ad guys, bad guys, whatcha gonna do? When they come for you?
We loveeee Will Smith and Martin Lawrence in this movie.
Will they come if we find the bad guys in Forex?
Probably not, they have enough on their plates in the USA.
So you need to learn how to recognise these bad guys-brokers in Forex and watch out for them.
In a simple sentence, Forex Bucket shops are brokerage firms that have “questionable” trading practices such as unnecessary frequent delays in order execution, frequent price misquotes or re-quotes, and frequent price slippages that are only favorable to the broker.
These guys are greedy and nasty. People operating bucket shops won’t think twice before they take your money and disappear on you.
We will give you three examples of bucket shops’ practices:
Scenario 1: A dishonest brokerage firm calls you aggressively over the telephone in order to make you open a trading account and deposit with them. Keep in mind that they will rush you to make more trades and deposit much more money, so they will be the only ones taking advantage out of it.
Scenario 2: A brokerage firm that offers you to make trades on your behalf and gives you promises you will have a certain profit. You don’t have any control of what is happening on the market, therefore the broker can manipulate you into losing your money. After you got cheated on, you will go back and check their Terms & Conditions, there you will see the fine print saying that you can’t take any legal action against them because they don’t have any responsibility.
Scenario 3: A total fraud company saying that they are legit forex brokers, but they are not even a company. If you start trading with them they will create a virtual trading environment. But you are not actually placing your orders out into the free market, instead, you are betting against the forex bucket shop operators. They start manipulating the exchange rates and your trades all result in a loss.
How to Identify a Forex Bucket Shop?
One of the best ways to detect bucket shops is whether your orders are actually filled in the real market.
You have to check the price charts or candlestick chart whether they are matching with some of the big brokers’ charts. If there is a news event that leads to the movement of the EUR/USD with nearly 50 points in 10 minutes, you should compare your broker’s prices if their price also moves in parallel.
It is best to select brokers who are registered in a strictly regulated country such as USA, UK, Germany, Australia, India etc.
AVOID brokers who especially offer you bonus just for opening an account or depositing money in your account.
We want to make sure that we taught you well enough how to prevent such scenarios from happening, so we prepared one more lesson on how to recognize such crooked shops.