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.
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.
One way is to announce forex trading contests that reward the winners with $2000, $1000 and $500 cash prizes. Who is the actual winner in these contests? Your forex broker!
This is like a lottery, only three win. The more you trade in order to win the contest, the more money your broker makes.
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 another practice used by forex brokers. If the broker thinks that price of a particular currency is on a rising trend, the broker will add a few pips to the currency quote in anticipation of that move. You cant do anything.
One of the best tricks that forex brokers use is Stop Loss Tripping. If they find many stop losses at a particular level, there will be a momentary blip in the price feed to take out 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.
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.
One way is to announce forex trading contests that reward the winners with $2000, $1000 and $500 cash prizes. Who is the actual winner in these contests? Your forex broker!
This is like a lottery, only three win. The more you trade in order to win the contest, the more money your broker makes.
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 another practice used by forex brokers. If the broker thinks that price of a particular currency is on a rising trend, the broker will add a few pips to the currency quote in anticipation of that move. You cant do anything.
One of the best tricks that forex brokers use is Stop Loss Tripping. If they find many stop losses at a particular level, there will be a momentary blip in the price feed to take out 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.
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in online trading; options and forex trading. Discover a revolutionary new broker buster Forex Robot. Read about Semi Automatic Forex Engine.
Aucun commentaire:
Enregistrer un commentaire