How to Avoid Broker Scams in Forex Trading

unfortunately, there will always be a minority of unethical brokers trying to scam their customers.
A bucket shop does not always enter trades into the general market by finding an opposing position. Instead, they take the opposing position, relying on the fact that most forex traders lose. Not only do they get the spread, they also keep their clients losing trade. Because that trade exists only on their internal systems, they can distort the market by widening in the spread. In a country with poor regulations, brokers could simply prevent trades from closing, to ensure they don’t lose. In addition, a bucket shop tends to take additional risk when camper to a regulated broker as it does not have to hedge its customers trading positions. Hence, it may reach a point that it is “open” with a very large loosing position against its customer base, reaching a point that the bucket shop can not pay the wining trades to its customers. In other words the bucket shop goes bust.

Most trading platforms will allow you to put in “stops”; when a currency hits a pre-determined price, your trade is sold out. This is a helpful tool to minimize losses. However, an unscrupulous broker can see your stop and move the price to that point, sell out your trade, make a quick profit and then return the price to the previous position.

Finally, unregulated brokers carry higher levels of risk over funds deposited with the broker for example: frauds and schemes, a bucket goes bust and unregulated brokers that do not want to pay wining customer its due funds. In effect, you may end up loosing all of your desposted funds at a broker without loosing over your trading activity.

To avoid this and other pitfalls, do your research, make sure your broker is credible and get the account and trading platform that suits your needs.

source : wikihow, wikipedia

Volatile Ranges- Forex Trading in Global-view.com

21:00 GMT- Feb 23 (global-view.com) Forex activity appears to be in a transitional phase as dealers cast about for the next trading theme. Greece appears to be on the back burner for the moment, but the focus increasingly has moved to whose sovereign debt will move next into the crosshairs of the markets. There is no shortage of candidates with many countries having played games with their budgets for years.

Spain is an initial concern and this could prove to be a weight on the EUR. Looking ahead, there are ample worries about the sovereign debt problems of the U.K., Japan and the U.S. Expect a long stream of debt downgrades for a number of major economies over time.


The key national focus of the Eurozone is always on the dominant German economy. On Tuesday the key German IFO data were released. We viewed the data as mixed, but the markets regarded them as disappointingly weak. The rest of the Eurozone economy recently has been mixed to weak. The EUR is well off its highs of the day following the IFO survey. The EUR has been trading an exceptionally volatile range recently.


The tone of testimony by Bank of England (BOE) Governor King Tuesday was much more dovish than expected and suggested growing concerns about the pace of recovery of the British economy. The GBP is back weaker again based on the comments by the BOE Governor. Complicating the markets, The Swiss National Bank (SNB) on several occasions recently has intervened in the EURCHF cross to try to drive the CHF lower vs. the EUR. These interventions have met only with mixed success.


Major USD forex trading relationships continue to track equity futures off and on. It seems that when the markets lack an overarching them that they tend to fall back to this pattern. Sometimes it is not obvious which market is in the lead. We have noted this week that a number of Toushin bonds from Japan are being issued. These are retail bonds whereby retail Japanese investors buy foreign currency denominated bonds to improve the yield on their investments.


Toushin bonds generate JPY selling vs. foreign currencies. On the other side of the coin, we are hearing from a chief dealer at a Japanese bank in London that commercial orders in the JPY vs. the USD currently are mostly balanced but that he is expecting JPY demand to intensify into the Japanese fiscal year end at the end of March..

See ECONOMIC CALENDAR for a complete list of upcoming forex market events and consensus data estimates. Go to the forex forum for up-to-date market developments and technical trading ideas.
By John Bland