Additional Deceptions Forex brokers can deceive you about there being no commissions. Guaranteed fills. True, but the only way a dealer can guarantee fills is for the dealer to become the buyer or seller of last resort.
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That means the dealer is running a bucket shop, and you're trading against the broker. Brokers do not all tell the truth about volume. They tell you about the volume for all Forex trading, which doesn't even come close to the volume they truly have at their own brokerage, where you are trading. Volume in currency futures is higher than the volume traded at any single Forex broker, often greater by a factor of ten.
Risk Warning
Brokers say they are charging you a 3-pip spread to trade the popular currency pairs. But in reality, a broker may be making even more by skewing prices. Since you are not trading at an exchange, the broker can basically feed you any price he wants to feed you. Broker pricing does not guarantee you true price discovery, nor does it guarantee an efficient market. A broker might, for example, widen the spreads from 3- to 6-ticks for a few seconds, hitting your stop-loss, while the real market never traded there.
Maybe you have heard that if you win regularly in Forex, you may be barred from trading. Is this true?
RISK STATEMENT FROM ORBEX
Yes it is, with some of the bad brokers. The fact that it is true is just another proof that when you trade Forex, you are trading at a bucket shop. In the book, "Reminiscences of a Stock Operator," we are told that Jesse Livermore was banned from trading at certain stock brokers because they couldn't stand his beating the house. The same thing is true with many Forex brokers. Since they are the ones guaranteeing you a fill, they are in effect the buyer and seller of last resort.
The truth is that most Forex brokers have precious little liquidity at their firms. In order to give you the impression that there is liquidity, it is the dealer who gives you your fill. It is the dealer who does the stop running that supposedly doesn't exist in Forex. But if you are regularly beating the socks off the dealer, he will ban you from trading at his firm.
Identify the Risks
This can happen even when the dealer claims to not have a deal desk. Is there hope for a trader who wants to trade Forex? There are risks associated with utilizing an Internet-based trading system including, but not limited to, the failure of hardware, software, and Internet connection.
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Risk warning | FXCL Forex | Online Forex Broker | Online Trading Platform
Please let us know how you would like to proceed. There are also risks associated with utilising an Internet-based trade execution software application including, but not limited to, the failure of hardware and software. You should be aware of all the risks associated with investing in foreign exchange, indices and commodities and seek advice from an independent financial advisor if you have any doubts. The information made available by Felix De Vliegher is for your general information and use and is not intended to address your particular requirements.
In particular, the information does not constitute any form of advice or recommendation and is not intended to be relied upon by users in making, or refraining from making, any investment decisions. Felix De Vliegher, will not accept liability for any loss or damage, including but without limitation to, any financial loss, which may arise directly or indirectly from use of or reliance on such information either provided by him or others that participate in the services provided.
Please use your own good judgment and seek advice from a qualified consultant, before accepting any of the information you are given. Past performance is not necessarily a guide to future performance. You should therefore carefully consider whether such trading is suitable for you in the light of your financial condition. In considering whether to trade or to authorise someone else to trade for you, you should be aware of the following:.
If you purchase a commodity option, you may sustain a total loss of the premium and all of the transaction cost.
If you purchase or sell a commodity future or sell a commodity option, you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
Under certain market conditions, you may find it difficult or impossible to liquidate a position. The high degree of leverage that is obtainable through, for example, futures trading, options trading, Spread Betting, Binary Betting and CFD trading can work against you as well as for you.