4 Ways to Identify a fraud or scam Forex Broker
Forex Brokers are not all Crooks
Forex brokers should not be thought of as all crooks. You should check your broker by placing trades on the market, if your broker does not place your order on the market and charge you instead of your order.This is a sign of fraud from a broker, if you found it in your broker you should check other brokers.Most people who trade in the Forex lose money. They are honest, and this means that they can help you to become a good trader too.
High Spreads / Commissions
In the last few years, the cost of spreads (which is the difference between what you buy and what you sell) has come down. For traders who are investing more money in the forex market, the broker will charge you lower spread as possible. Brokers that offer better spreads usually require a higher minimum deposit.
Recently, some brokers have been introducing a new way to charge for their service. Some people pay a set amount of money per trade. When you see this offer, calculate how much you usually risk on each trade with one pip. Then from that figure out the commission that you are going to have to pay for this deal.
Overnight Financing Charges
Imagine that, you are a day trader and you are closing your trades before 10 pm London midnight time each day. When you close your trades at this time you will have to pay or receive a small amount which could be less than 1 pip.
Some brokers charge more than others, and many don't tell you. But once you pay your bill or are deducted, you will know if they did. Compare the rates on different currency pairs and see what happens.
Running of Stops / Spikes in Volatility
Most people don't know that a lot of brokers control their own price feeds. All of us know that there is no central exchange board available for the market, as a result, many fraud brokers are doing the wrong thing. You should check the price feed from other broker's price feed to verify it.
Brokers can see where the clients are putting their stop-loss orders. Most of the time fraud brokers are creating technical issues while a trader placing trades on the market. For example, if you are placing an order and failed to get the connection to your broker, then you should check it carefully. If you feel it is coming repeat then you should realize your broker doing fraud with you. And this is easy to do because when there are news announcements or sudden shocks that spike up or down.