You as a retail forex trader need to understand that forex brokers are in the end above all marketing machines. Since more than 90% of the new traders dont survive long and give up trading after losing their hard earned money, forex brokers need a constant flow of new clients.
Forex brokers spend vast sums of money on advertising to entice new traders. If you go on Google and search any forex related keyword, you will find most of the ads are by forex brokers. Forex brokers give many incentives to you to start trading.
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.
In order to win, many small traders get wiped out losing their money. This is just a trick forex brokers use to make you trade more. The more you trade, the more money your broker makes. This trick is similar to a lottery.
Forex brokers are free to offer any price to their clients. Most of the brokers get price quotes from the interbank market with a 1 pip or even lower spread. To this pip spread they add 2 or 3 or even more pips as the price quote to their 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 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.
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.
The blip was so momentary that you cant do anything. It was a momentary spike, so small that you could not trade but enough to trip the stop losses.
You can never complain, your broker will always say there was sudden big transaction in the interbank market or his price feed is faster and better in reflecting the interbank rates. - 23812
Forex brokers spend vast sums of money on advertising to entice new traders. If you go on Google and search any forex related keyword, you will find most of the ads are by forex brokers. Forex brokers give many incentives to you to start trading.
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.
In order to win, many small traders get wiped out losing their money. This is just a trick forex brokers use to make you trade more. The more you trade, the more money your broker makes. This trick is similar to a lottery.
Forex brokers are free to offer any price to their clients. Most of the brokers get price quotes from the interbank market with a 1 pip or even lower spread. To this pip spread they add 2 or 3 or even more pips as the price quote to their 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 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.
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.
The blip was so momentary that you cant do anything. It was a momentary spike, so small that you could not trade but enough to trip the stop losses.
You can never complain, your broker will always say there was sudden big transaction in the interbank market or his price feed is faster and better in reflecting the interbank rates. - 23812
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. Download Forex Scalping Cheat Sheets. Discover The Best Forex Signal Service! Read about Trend Forex System.
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