Broker Created Spikes
With a dealing desk broker when you open a position they take the opposite side, correct? You and they are trading against each other. This human involvement along with the opposing position element has raised accusations of brokers cheating.
I’ve read stories about unscrupulous dealing desk forex brokers who artificially spike a pair to cause you to lose. But my question is do they cause only your chart to spike or does anyone trading with them realize the spike?
If they can only spike one traders chart causing that person to lose it seems that would cause a control nightmare. How many thousands of traders would they have to watch and manipulate?
If all traders experience the spike wouldn’t it make since that some traders would benefit from such an event and so the broker would, in the long run, break even?
I admit I don’t fully understand how this works but it seems that accusations about dd broker spikes to cause traders to lose is a bit hard to swollow.
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April 8th, 2009 at 12:55 pm
Good points, I am inclined to agree with you. I am with GFT Forex, they have a proprietary trading platform. So, when I first heard about “stop hunting” I downloaded an Oanda platform, and later FXPro. I used them to monitor prices throughout the day for a month or more. My account at GFT is tiny, and I have not mastered successful trading yet — so there has been no reason for GFT to “get me” — but the only differences I saw in prices looked like the normal between dealers – less than 2 Pips moment-to-moment across all the majors. (Spreads are another matter)
You probably don’t need this, but just in case… In choosing a broker, some things you may want to consider are the financial stability of a broker, support response, length of service, physical location.
Can they weather the upcoming storms of a global depression (IF that happens)? Have they been here long enough to have a good track record (reliable internet connection, prompt cash transfers out of your account, etc. BBB filings, CBOT filings, etc)?
What happens if you enter an order by mistake (I’ve had that happen while trying to close an open position, with bad results which would have been disastrous without immediate intervention by customer support)? Have you tested this and similar scenarios, and tested their Tech Support?
Are they located in a nation which has financial and political stability? Does that nation have an historically friendly relationship with the nation in which you reside? Does that seem likely to continue? What tax implications are there with their physical location? Will you be taxed in 2 countries?
Hope this is useful.
April 8th, 2009 at 1:34 pm
J4J, thanks for the comment and info. Selecting a forex broker is far more difficult than choosing an online broker. Unfortunately the one I use does not offer forex trading.
You raise a number of points I have not thought of, I appreciate them.
I want to believe that FAPTurbo and MegaDroid will be worth using so I’m interested in a broker with MT4. However, as it stands now with my demo accounts I am blowing away both bots results with my personal trades. I hope I can transfer that to real money.
Thanks again.