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.
For enticing new clients, vast sums of money are spent on advertising by forex brokers. You can check this fact by going on Google and typing any forex related keyword. Almost all the ads will be by forex brokers. Each click costs them around $1.
Forex brokers want you to trade more. They use many methods as incentives to make you do that. One of the methods is to hold a Forex Trading Contest by announcing cash prizes of $2000, $1000 and $500 for the top three.
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.
Just imagine by acting only as middlemen between the interbank market and retail forex trader, forex brokers make risk free profits of 3 to 4 pips on a round trip trade.
Price shading is one of the practices used by forex brokers. If the price of a particular currency is rising, the broker may shade the price quote by adding a few pips in anticipation of the rise in currency rate. You wont even know it.
If the broker sees that many traders have placed stop orders at a certain price level, he will mount a sudden attack to take out all the stop order by momentarily spiking his price feed.
You cant do anything. It was a momentary spike, so small that it only tripped the stop losses.
If you complain, your broker can say there was a sudden large transaction in the interbank market or his feed is faster and reflects the interbank rates better. - 16890
For enticing new clients, vast sums of money are spent on advertising by forex brokers. You can check this fact by going on Google and typing any forex related keyword. Almost all the ads will be by forex brokers. Each click costs them around $1.
Forex brokers want you to trade more. They use many methods as incentives to make you do that. One of the methods is to hold a Forex Trading Contest by announcing cash prizes of $2000, $1000 and $500 for the top three.
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.
Just imagine by acting only as middlemen between the interbank market and retail forex trader, forex brokers make risk free profits of 3 to 4 pips on a round trip trade.
Price shading is one of the practices used by forex brokers. If the price of a particular currency is rising, the broker may shade the price quote by adding a few pips in anticipation of the rise in currency rate. You wont even know it.
If the broker sees that many traders have placed stop orders at a certain price level, he will mount a sudden attack to take out all the stop order by momentarily spiking his price feed.
You cant do anything. It was a momentary spike, so small that it only tripped the stop losses.
If you complain, your broker can say there was a sudden large transaction in the interbank market or his feed is faster and reflects the interbank rates better. - 16890
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.
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