Among the problems facing foreign exchange traders is the fact that their broker isn’t always friends with them. There’s a category of broker referred to as a market maker and you have to be cautious about them. The marketplace maker earns their cash with a commission that is fair enough but additionally if you take the other side of the trade.
Which means if you have a losing trade there is a winning one. It’s just not within their needs you have plenty of winning trades because it will likely be costing them money. In addition they’ve provided your buying and selling platform and may use whatever notations you’ve put on your chart. It is a bit like handmade cards with one player dealing with begin to see the other player’s hands. It isn’t really fair whatsoever.
Imagine you’ve analysed the marketplace properly, placed the transaction and prevent-loss position then you definitely visit a temporary and somewhat wild fluctuation on the market. Your situation continues to be stopped out and so the market will take off exactly like you had expected it might, along with you located on the sidelines wondering what just happened.
It may sound crazy, however it became of me many occasions initially when i first began to trade foreign exchange. What appeared like reasonable stops according to past market conduct appeared to be removed. I attempted using this issue track of my broker but was always told exactly the same factor: “There is unusual volatility on the market in those days”. The final straw for me personally was whenever a sensibly placed stop wasn’t filled if this must have been and it was left to operate almost an additional 20 pips. That kind of slippage is inexcusable and really should never happen. I closed my account on that day and continued a look for a new broker.
There’s another kind of foreign exchange broker known as an ECN broker. ECN means Electronic Currency Network, so your broker earns money by supplying a platform to go in your trades in to the network where buy trades are harmonized with sell trades and the other way around. This broker has little interest in governing the market against you. They just would like you to do business with them.
I have come across hybrid brokers which use the electronic currency network but they are also market makers. Again I suggest that you simply steer obvious of these and look for a real ECN broker.