Forex brokers are more of a marketing machine than market makers. Forex brokers need a constant stream of new clients to keep making money since most of the new traders dont survive longer than a few months.
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.
There is no check on the forex brokers. They can quote any rate to you. Forex brokers do this by adding 2 3 or even more pips to the interbank market pip spread
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.
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.
As a tyro in this field Mr. Ahmad i’ve been learning the industry and apply what i have learned. However, can you assist me with finding a good forex robot trading system or software that will show me exactly how to quickly and easily begin pulling in Forex profits. Thanks!
Thanks for very interesting information