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What are the types of broker scams?
- Old scam
At their most common form, forex broker scams involved the manipulation of the spread. The point spread between the bid and the ask can be seen as a reflection of the commission of a transaction. - Modern scam
Computers do most of these systems, hence the name "robot" system. If the system can't detect valid signals, it will generate random buy and sell entries, which often cause traders to lose.
Continue Reading at Beware the Trap of Money Game in Forex Brokers
Why are strict brokers safer than those that are not?
Brokers that loosen their requirements are much more exposed to fraud than those that do not.
Many clients have been complaining about the long safety procedure and identity verification, which can take at least a few business days to complete.
If the company keeps requiring clients to double-check their login details, verifying their identities multiple times, and confirming their intentions, people can easily back away and this means lower revenue.
Most companies wouldn't take such a risk in this dire economic situation, as customers are their sole source of income.
In the cost of satisfying their customers, brokers must face the risk of fraud. By lowering their security measures, they are practically exposing their vulnerabilities to the public. And in reality, one fraudster can cause greater harm than 100 legitimate customers can cause good.
Continue Reading at Fraud Trends that Brokers Should Watch for in 2023
There is no clear-cut answer to that. What you need to know is that ECN brokers do offer a better trading environment than market makers although some of them may cheat on you.
Better yet, licensed ECN brokers in advanced countries are usually subject to stricter supervision that reduces the likelihood of fraud.
Continue Reading at Can ECN Brokers Cheat on You?
What are the key features that should not be changed suddenly by brokers?
When anything is described as "subject to change," there is a potential that you may incur more losses in terms of money, time, and effort.
- Your brokerage company may execute trades with a different model than what they are supposed to.
- The platform changes. You are used to using MT4. All of sudden, you have no choice but to move to MT5.
- The stop-out level is increased. A higher stop-out level will cause you greater loss as it will let your losing position run its course until you have nothing left in the account.
- Changes in spread and/or commission. Anything related to trading costs should be a sensitive matter as it influences one's profitability in the long run.
- Leverages are lowered for no reason. This limitation may result in higher margin requirements and thus inflict on any trader who are used to trade with high leverage.
- Your pair leaves you.
- Obvious stop hunts. This often happens in market maker brokers who trade against the traders. In this case, you will find your stop losses getting executed just before the price moves in your favor.
Continue Reading at Broker Red Flags: Signs You Should Leave Your Broker