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| More On Forex Broker Tricks |
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| Written by Hass67 |
| Wednesday, 22 April 2009 09:27 |
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You need to understand that forex brokers are above all marketing machines. Forex brokers continuously require a flow of new clients, since many retail forex traders dont survive longer than a few months. After losing, more than 90% simply quit and give up forex trading. To entice new traders, vast sums of money are spent on advertising. Just Google, any keyword related to forex and you will find so many ads by forex brokers giving you so many incentives to start trading forex. Most popular way used by forex brokers to make you trade more and more and burn your money is to announce monthly Forex Trading Contest. Cash prizes of $2000, $1000 or $500 are announced. Most of the traders get wiped out trying to win the contest. This trick is almost like a lottery. Only a few win, rest loses! But in the end its your forex broker who makes the most money. Since there is no central exchange to regulate the currency quotes, forex brokers are free to offer any price to clients. Most of the brokers simply add 2 or 3 or even more pips to the interbank market 1 pip or even lower spread, when offering rates to clients. Now you must know how forex brokers make so much money and are even willing to spend so much on advertising. These 3 or 4 pips are risk free profits for the forex brokers. Price shading is another practice used by forex brokers. If the broker thinks that price of a particular currency is on a rising trend, the broker will add a few pips to the currency quote in anticipation of that move. You cant do anything. One of the classic tricks used by many brokers is to trip stop losses with a single momentary blip. Brokers have all the information about stop losses placed by their clients. So, if he finds many stop losses at a certain level, there will be a momentary spike in the price feed that will trip most of the stop losses. You cant do anything. It was a momentary spike, so small that it only tripped the stop losses. Since, there is no central exchange to compare moment by moment prices, your broker can offer any excuse like there was sudden large order in the market or the broker feed is much faster and reflects true interbank rates. About the Author: Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in investing, stock and forex trading. Discover a revolutionary new broker buster Forex Robot. Read about Semi Automatic Forex Engine. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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