1. Not all Forex brokers are thieves!
It would be very unfair to take the attitude that Forex brokers are all criminals. What you need to keep in mind is that most Forex brokers do not place their customers ' trades on the real market, and they charge spreads instead of commissions. This means that most Forex brokers are in a direct conflict of interest with their customers: the more they lose their customers, the more money the brokers earn. In fact, their business model is based on the failure of their customers ' trades.
is a sad fact that most forex traders lose, but this is mainly due to poor trading methods, and does not mean that forex brokers have to act dishonestly to make profits.
However, more profits are always good news, so there are some tricks that some brokers have in their sleeves to squeeze more money from flexible customers, and here are a few things you should consider.
2. Spreads or High Commissions
The spreads have gone down very much in the last years. All the more money has you to finance its account, probably it will find better spreads available for you. This is due to the fact that the brokers that offer better spreads, usually need higher minimal deposits. In any case, you really must compare its options. The days of having to pay a spread of 3 pips for EUR/USD have ended.
Recently, more brokers have been introducing models based on commissions, where the clients pay a fixed cash quantity for trade. When it meets this, calculates carefully how much it usually risks in a trade for pip, and then calculate this "spread" who will be paying. Sometimes these offers of spread more commission are designed to do that the offer turns out to be better than really it is, and it is possible only to discover this once I realized personalized calculations.
3. Financing During the Night
Unless you are a pure day trader and close all its positions before 10 a.m. pm or the hour of midnight of London every day, you will pay or it will receive a small quantity (generally less than 1 pip) in every open trade that it has in this moment. This is based on the interest rates differential between the coins that compose this pair in particular, but it is structured by practically every broker as clear loss for the client. Some brokers are much worse than different, and many people do not announce these tariffs - you see it in its declaration the following day once the payment or the deduction has been done. If it gets in touch with most of the brokers, in general they will be prepared to quote its financing valuations overnight. Obtain some quotations and compare them in the same pairs of currencies, and perhaps be surprised for the results. If he likes maintaining trades in the long term, do a few calculations on how much it is probable that he pays in this night financing. You can think that you diminish significantly or you even erase its profit.
4. Execution of Stops / Sudden Increases
It is not understood that the brokers control their own prices. There is no central market, and most of the brokers are not doing trades real: and they can quote any price that they want! Of course, they have to maintain the quite honest prices, since otherwise it might use the prices of other brokers to predict correctly the prices movements, and as result they would lose money. So really he does not have to worry that its broker is going to invent the price.
What might worry him is that a broker can see where its clients are grouping its stop loss orders, and if the general price of the market comes very close to unleashing these stops, the broker might feel very tempted to push its price on this level and to take the profit as soon as possible. This can become even more easy during announcements of news or sudden shocks that have the effect of increasing the general price of the market up or down. A broker without conscience can always send the price a little higher or lower in these moments.
To be just persons, sometimes errors are committed, and the brokers often compensate the trades interrupted after excessive peaks when a sufficient quantity of its clients they complain. Nevertheless, it is something so that you are careful.
5. Interruptions
There are times when the market is fleeing in a clear direction. If you want to make a trade and cannot get a connection with your broker, or the trade is repeatedly rejected for some unknown technical reason, then be careful. This is a type of a broker who is using unfair methods to prevent his customers from placing winning trades. If it happens a lot, it's a suspicious signal.
This is not a comprehensive list of things to consider when choosing a forex broker, but are the most common broker problems that can make you win in Forex is much more difficult than it should be if you do not consider them.
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