Wondering why stop hunts happen? Why do some brokers have different prices? What is the story behind the scene?
Who is responsible for this price difference? Obviously, if they are brokers, are they legal? If you are struggling to find the answer to such broker-related questions, this post is for you.
Get started with the answer to the question: Can forex brokers manipulate price?
Unfortunately, some brokers can use tricky ways to manipulate prices a bit. They can change the bid/ask spreads they offer to their clients slightly. Though they can’t change the core pricing system and the forex market. As they don’t have the right to be a big market changer. Banks are there as big bodies.
There are so many complaints about brokers in which traders spot such manipulation. They think that it could be the main reason for failure in trades.
What is Forex Manipulation
Before knowing the broker’s game, it is necessary to understand the concept of forex manipulation.
In general, manipulation in forex is a tactic in which market makers will force prices to the level to stop you out of your position and cause loss. They do so to stop retailer traders from entering the market in the wrong direction.
According to experts mostly this manipulation happens in the London fix, which is 4.00 PM from the London time zone. It might happen with a 30 to 60-second gap before 4.00 PM.
It is a time when most of the transactions in foreign exchange take place.
It is the best time to manipulate price as rates will fix after this time. So, market makers take advantage of these rushy transaction hours and tend to manipulate the biggest market of forex. But now authorities are fining banks and other market makers if they found them doing so.
How Do Forex Brokers Manipulate Prices
When a regular trader place order he has hope that the broker will offer a competitive bid/ask quote. This happens when your chosen broker is authentic and not going against you. But if your broker is a scam, he will get control over speed.
Plus, he will widen or slow the spread to create artificial spikes. As a result, traders may lose capital more quickly.
It is an easy task for brokers to change the price feed provided to the trader. Some brokers are smart enough to tune the software to create such artificial spikes near major support and resistance levels. In this way, you may lose your money quickly.
In some cases, traders complain about stop loss and server speed. The scam broker might force you from hitting stop loss when it’s necessary. In this way, traders will tend to lose money.
Can Forex Market be manipulated?
Though it’s not easy to manipulate the forex exchange market, yes it is possible.
It is impossible in a sense that it is hard to see how much the market does worth in a given day as it operates 24hours a day. It is possible in a sense that broilers or market makers tend to change the value of the currency to make a profit.
It is easier to manipulate the price when the market shows low less liquidity. However, it becomes harder or even impossible to manipulate the market when it shows high liquidity.
It was thought that manipulating a foreign exchange market with more than 3trillion dollar trade volume is impossible.
But this happened when several banks were fined doing so. But who cares!
Why Do Different Forex Brokers Have Different Prices?
It’s the reality that different brokers have different prices of the same currency pair in the forex market. The reason is that the forex market operates through an un- centralized exchange.
Here different brokers have different numbers of traders, different liquidity providers, and different time zones.
Though the price variation is not a big number. It would be a slight variation from other sources. If this variation is larger, your broker might be a scam. So, keep an eye on this factor and keep relating your real-time pricing chart with other sources.
How do you outsmart forex brokers?
The harsh reality about market maker forex brokers is that they would first think of making money for themselves. After this, they would think of you. Legal brokers will make money by exposing all the ways through which he earns. This might be his charges or fees.
As real traders, we cannot trade without a broker. We have a detailed article about forex trading without a broker.
But there are few other tricky ways from where they try to make more profit. Though these rules are still legal in forex terminology.
But they are making brokers richer than traders. If you want to outsmart the forex brokers you should understand the ways through which they can go against you.
You are here to earn; they are here to earn. They can be your friend and worst enemy at the same time. So, they can cheat you through OTHER WAYS like spread policies, execution time, Platform time zones, negative interest markups and affiliate commissions.
If you want to outsmart them keep your eyes open to these superficial other ways.
Can MT4 be manipulated?
In reality, it is impossible, but for scammers everything is possible!
If any broker tries to manipulate MT4 data, you can easily spot it. Everything is in fronts of you such as real-time prices and other data. To outsmart brokers, you can correlate the MT4 data with other platforms. If you find anything wrong, you can file a complaint against your broker.
It is possible in a sense that brokers can manipulate price feed and execution time. They would deliberately slow down the server to cause a possible delay in stop loss or trailing stops. In this way, they can bring a huge loss to you and the reputation of the MT4 platform.
If you notice such activities, stay away from those brokers. Though they can’t get control over the central pricing system.
Is the Forex Market Rigged
Yes, forex markets are rigged in a much-organized way. Though it’s far more technical than manipulation. There was news in which the world’s largest bank was fined for rigging the forex market. But traders did not care about this news.
Who Control Price in Forex Market
In the forex market, prices are in direct control of Banks or Central Banks. No third party or authority is involved. Only banks are responsible for operating the core pricing system for forex. If you want to learn to trade, it’s a better idea to understand the importance of bank control.
To summarize, You have to choose a regulated broker with a low spread to bypass this manipulation. We recommend choosing ICMarkets or a similar broker to invest your hard-earned money.
Brokers can manipulate prices in the forex market. Though they can’t touch the core pricing system as banks are the main price controlling authorities.
I would say the main cause of unsuccessful trading is manipulation by brokers. It can affect your trade if your broker is using tricky ways to cheat you along with manipulation.
However, it can’t affect your trade if it’s only a slight price change. An honest broker will try to make you earn rather than himself. Unfortunately, the number of such brokers is limited.
Have you ever spotted tricky ways of your broker? What did you do then? Share your experience with us!