Forex Brokers That You Should Avoid
Just as there are forex brokers that you should look for, there are also brokers that you should avoid. There are some trifling things that are committed by brokers who only seek to increase profits. For example there are forex brokers who are prone to prematurely buy or sell near preset points (commonly referred to as sniping and hunting). Obviously, no broker would actually admit to doing this, but there are ways to know if a broker has committed this offense.
One of the way that you can really determine which brokers do this and which brokers don't, is by asking fellow traders. There is actually no list or organization that reports this kind of activity. The point here is that you have to talk to other traders or visit online discussion forums to find out who is an honest broker and who is not.Strict Margin Rules
Signing up for a forex trading account is a great deal like getting an equity account. The only difference is that, for forex trading accounts, you are obligated to sign a margin agreement.
What this agreement basically says is that, you are trading with borrowed money, and, because of this the brokerage firm has the right to interfere with your trades in order to protect its interests. Once you sign up, all you have to do is fund your account and you'll be ready to trade right away.
When you are trading with borrowed money, your forex broker would have a say in how much risk you are able to take. With this in mind, your broker can buy or sell at its discretion, which can be a really bad thing for you, so you have to watch out for this kind of brokers
Let's just say that you have a margin account, and your position takes a headlong nosedive before it begins to rebound to all-time highs. Even if you have enough cash to cover it, some brokers will liquidate your position on a margin call at that low. This action on their part can cost you dearly. You have to visit online discussion forums to find out the honest brokers.
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