Fraudulent Brokers - How They Operate

Fraudulent brokers use various methods to rob their clients' cash and some methods can be delicate enough that they could hide behind legitimate reasons to justify such acts. If your broker declines to process your withdrawal request or call off your winning trades without any solid reason, you can assume that you're working with a scam brokerage. However, when they are utilizing more delicate approaches, you have to know exactly how to see the symptoms.

Pip Hunting Rules

"Pip hunting" is a phrase to mark short term trading strategies, particularly scalping. Usually, they eliminate this type of trading strategies by placing policies on "minimum time" a trader have to hold his position. Any attempt to close the trade prior to the "minimum time" passed can result in termination of the trade and confiscation of profits produced during that trade.

Be aware that these rules might be hidden among numerous rules on the contract and you won't be told specifically concerning this throughout registration. If you violate these policies, the broker could terminate your trade and possess every legal reason to do so.

Requotes

In a volatile market, it is possible for prices to move so fast that when you're placing your order the prices already become different. Consequently, your trading platform will cease the order you just gave and give you a new price, then inquire if you'll place the order at the new price. This is called requotes and it's common to occur during erratic market.

Even so, deceitful brokers have used this as an instrument to stop trader to go into the market at good prices. They simply cease the order, then provide the trader a worse price. You need to watch the requotes occurrence; if it happens all too often, then there is high possibility that your brokerage is the one behind it.

Finding a broker with no requotes policy is a good solution. Just remember to make sure that the broker uses instant execution type because market execution will simply get your order executed on the "next best price".

High amounts of Slippage

Slippage, similar to requotes, is possible to take place during highly erratic market condition. During such condition, the trading platform might fail to execute pre-defined orders (such as take profit or stop loss) at the inquired prices. Rather, the orders are filled later; possibly in worse prices.

While this is normal to occurs during erratic market, excessive slippage is not acceptable. Deceitful brokers use slippage as their justification to ignore stop-loss order, thus making you suffer more loss than you designed in your risk management.

Fraudulent brokers never allow your money to be used for actual trading; instead they just ensuring that you lose most of your trades and have legitimate reason to keep your money. Being trading by their rules and utilizing their trading platform, tackling your trades is not a hard thing to do for them. Whenever you notice these signs of dishonest brokerages, it is best to withdraw all your money and stop doing business with them.