What You Need To Be Aware Of While Choosing a Forex Broker

Just as it is in other businesses it is not uncommon to hear about forex broker scams. The fact of the matter is that even a well reputed forex broker can cheat you because there is no formal regulatory central agency the way there are stock exchanges for the stock market. This is also the reason why it is extremely crucial to know how you choose your forex broker and understand how s/he can cheat you.

One of the most common ways that a forex broker can cheat you is to provide you with fake rates of currency pairs. Keep in mind that brokers have access to better technology and can choose to show whatever price they want to. The fact is that every broker offers a different spread on currency pairs and this will always differ from the actual quotes in the interbank market. This gives brokers a chance to change rates whenever they want to. The best part is that they are on the right side of the law as they are covered by the terms and conditions of the contract you sign with them.

Fraudulent brokers can easily programme cheating schemes into their trading platforms. For example, they could fraudulently run your stop losses to make more money out of you. However, at the same time it must also be said to their credit that good brokers do not normally indulge in such fraudulent practices and do not change their spreads simply to cheat their clients.

To protect yourself from forex broker scams it is necessary that you check the rates offered by your broker with other sources, preferably with interbank rates.