Do Forex brokers really trade against us these days?
by Dragan Lukic
We all know that there are bad Forex brokers out there that are only interested in getting as much cash out of your trading account as possible. They will do anything to get you to trade multiple times per day because the more you trade the more commission or spread cost they can charge. Unfortunately, these types of companies base their business model on greed which blinds their eyes from making an honest profit from an industry that can actually deliver it. Perhaps they know they are not going to stay in operation for a long time so their aim is to scam traders as much as possible and as fast as possible.
However, there are ways to ensure that you do not become a victim of this greed. One of the ways is to ensure that you only use a regulated Forex broker. Regulation will work in your favor and protect you from any bad practices utilized by bad Forex brokers. However, you must also check where they are situated because if they are based in a country with relaxed regulation then you may not be entitled to anything if things go wrong. It is this ‘relaxed regulation’ that contributes to greed desired by bad Forex brokers and it is up to us to research it. So, when the time comes, you simply must confirm and be comfortable with what you are entitled to and how you are protected; which is described in the regulatory body’s list of rules and legal descriptions.
Traders find it really easy to blame Forex brokers when trades start turning against them. Reason why is because historically, a selection of market makers traded against their clients resulting in frequent investment losses. This is why a lot of us find it harder to trust market makers these days but the truth is, it is not important if they are market makers or not.
Firstly, this is because there is always a better company to partner up with that allows you trade in fair market conditions, so you simply need to open a new account. Secondly, it is because most market makers don’t need to cheat anymore. For example, many people say that Forex brokers profit from losses incurred by traders, but they say it like it is a really bad thing. However, this is true in all cases – all brokers make money when you lose. Sometimes this saying gets lost in translation because what they mean is that some brokers make the trader lose so that they can profit. This is not true in all cases. The reasons why are traders themselves. The unfortunate truth is that most traders fail; around 90% of them. With this being the case, these companies don’t need to cheat their customers because the losses are ‘given’ to them on a regular basis. All brokers know this so they compete heavily on low spreads and low commission to get as many customers through the door as possible. They are simply playing the odds that we, as traders, have created ourselves, so for them it is easy money.
All this really proves is that most traders do not get the right education. Without it, our markets are always going to be viewed as a betting field no different to the one created by a betting shop. The reason is failure – our failure. However, this is all treatable. We just need to get out of this frame of mind where we think we can beat the market. Instead, we need to apply discipline and professional education to all we do in the markets. Otherwise, the 90% problem will stay with us forever and we will always look for another Forex broker to blame.
Dragan Lukic is a professional trader with years of experience with Forex brokers. His advice is to research and ask questions no matter which broker you find.