I've noticed that there are two different kinds of forex traders. There is the group who thinks that the brokers are God's angels who could do no wrong, and there is the group who thinks that brokers are out to get them. They think every last one is so crooked that they would steal your wife and kids too, if they had a chance.
Honestly, they are both wrong. However, the more dangerous belief is that brokers can do no wrong. In the USA, they are trying harder to regulate them, but forex is still a largely unregulated market.
Due to the increased government regulations and sanctions, you are probably better off using a broker in a country that has more regulations.
Now, that doesn't prevent them from ripping you off, but it does make it less likely. If the broker thinks no one is looking over his shoulder, that's when he'll start playing games with you.
Things will happen... like you'll get filled at a bad price. Slippage will get more common. Even worse is pip shading.
Pip shading is when the spread is really 6 pips, for example. However, the broker quotes it to you at 2 pips. If you buy, he gives you the worse end of the 6 pip spread. Your order has slipped and you find yourself down 6 pips instantly even with an advertised 2 pip spread.
Most of these problems happen with market orders and stop orders. If you can help it, use more limit orders to enter the market and don't broadcast your stop loss. Just because you have a price in mind, doesn't mean you have to transmit that to the broker.
Source: EzineArticles.com
Honestly, they are both wrong. However, the more dangerous belief is that brokers can do no wrong. In the USA, they are trying harder to regulate them, but forex is still a largely unregulated market.
Due to the increased government regulations and sanctions, you are probably better off using a broker in a country that has more regulations.
Now, that doesn't prevent them from ripping you off, but it does make it less likely. If the broker thinks no one is looking over his shoulder, that's when he'll start playing games with you.
Things will happen... like you'll get filled at a bad price. Slippage will get more common. Even worse is pip shading.
Pip shading is when the spread is really 6 pips, for example. However, the broker quotes it to you at 2 pips. If you buy, he gives you the worse end of the 6 pip spread. Your order has slipped and you find yourself down 6 pips instantly even with an advertised 2 pip spread.
Most of these problems happen with market orders and stop orders. If you can help it, use more limit orders to enter the market and don't broadcast your stop loss. Just because you have a price in mind, doesn't mean you have to transmit that to the broker.
Source: EzineArticles.com
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