Forex Trading - Brokers Scams and Traps

Let’s set the record straight once and for all. Brokers do stop hunt. Yes, it happens. Sometimes it’s larger banks behind the scenes too, but it is happening.

After all, they don’t even always put your order through to the larger banks. The just play bucket shop a trade against you.

Something else, brokers do play games with the spread during very volatile times. Spread have gotten as wide as 200 pips. Yes it has happened!

They want your money. To them you’re just a chubby little kid with sweaty palm full of money. They’re going to take it away from you. The owners of some brokerages have even said that running a forex brokerage is just a marketing game. Herd them in. Empty their pockets with huge leverage, wait for them to come back with more money later, rinse and repeat.

Cool, huh?

Oh, that doesn’t make you happy? Okay, I admit I’m being a little sarcastic. Listen, there isn’t any real regulation of forex brokers. Furthermore, there isn’t any central exchange where everything is tracked. Every does whatever they can get away with.

So, what do you and I do about it? Let me give you one tip. Brokers eat scalpers. Yeah, it’s their favorite dish. If you open up your trading, most of their games become meaningless.

Yes, that means you’ll have to slow your trading down and use less leverage. Believe me, it makes the brokers cry when someone does that. After all, they can’t hunt and take out a stop that’s 50 pips away from the market price (excluding non-farm payroll releases).

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Nathan Pennington is a forex trader and the author of winningforextrading.com Winning Forex Trading -THE Definitive Guide