A Wise Trader
Recruit
- Messages
- 13
I must say that I'm a bit embarrassed to admit what I'm about to label as a "Scam." Not because I don't think it qualifies as a scam, but because I allowed one broker to fly right under my scam alert radar for MONTHS before I caught the scam. The broker is IG. The scam is the "Minimum Distance From Entry" rule that some brokers deploy.
I was going about the business of doing Retail Broker Evaluations on my own. I had selected 7 Retail FX Bucket Shops (because that's all we get here in the United States at the Retail level) and begun my analysis of each one using various criterion and measures for determining who gets cut and who advances to the final round. IG quickly moved up the list.
What distracted me early on about IG were there spreads. In fact, I got so distracted by their spreads because spreads like that allowed me to evaluate certain trading approaches not easily doable with other brokers having higher spreads. So, that was a huge slight of hand distraction which kept me using the MT4 IG platform in my evals while never having to worry about the Minimum Distance limit issue. So, IG kept moving up the list.
Eventually, I began running evals of other trading approaches that required Market Orders followed by an immediate Limit Order of some kind that was fairly tight to the point of entry. Suddenly, I find that my orders kept getting rejected. I said to myself: WTF? I'd drag the order line up/down repeatedly to set my Limit Order level and once again, the function got rejected. I said to myself: That can't be right, let me check the MT4 Journal. Sure enough, after checking the Journal, I found that each attempt to set a Limit Order within 200 points of the entry always failed. I called IG.
IG answers the phone - basically - whenever they want to. Sometimes you get someone lightening quick. Sometimes your call is never answered and you end up dealing with an inbound caller robo system. On this day, the phone was answered lightening quick. I told the IG Rep what I was experiencing. They said that if my Limit Order was within the 200 point minimum range from the entry, that my order would always be rejected. I said, "Why?" They said, we have a "Minimum Distance" rule of 200 points from the entry. Your "Stop Order" and/or your "Limit Order" must be greater than this "Minimum Distance" of 200 points. I said to myself: WTF! I did not say that out loud, but that's what I was thinking.
I said, "...forcing a 200 point minimum distance rule guarantees my loss at 20 pips plus the IG spread should the trade go against me." The IG Rep said, "Uh, yeah - I think, Uh - yeah that's correct." I said, "...are you serious? How can I trade that way? Who would use a Broker that forced a guaranteed 20 pip loss in addition to the broker's spread?" IG Rep replied, "Sir, that's out policy. Is there anything else I can help you with?"
When I heard, "...Is there anything else I can help you with?" - I immediately knew I would be removing IG from my evaluation list.
I had been so engrossed in the testing and evaluation of other trading methods that I got highly distracted by IG's tight spreads. So engrossed in fact, that I delayed the testing and evaluation of my other trading approaches that would require tighter Limit Orders until later in m overall evaluation. That's why and how this "Minimum Distance" rule slipped by me for so long. I had been evaluating IG for nearly 4 months until discovering this rule.
In my opinion, this is a Scam. This is an artificial means to hold Traders in positions that are going against them for a guaranteed distance above or below their entry level and THAT is wrong in my opinion. If you advertise the most liquid Forex platform in the world and you then force the Trader to drink an additional 20 pips of red ink while being made to pay the spread on top of that BS, then you are engaging in a SCAM as far as I am concerned.
In Retail Forex, Minimum Distance Limit Rules should be banned. This is the kind of stuff that Dodd-Frank should have been targeting instead of implementing FIFO and Hedging which are two extremely valuable tools of the Wiser Trader, if used correctly. I will NEVER trade with a broker who forces such nonsense on their platform.
IG was dropped. That left one broker here in the United States. I'm now completing final evals with that broker before going live.
Ban All Minimum Distance Limit Levels in Retail FX
I was going about the business of doing Retail Broker Evaluations on my own. I had selected 7 Retail FX Bucket Shops (because that's all we get here in the United States at the Retail level) and begun my analysis of each one using various criterion and measures for determining who gets cut and who advances to the final round. IG quickly moved up the list.
What distracted me early on about IG were there spreads. In fact, I got so distracted by their spreads because spreads like that allowed me to evaluate certain trading approaches not easily doable with other brokers having higher spreads. So, that was a huge slight of hand distraction which kept me using the MT4 IG platform in my evals while never having to worry about the Minimum Distance limit issue. So, IG kept moving up the list.
Eventually, I began running evals of other trading approaches that required Market Orders followed by an immediate Limit Order of some kind that was fairly tight to the point of entry. Suddenly, I find that my orders kept getting rejected. I said to myself: WTF? I'd drag the order line up/down repeatedly to set my Limit Order level and once again, the function got rejected. I said to myself: That can't be right, let me check the MT4 Journal. Sure enough, after checking the Journal, I found that each attempt to set a Limit Order within 200 points of the entry always failed. I called IG.
IG answers the phone - basically - whenever they want to. Sometimes you get someone lightening quick. Sometimes your call is never answered and you end up dealing with an inbound caller robo system. On this day, the phone was answered lightening quick. I told the IG Rep what I was experiencing. They said that if my Limit Order was within the 200 point minimum range from the entry, that my order would always be rejected. I said, "Why?" They said, we have a "Minimum Distance" rule of 200 points from the entry. Your "Stop Order" and/or your "Limit Order" must be greater than this "Minimum Distance" of 200 points. I said to myself: WTF! I did not say that out loud, but that's what I was thinking.
I said, "...forcing a 200 point minimum distance rule guarantees my loss at 20 pips plus the IG spread should the trade go against me." The IG Rep said, "Uh, yeah - I think, Uh - yeah that's correct." I said, "...are you serious? How can I trade that way? Who would use a Broker that forced a guaranteed 20 pip loss in addition to the broker's spread?" IG Rep replied, "Sir, that's out policy. Is there anything else I can help you with?"
When I heard, "...Is there anything else I can help you with?" - I immediately knew I would be removing IG from my evaluation list.
I had been so engrossed in the testing and evaluation of other trading methods that I got highly distracted by IG's tight spreads. So engrossed in fact, that I delayed the testing and evaluation of my other trading approaches that would require tighter Limit Orders until later in m overall evaluation. That's why and how this "Minimum Distance" rule slipped by me for so long. I had been evaluating IG for nearly 4 months until discovering this rule.
In my opinion, this is a Scam. This is an artificial means to hold Traders in positions that are going against them for a guaranteed distance above or below their entry level and THAT is wrong in my opinion. If you advertise the most liquid Forex platform in the world and you then force the Trader to drink an additional 20 pips of red ink while being made to pay the spread on top of that BS, then you are engaging in a SCAM as far as I am concerned.
In Retail Forex, Minimum Distance Limit Rules should be banned. This is the kind of stuff that Dodd-Frank should have been targeting instead of implementing FIFO and Hedging which are two extremely valuable tools of the Wiser Trader, if used correctly. I will NEVER trade with a broker who forces such nonsense on their platform.
IG was dropped. That left one broker here in the United States. I'm now completing final evals with that broker before going live.
Ban All Minimum Distance Limit Levels in Retail FX