With a significant increase in the demand for retail traders to trade in the Forex market, tons of forex brokers have established their businesses to profit from their clients. This might seem like an advantage for traders as they have a variety of options to choose a broker. However, this is not the case.
In the world of forex brokers, there exist both genuine and fraudulent brokers. And these fraudulent brokers are referred to as bucket shops. These brokers have a frequent practice of misquoting and requoting and slippage, which favors only them.
Back in the day, as there was no internet, it was not possible for traders to know the actual price of the currency or security every moment. So, the clients used to place trades via phone. But, there were brokers who used to put the clients’ phone orders on slips and drop them into a bucket instead of officially executing them. Later, these orders were unofficially executed against the bucket shop operates, known as bucketeers.
These bucketeers usually did not disclose the real price of the currency, which was being traded in the market. They used to tell their clients that the price didn’t move in their favor, even if it actually did. But with the introduction of the internet and the improvement in the regulation of forex brokers, these scams have considerably reduced.
However, unfortunately, there still are these brokers out in the market. So, we’re here help to protect you from these scams. Things one must always keep a track of when trading with a broker are as follows:
✨ Constantly compare the price movement
Many traders trade based only on the prices mentioned by the brokers on their trading platform, which is quite dangerous. Currently, on the internet, there are many web portals that show the price feeds every tick. Hence, one must always keep track of the price feeds from several third-parties to confirm if the prices shown by the broker are real or not.
✨ Have a Trading Journal
Developing the habit of keeping a detailed journal of all the trades and transactions is extremely vital for a professional trader. Because if a trader feels that the broker has cheated them, they will need evidence to prove the genuineness in the filed case. And the simplest way to keep track of it is by taking a screenshot of every transaction they make. This can act as an excellent backup when they are cheated by a broker.
✨ Filing a legal action
Sometimes the disputes between the clients and brokers are not settled completely. So, this is when a trader must take legal action. If any conflict is unsettled, Forex traders can approach either the Commodity Futures Trading Commission (CFTC) or the National Futures Associations (NFA).
The CFTC has something called Reparation programs that provide an unbiased forum to handle and resolve customer’s complaints. You can click here to access the program.
Hence, by considering all these factors, one can stay away from being trapped by the fraudulent brokers in the industry.