Why do many skillful traders tend to lose in forex? What to consider for making money other than effective strategy and steel nerves? Why do many traders quit forex despite having forex education, skills, and training?
There are three corners of the forex money- making- triangle. One is control over nerves, the second is an effective strategy and the third is brokerage service.
Check whether your broker is responsible for your failure or something else? If it’s a broker, take immediate action!
So, read the quick answer: Do Forex Brokers want you to lose? Unfortunately, scam brokers can make you lose at any level of trading. They will cheat you by causing artificial spikes, stop loss hunting position, high leverage, markups, swap, and slippage. This way, you will lose and your broker will make more money.
It’s not a big challenge to find an authentic broker. I would suggest STP and ECN brokers as they are neutral. Keep reading because there is very interesting Infos about tricky ways of broker here in this post!
So, be an eye-opener to such tactics!
Do Forex Brokers Want You Lose
With the increasing trend of forex, some bad brokers are emerging fastly. They will try to make you lose money through jigging your account, stop loss hunting, swap, and price manipulation. But the number of such brokers is limited.
You need to outsmart to spot such tricky ways before losing more. If you find something wrong in any broker, there are authorities you can put complaints against them. There are strict regulations from central banks that every broker is bound to follow.
They can make extra money other than commission fees and trade of lot size. Unfortunately, this is happening due to greed for making more. Because of this attitude, people are looking at the forex with suspected eyes.
This makes such brokers a major threat to Forex Reputation!
Why Do Forex Brokers Want You To Lose
Obviously losing is part of the game when it is due to low skills from the trader’s side. But it’s very unfortunate when losing is due to the tricky ways of brokers.
When brokers do this with their clients, they tend to make the false assumption that forex itself is a scam. Here are a few reasons why brokers do this:
- Brokers want to make you lose in the greed of earning more
- When brokers make you lose they are scam
- When brokers make you lose they are actually trading against you behind the curtain
- They do so to make themselves rich not their clients
They want to give the gestures that forex is good for brokers only not for traders.
But saying this, we don’t mean that all brokers are a scam. Only 2% or less follow tricky ways to make you lose. It is a better idea to evaluate your chosen broker first by trading with small money.
If you find them better then go on with more funds. But if you find something wrong, complain against them and close your account.
6 Tricky Ways Brokers Use to Make you Lose Money
There are so many ways through which many regulated brokers can make you lose money. Some ways are even untraceable by authorities. Brokers can bribe the authorities to favor them to make money. Let’s discuss 6 tricky ways in detail:
Traders Lose Money By Stop Loss Hunting
It is probably the most common trick that brokers use to make you lose money. Scam brokers or even some legal brokers hire teams or employees to monitor your trades.
When you take a short trade position and set a stop loss and the market goes against you, the hired people will manually change the spread.
This way, your stop loss will hit the price sooner and the trader will automatically lose money. So, beware of such tricky ways. If your broker is doing so, register to complain as soon as possible.
Unfortunately, stop loss hunting can happen anytime if your broker is willing to do so. Moreover, scam brokers are now using robots and software for this illegal task.
Traders Lose Money When Brokers Add Markups
Though the commission and spread is the only way through which brokers earn money legally. But they use some sideways like markups to make more money by making you lose money. They usually charge you for every pip you place a trade.
Unfortunately, many brokers will add one extra pip to the liquidity provider’s base spread. But traders are unaware of this. Some brokers will tell you that they will add markups. But many brokers will hide this reality. Always discuss markups before planning trade with any broker.
Traders Lose Money When Brokers Cause Slippage
In simple words, slippage refers to the technique of slipping price in the meantime of taking or closing a trade position. You may not even notice how price changes. When you hit the buy button, the team behind the curtain (or brokers) will change the price to a higher level.
So, you will place an order at a high price. That’s losing indeed!
Slippage is always hidden from traders. It is a game of moments. As long as you notice it, you have clicked the buy button. Brokers behind the curtain may not manually change the price. They have automated setups to change this price setting.
Trader Lose Money Through Broker’s re-quoting Trick
Re-quoting is another trick that market maker brokers use to make you lose money. This happens when the price goes up strongly. When a trader hits the buy button, the broker will slow down the server. As a result, instead of opening an actual position, your position will open with the new price.
The main aim of the broker in this trick is to not let you open the position at the right time. When you spot this scenario and complain about this issue to the broker, they would blame the market’s volatility for this situation. That’s probably a lame excuse.
They deliberately do this through software and some automated settings. Behind the scene.
Traders Lose Money By Swap
When you hold a trading position overnight, you will have to pay interest which is called swap. Swap is calculated by the interest rate of the currency. Central banks issue the same interest rate of the currency for all brokers, banks, and liquidity providers.
If the interest rate is fixed brokers should charge fix amount as a swap which you can avoid with an Islamic account. But every broker has its own swap. If this price is different slightly, it does not matter. But if your brokers are charging too much, you should stop your account.
One more advantage of swap is that it can make you lose lots when the trading position is open overnight.
Trader Lose Money Through Broker’s High Leverage
The main reason behind smaller account profit is leverage. Brokers are directly connected to real liquidity providers to pay traders and may not offer liquidity higher than 100:1. In case leverage is higher and the trader is placing bad trade, a broker has to pay the loss. That’s why real brokers will never offer leverage higher than 100:1
But I have seen many brokers offering 2000:1. Beware they are scam brokers. In greed of making a high profit, many clients risk their money. As a result, they tend to misuse the leverage factor and the broker earns in return.
That’s all the story behind the scene. So, beware when you’re losing, your broker is earning in many cases.
We have another detailed article you can check about can forex brokers manipulate the price.
Frequently Asked Questions (FAQs)
Do forex brokers actually want you to succeed?
Yes or No both for this question. If your broker is earning through commission fees and lot size then he will surely encourage you to succeed. This is because when you earn, the broker will also earn. But if your broker is a scam, he will try to grab your money in tricky ways.
Sometimes you may not even notice these tricks and blame yourself.
Does your forex broker really want you to make Profits?
To find out whether your broker is sincere with you or not, initially invest a little amount like 5$ or 10$. When trading with this low balance your aim should be to evaluate your broker’s authenticity.
If your broker is not creating artificial spikes, stop loss hunting, wipe off the account, slippage, you can say he wants you to earn a profit. Most STP/ECN brokers offer real profitable platforms.
Do all forex brokers make money when you lose?
No, there are ECN and STP brokers who will not make money this way. These brokers are neutral and they earn through commission fees and several lots traded. Such brokers will never rely on spread and price manipulation for making money while losing clients. Do search and go with them!
What percentage of forex traders lose money?
Unfortunately, 90% of forex traders will end up losing money. But this number can go up to 90%. The reason might be the trader’s skills and broker scams. It can be anything but losing is evident in forex. So, never join this platform before proper forex education, training and practice.
This post will help you figure out Whether forex brokers want you to lose money or something else.? Despite putting in a lot of effort, years of hard work, some traders still fail to make money. The reason might be the wrong choice of broker.
ICMarkets is the perfect broker with a good review. It’s also a regulated and low-spread broker.
They are a game-changer if they are earning through illegal ways. So, keep your eyes open to all the factors mentioned in the above post to avoid such scams. Do you think your broker is fair? Tell us about your broker. We’d love to share your experience with our readers!