There are many more ways to make sure your brokers is not cheating you but the above should give you an idea on how to spot their usual and standard tricks.
