Five Ways to Detect a Forex Broker Scammer

If you are looking for a new Forex broker, or wondering if your broker is giving you an acceptable deal, then here is a list of some things for you to consider when doing your evaluation.

1. Not All Forex Brokers Are Thieves!

It would be very unfair to take the attitude that Forex brokers are all delinquent. What you should keep in mind, is that most Forex brokers do not place their clients' trades in the real market, and charge us spreads instead of commissions. This means that most Forex brokers are in direct conflict of interest with their customers: the more their customers lose, the more money the brokers earn. In fact, your business model is based on the failure of your customers' trades.

It 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 gains

However, more profits are always good news, so there are some tricks that some brokers have in their sleeves to squeeze more money out of flexible customers, and here are some things you should keep in mind.

2. Spreads or High Commissions

Spreads have fallen a lot in recent years. Of course, the more money you have to fund your account, you'll probably find better spreads available to you. This is because brokers offering better spreads often require higher minimum deposits. In any case, you really should compare your options. The days of having to pay a spread of 3 pips per EUR / USD are over.

Recently, more brokers have been introducing commission-based models, where customers pay a fixed amount of cash per trade. When you encounter this, carefully calculate how much you usually risk in a trade per pip, and then calculate that "spread" you will be paying. Sometimes these more commission spread offerings are designed to make the offer look better than it really is, and you can only discover this once you do custom calculations.

3. Financing During the Night

Unless you are a pure day trader and close all positions before 10 pm or London midnight every day, you will pay or receive a small amount (usually less than 1 pip) for each open trade you have at that moment. This is based on the interest rate differentials between the currencies that make up that particular pair, but it is structured by practically every broker as a net loss for the customer. Some brokers are much worse than others, and many do not advertise these rates - you only see it in your statement the next day once the payment or deduction has been made. If you get in touch with most brokers, they will usually be prepared to quote your overnight financing rates. Get some quotes and compare them on the same currency pairs, and maybe be surprised by the results. If you enjoy holding long-term trades, make a few calculations about how much you are likely to pay on this overnight financing. You may find that it significantly decreases or even erases your earnings.

4. Execution of Sudden Stops / Increases

It is not widely understood that brokers control their own prices. There is no central market, and most brokers are not making real trades, and they can quote whatever price they want! Of course, they have to keep the prices fairly honest, otherwise they could use the prices of other brokers to correctly predict price movements, and as a result they would lose money. So you really do not have to worry that your broker will invent the price.

What might worry you is that a broker can see where your customers are grouping their stop loss orders, and if the overall market price comes very close to triggering these stops, the broker might be tempted to quickly push their price on that level and take profits. This can be done even more easily during news announcements or sudden shocks that have the effect of raising the overall price of the market up or down. An unscrupulous broker can always send the price a little higher or lower at those times.

To be fair, mistakes are sometimes made, and brokers often compensate for trades interrupted after excessive peaks when enough of their customers complain. However, it is something for you to be careful about.

5. Interruptions

There are times when the market is fleeing in a clear direction. If you want to trade and can not 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 their customers from placing winning trades. If it happens a lot, it's a suspicious signal.

This is not an exhaustive list of things to consider when choosing a Forex broker, but they are the most common broker problems that can make winning in Forex much more difficult than it should be if you do not consider them.

Five ways to detect a scammer Forex broker

If you are looking for a new Forex broker, or doubt if your broker is giving you an acceptable deal, then I will leave you a list of some things for you to consider when doing your assessment.

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.

The best trading platforms

Almost as important as finding the best online broker is the choice of a trading platform that fits what we are looking for. Many traders do not notice this peculiarity and only take into account the commissions and which is the cheapest broker. However, sometimes cheap can be expensive and as we always warned, when investing our money are not worth half measures we have to report well! That's why we bring you a selection with some of the best trading platforms so that you start to operate with the most appropriate tools.

1. Broker and trading platform are not the same

We often have a capital problem that some brokers seem to ignore: we did not find information about the trading platform offered by the broker in question anywhere!

How is this possible? As it turns out that broker and trading platform are not the same: while the former is the intermediary arranged directly between us and the stock market; the trading platform is the working tool through which we will operate, negotiate and issue orders. What does this mean? The broker will offer us a service while the platform will allow us to execute our strategy.

Therefore, if we do not have the appropriate means to invest, our investments can end badly.Two types of brokers: with or without own platform

         2. Two types of brokers: with or without own platform

When it comes to hiring an online broker we are going to run into two possibilities:

•        Brokers who have developed their own trading platform.
•        Brokers that use a multibroker platform (also available to other providers).

Although there are very powerful tools developed in house by some brokers, keep in mind that a multibroker platform can open many doors to you when changing and negotiating with other suppliers.

Learning the operation of a platform is not an easy task, therefore, it is less advisable to hang on a platform that you can only use with a specific broker. As a rule, all brokers offer a platform (either proprietary or not) for free for their customers.

         3. Looking for the best trading platform

• Offer the stock instruments with which you want to invest.
• Have the functionalities you want to work with:
• A social trading platform is useless if you are not interested in following or sharing your trades. This will depend on your strategy and how confident you are with one or other of the functions: analysis indicators, real time, order types, graphs, automatic trading system, etc.
• Platform is friendly and simple to use:
• In an ideal paradigm, the best platform is the one that offers the most complete and easy usability for the user.
• Make it fast.
• That offers software compatible with our operating system:
• If we do not want to be using patches all the time, the better the software is compatible with our computer. Interesting are also the mobile version and online (called webtrader), so that we can operate anywhere in the world with any support without needing to download the program (tablets, mobile, other pcs).
• Access to the tool code:
• Some platforms like Metatrader 4 allow to modify the programming codes to create indicators or own scripts among others.

         4 and 5. The best multibroker trading platforms ( Metatrader )

We started the list with the trading platform par excellence Metatrader 4 (and currently its update 5). Created initially for Forex in 2005 by the company MetaQuotes, today it has been adapted for trading with more instruments.

•  Free trading platform.
• Analyze the market and execute orders (snapshots or pending).
• Customize the graphics and create your own scripts and indicators thanks to its open code, among others.
• You have an internal mail to contact your broker as well as a help system.
• You can have two real counts and as many demos as you want (with pretend money).
• More than 90 indicators.
• Automatic trading system.
• New webtrader format so you do not have to download the software.
• Ability to download the data history.

Ninjatrader

It is a platform whose operation is more focused on execution than on analysis. Ninjatrader is part of the NinjaTrader Group, LLC group, founded in 2003 and currently has more than 40,000 represented through more than 150 brokers around the world.

• Payment trading platform (demo with limited options).
• Operational especially for trading with futures, but also allows shares, forex and CFDs.
• Analyze the market and execute orders directly from the charts.
• Extensive customization of its graphical interface.
• Ability to download the data history.
• Real Time and Strategy Backtesting.

Visual Chart

Visual Chart is a multitasking platform specially designed for technical, graphic and fundamental analysis. Part of the Visual Chart Group, S.L. which was born in Almería in 1998 to expand to other countries like Germany and the United States.

• Advanced charts, custom tables, depth charts, financial news, etc.
• Operational especially for the trading of stocks and futures.
• Execution of orders directly from the charts.
• More than 200 indicators.
• Extensive customization of its graphical interface.
• Ability to download the data history.
• Real Time and Strategy Backtesting.
• Automatic trading system.
• Direct broker access and data history of more than 20 years for backtesting.

Pro Real Time

Pro Real Time is a platform that, like Visual Chart, focuses more on analysis than on execution. Pro Real Time is owned by the French company IT-Finance, which has more than 10 years of experience, 500,000 users worldwide and more than 300 servers managed in different data centers.

• Free tool (although you pay for the data in real time-> you can try to be version for a week without costs).
• Operational especially for the trading of stocks, futures, forex, indices, cfds, commodities, obligations and options.
• Powerful graphics and easy interface.
• More than 100 indicators.
• Possibility to download data history up to 16 years for backtesting.
• Automatic trading system.
• Lightweight version for smartphones
• Customize the platform: fonts and colors, graphics, create custom lists, est.
• Help and support service as well as access to the trading community.