How do Forex Brokers Scam Forex Traders
Foreign exchange (FX) is a market where many national currencies are traded. It is the most liquid and largest market with trillions of dollars being exchanged every day around the world. An exciting aspect here is that it is not a centralized market; Rather, it is an electronic network of brokers, individual traders, institutions and banks. Large-scale forex markets are located in major global financial centers such as New York, London, Tokyo, Singapore, Sydney, Hong Kong and Frankfurt.
Forex Brokers do not have to scam anyone as a general rule but due to running the system works peculiarly at the retail market.
It is easy to open an account and start merchandising and there are a great deal of brokers.They make this an easy process because all brokers without deviation know that all accounts apart from a miniscule % opened by new clients will go to zero within one month of being opened.
So you might be thinking that you are trading in the real market but in actual terms the broker is just giving you some market knowledge and pocketing your money.
Anyone can show you a fancy lavish trading platform with some trades on it and the only way any broker stays in business is by the toss of new clients that replace those who lose and stop trying.
This is why time and again even large regulated brokers find it tricky to pay out to winning traders. The winning traders are so rare that many firms just do not have the back office functions to pay out in a timely manner.
In essence the retail traders just trick themselves by entering the trading side of the pact and depositing money and it really is just a question of time before the money deposited is lost.
This is why there is a huge industry of hangers on selling advice and training. The basic brokerage function has been so discredited by its very nature that people who want to participate are desperate for anything they perceive to give them an advantage and eliminate even a small % of the 100% downside risk.
How to Identify and Avoid Forex Scams:
Some of the most common forex scams to watch for include:
- Spoofing, also called ghosting – When a trader handles the market by placing a large order, the trader doesn’t plan to execute in order to maintain the impression of interest in the position.
- Front-running – When a broker, realizing that a client is going to be placing a big order. Then the broker places from his own account ahead of the client’s.
- Signal seller – Firms or traders who use word of honor to identify buy or sell signals that indicate it’s a favorable time to make a trade in exchange for a fee.
- Robot scams – The use of words to make automated forex trades using a trading program, often called a “robot.”
To avoid forex scams, the most important action you can take is to research
Training Needed Adequate training is essential in the dynamic environment of forex trading. Whether you are a veteran or an expert in currency trading, it is essential to be well prepared in order to achieve consistent and satisfactory profits. Of course, this can be said to be easier said than done; But never impossible. To make sure you don’t give up on your success, never stop your training. Develop a fundamental trading habit, attend webinars and continue to receive education to stay as competitive as possible.
Foreign exchange (FX) is a market where many national currencies are traded. It is the most liquid and largest market with trillions of dollars being exchanged every day around the world. An exciting aspect here is that it is not a centralized market; Rather, it is an electronic network of brokers, individual traders, institutions and…