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Chapter 39, Part II. Forex Scam - Trading Bots, Signals, and Brokers. Page 9

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 28, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Scam Brokers continued

    Commander in Pips: Maybe this is not crucial for you, if you make 1-3 trades per day, but imagine how it will be for scalpers. Besides, 5 pips more spread is just for 1 client and 1 trade, but what if they have hundreds of clients with hundreds of trades per day. This is I can say good money…

    Second, is about stop grabbing. The point is that Forex brokers surely know where clients have placed their stops. That’s normal. Also as if you trade via exchange you see all orders that have been placed. But while on exchange there could not be any difference with trading quotes and historical price among the traders, on forex it could. When price approaches to clients orders, back-alley forex brokers manipulate with quotes so, that those stops can be triggered. In reality there was no such price on the market. This is very easy to do, especially if you recall how quotes are provided by DD brokers.

    Pipruit: I suspect something like that…
    Commander in Pips: Although regulators are struggling with such back-alley brokers, and they are much fewer now, still they exist. Here we can advise you following things:

    1. In the US, choose a broker that has been registered as FCM (Futures Commission Merchant) with the CFTC and NFA. The point is that there are almost 2000-2500 forex brokers in US, or claiming to be in the US, but only about 1% of them are registered as a member of NFA;

    2. Do not trust any broker by word or advertisement – check out its status (has it registered with NFA or not) by phone (800) 621-3570 or on the NFA website's BASIC search;

    3. Do not be upset if you’re not in US – many other countries also have regulators as well I will list some of them in the next lesson of this chapter;

    4. Also the NFA is doing much to prevent frauds on the Forex market. Once it has released some NFA basic course. We recommend you to read it;

    5. Also we do our own work. We suggest you to read Pharaoh's education folder in the forums, especially his article on broker choosing procedure and our reviews of brokers.

    6. Do not deal with a broker that is not a member of NFA/CFTC or other major regulator and do not put money with them. Do not tell us later that you haven’t been warned.

    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please put them on the next page and Sive should answer soon.

    Note: FPA ranks are earned in the battles against scam, not in the classroom.
    #1 Sive Morten, Dec 28, 2013
    Lasted edited by : Oct 16, 2016
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