Reader Questions Answered

Screwed by his forex broker

The following rant was posted in a forum by a clearly frustrated forex trader claiming his broker (I’ve removed the name) was trading against him.

….They are totally and 100% trading against you.. They will not even make you a dollar!..I had my account for less than 2 days and they ate all my money…

there was an uptrend…i was buying and what do you know! goes downtrend!

So decide to sell (since it was a downtrend and from the first 5 seconds, it started again uptrend…That happened 7 times!!!! is this COINCIDENCE?????

Well well well…would you look at this now? my order closed because i was losing money from a downtrend and now its again an uptrend…LOOK AT THIS COINCIDENCE!!!!

I think I can safely say that many who have been in the markets for any length of time have had a situation where they found themselves chasing a whipping market. It’s a horrible feeling and a quick way to the poor house if you’re not keeping your exposure very low. From that perspective we can all feel quite a bit of sympathy for this person.

Now, having said that, clearly we have a case of wanting to find someone else to blame for one’s own errors. Even market making forex brokers do not make trends. They might at best clip your for a few pips to run a stop (assuming they do such things), but they cannot turn the market as a whole by themselves. There was no way this was ever going to be a “my broker screwed me” situation.

Fortunately, the poster of the above comments actually seems to have accepted the face that it was him, not his broker, which was the problem. He admitted all the negative talk about brokers got him riled up, but after hearing from a few respondees to his post has recanted and come to realize he was chasing the market, not falling victim to an unethical broker.

Having said all that, forex price data is pretty easy to come by. Anyone can sign up for demo accounts with a number of brokers. If you suspect your broker of playing fast and loose with their price quotes, compare them to others and see if there’s a big different (not just a couple pips).

By John

Author of The Essentials of Trading

3 replies on “Screwed by his forex broker”

I’ve traded equities for over 8 years. I’ve spent the greater part of 2009 researching FX. I’ve demoed almost every platform/broker out there. Still, I feel like I have no clue. But, its no secret that the bulk of retail FX brokers are bucketshops. Of course they are trading against you!

But, his account was wiped out in 2 days?! He either started out with only 2K or less…..and thus never really gave himself a chance. Or, he was levered at least 50:1 which is the same as starting out with 2K or less.

Another thing…………granted, the FX markets do trend, but, they also retrace a lot during intraday and can be notoriously range bound.

cr – Since there are brokers which allow you to trade very small amounts (like Oanda), one doesn’t need $2k to be able to effectively trade forex. On the flip side of that, though, given the available leverage, $2k or more in the account is not going to stop someone from losing 70% of their account in two days. That’s the sort of thing that can be done at any capitalization level when chasing a market (and he was probably revenge trading too).

All of us know that some of brokers are scamers, but… I think this man just do not know how to trade. At the beggining of my forex carieer I was also in same situation like this man, but I knew that was my bad decision what to trade, not broker.

I mean, why to open 7 positions in one single day? How much you have to invest per trade to burn your whole account for only two days?!

People are often lazy to learn and to educate themselfs before trading… and when they burn their accounts in two days they always blame brokers… Come on, don’t be childrish!