Many forex traders keep on losing and don’t know the reason. Know these shocking truths about forex broker frauds that can make your winning trades turn into losing trades. Do you know this fact that most of the time, forex brokers are trading against you. If you take a long position, the broker will take a short position. This has something to do with the unregulated nature of the forex market. You see, forex market is an unregulated over the counter market. There is no central clearing house like that in the futures market in the forex market.
This unregulated nature of the forex market means that most brokers are free to quote currency rates of their own. What many brokers do is add 1-2 pips to the interbank rate that they get. In times of volatility, you will find that the spreads might suddenly widen. All these are forex broker games that you need to be aware of if you want to seriously dabble in the game of forex trading.
Almost all brokers now tell their clients that no commission will be charged like that in the stock trading. What they don’t tell you is that commission is being charged in the hidden shape of spreads. 2-3 pips bid/ask spread is your trading cost and the broker’s profit.
Brokers encourage their clients to trade more. There are many games that forex brokers use to make you trade more. A broker will invite you to take part in a trading competition with the announcement of something like $2000-$2500 as a prize for winning the competition. Most of the new traders lose 99% of the time. The more you lose, the more the broker makes. Now this has also got something to do with the nature of the retail forex market. Retail forex market is different from the interbank market that is highly regulated. But as a retail trader, you don’t have access to the interbank market. Your only means to access that market is through the middleman in the form of your forex broker. Most of the retail trader have small account sizes. So when you open a trade, keeping in view the small size of the trade, the broker is forced to take an opposite position just to provide liquidity. This provides the forex broker to trade against you. Since, most of the new traders are inexperienced, they lose a lot. Your loss, your broker’s profit!
Add leverage to this. Your broker will entice you to use a high level of leverage by saying that it will increase your profits. You are new, you don’t know how to use leverage. You end up losing. The more you lose, the more your broker will make.
These are all games that your broker is continuously playing with you. Your forex broker can turn your winning trade into a losing trade by using blip or a sudden spike in the price feed. This is also known as stop hunting. Stop hunting is what many brokers continuously do. You suddenly find that your stop loss order has been triggered and your trade is closed. What you don’t know is that the spike in the price action was artificially created by the broker. So my friend, if you are really serious about trading forex than know your broker first before you start dabbling in the game of trading forex.
Mr. Ahmad Hassam has done Masters from Harvard. Discover Forex Mastery and the M3 Forex Navigator. Learn this 10 minute a day Swing Trading Strategy that works for forex, stocks and futures! Article Source:http://www.articlesbase.com/finance-articles/forex-broker-frauds-shocking-facts-1660566.html