Question by : Does retail forex traders suffer from similar biases from Forex brokers?
Best answer:
Answer by Fxcc
Hi Tin,
I believe that retail forex traders suffer or not from biases from Forex Brokers, depending on the type of broker they have chosen to work with.
Since there is a wide range of brokers, regulated, non regulated, market makers, ecn/stp, traders have a rough time making the right choice.
From my point of view, if you want to avoid biases from Forex brokers, you need to take into consideration a couple of conditions:
- as a retail client, it is better to register with a regulated broker;
- the broker is not supposed to interfere with my trades;
- the broker is not supposed to gain from my losses.
The main idea is to register with regulated broker because the regulatory body actually obliges the broker to be transparent, to run it’s activities according to the financial directives and laws of that region, in some cases to offer you, as a retail client, a type of coverage for extreme situations such as bankruptcy.
Regulatory bodies have been created to impose certain limits with regards to how much information regarding the risks involved in trading should a trader have access to, to how well protected a trader’s investment is, to avoid any potential conflict of interests between the market participants.
Another good thing about a regulated broker is that you, as a trader, can actually file a complaint if you have evidence that your broker has breached the financial laws/directives imposed by it’s regulatory body.
Regarding the interference of brokers with their client’s trades, there is one documented fact- market makers do that on a regular basis, to make their profits, this is why you will get re-quotes whilst dealing with this type of brokers.
Regardless of the outcome of your trade, the broker is not supposed to gain from your profits/losses. So instead of having your trades manipulated to lose more than to gain, I would suggest you search for a broker that charges you a commission rather than make your loss their gain.
Best Regards,
FXCC Representative
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