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Three Signs That Your Online Forex Broker Is Robbing You Blind

Three Signs That Your Online Forex Broker Is Robbing You Blind

Is your online forex broker hoping you'll lose money? It's definitely possible.

Worse yet, it's possible that your online forex broker is not only hoping that you'll lose money, but actively working towards that goal.

Why would an online forex broker do you like that? Well, for one thing, because many online forex brokers act as "market makers," meaning that many online forex brokers are taking the other side of your trades, many online forex brokers win when you lose.

There is nothing inherently wrong with the market maker business model--there is always someone taking the other side of your trade, or else no trade occurs--but you should nevertheless be vigilant in watching out for forex brokers who want you to fail.
Here are three signs that your online forex web trader may be robbing you blind:

1. They Want You All Hopped Up on Leverage

Just because you can do something doesn't mean you should do something. If life doesn't teach you that lesson, forex trading surely will.

In the case of currency trading, this ultra-true axiom can be aptly applied to your use of leverage. All online forex brokers will offer you leverage, i.e. the ability to borrow money "on margin," to buy bigger stuff. But some online forex brokers will offer you more leverage than others.

More leverage than you need, in fact. More leverage than, frankly, you can handle.
Any online forex broker offering leverage beyond a ratio of 200-1 must be considered a suspect in the crime of assisting you to commit account balance suicide.

2. Funny, the Spreads Here Are Thinner Than Anywhere Else

Spreads, of course, are the difference between the "buy" and "sell" price of any particular currency pair. Spreads are the transaction cost paid to the online forex broker, for making the market, connecting buyers with sellers, writing website code, and all that jazz.

If the spreads at one online forex broker are thinner than anywhere else, something funny may be going on here--not funny haha, neither, but something more akin to funny you got ripped off.

If you notice that your thin-spread trades are frequently getting "requoted," consider it case closed: your online forex broker is robbing you blind, using thin spreads as bait.

3. Your Online Forex Broker Has No Friends

When making a purchase in the real world, it is natural to want to deal with an established company that has a reputation to live up to. The same desire should be manifested in your choice of an online forex broker: only work with a forex broker that has a reputation to protect.

Information about the reputations of individual online forex brokers is available, guess where, online. Check to see if your online currency broker shows up on the websites of the Commodity Futures Trading Commission (CTFC) and/or the National Futures Association (NFA).

Consumer review sites are another good source, although you must take some complaints with a grain of salt because forex traders who've lost money can be, at times, highly bitter individuals who are intent on blaming other people for their own monetary mistakes.

Filter out the emotion and look to the facts--always good advice in the world of forex trading.

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