Options for cheating on Forex
Traders, without even realizing it, often become targets for fraudulent companies, and their deposits are the very tidbits that are so eagerly sought by pseudo-companies providing services in the forex market.
It's worth noting that the fraudulent technology itself is clearly visible and right under the trader's nose. However, behind the clever terminology, many people can't figure out how the broker operates and how they can actually make money off of you.
In this article you will learn about classic work schemes Forex brokers, as well as methods of deceiving traders in the Forex market.
How black brokers operate
Kitchen LayoutThe most common deception scheme used by most dealing centers, which traders call "The Kitchen," is that all trades made by traders are not actually sent to the market and are nothing more than virtual transactions within the company.
This is why companies operating under this scheme may not interfere with traders' work at all, but simply wait until the majority of them have lost their deposits.
However, when a major player enters the market and truly demonstrates profitability, such a black broker may perform the following actions:
1) Price manipulation and shifting
The thing is that the source quotes For a trader, your primary influencer is your broker, who not only sees the direction of the transaction and its volume from the order, but also where you set your stop order and profit.
The most harmless trick a broker can pull is opening a position at an unfavorable price, moving it a few points against your position.
Also, since the dealer sees your stop orders, he can easily, in critical situations, add several points or larger values to your price so that your transaction is closed by a stop order.
2) Psychological pressure
By psychological pressure, we mean pushing various services that could harm the trader. One such popular service is a personal manager.
In practice, these are just regular DC employees who constantly call clients and inadvertently pressure them to open more trades or even offer to perform transactions on the trader's account under the pretext of released news or unique statistics.
Typically, this type of pressure ends either with the trader wiping out their account on their own under the manager's orders, or with the manager themselves wiping out their deposit, even if you entrusted them with the account.
3) Review of trader's transactions
Any kitchen that makes money not from the spread, but from draining the client's profits, is in no way interested in the presence of the most profitable category of traders – scalpers.
Such companies have a simple limitation: if a transaction is on the market for less than three minutes, it can be cancelled or revised.
If a trader successfully loses their deposit, the company ignores it, but if they make a profit, the broker freezes the funds and reviews the trades. Typically, all losing trades are not cancelled, but profitable ones are either cancelled or reviewed negatively.
4) Pseudo shares
Many dealing centers operating on the kitchen principle create very exciting promotions, up to doubling or tripling your initial deposit.
However, in fact, the terms of the shares are written in such a way that the trader will never be able to fulfill their conditions.
Offers to participate in the action at a time of strong tension look especially cynical subsidence on an account when a trader is under strong psychological pressure and is ready to receive additional funds under any circumstances.
Scheme for deriving the aggregate position
The scheme of bringing a total position to the market is considered a white method of brokerage activity, which consists of the company collecting the total volume, and especially the excess that cannot be covered by other players or the company itself, and bringing it to the interbank market.
However, clearing itself, as in the case of kitchens, occurs within the company, and only in the event of a significant risk to the broker's capital is the transaction withdrawn to the interbank market.
However, it's important to understand that in most cases, the dealing center itself covers traders' positions, and to do this profitably, the company can shift the price in its favor, which allows for so-called brokerage (simple arbitrage).
In conclusion, I would like to note that the most transparent and safe way of trading for a trader is the so-called ECN accounts, where absolutely all trader transactions are transferred to the interbank market.
However, not all brokers can afford this service, only the largest and leaders in their industry, such as Alpari And Amarkets.
