lets find out if largest forex brokers are really good?. Now we all have been singing forex praises for last few years, we all know the big advantages forex market has over the other markets. Some of them are high liquidity, low spreads, no commission, flexible timings and the list goes on. But have you ever wondered that all of this might just be too good to be true. Well it’s, there are many forex brokers who are scams and these scam brokers can hardly be differentiated from good forex brokers, so we are going to help you make the right decision when it comes to choosing the best forex broker among all other largest forex brokers.
Have you ever heard the term ‘bucket shop’ or ‘market makers’? In case if you haven’t, these are type of largest forex brokers who trade against their clients to make profits, shocked? Let us explain to you. Market maker brokers have this thing called ‘dealing desks’, it is an artificial trading environment solely controlled and manipulated by the largest forex brokers, and that is why they are called market makers. more on forex brokers
In short, when traders want to sell, they buy from them, and when traders want to buy, they sell to them and in this way they create the market. Hence when you lose they make profit and vice versa. Market makers won’t mind disabling your account if you are too profitable.
So, which ones of the largest forex brokers are market makers?
Here is a rule of thumb; a broker can be called as a market maker if he offers fixed spreads. Because fixed spreads are not possible in true market environment and there is a reason behind it, the true big forex market has peak trading hours (time of very high liquidity) when spreads go very low (in some cases, spreads become zero) and normal trading hours when liquidity in normal and spreads are more than usual. Thus if your broker says he offers fixed spreads, you can conclude that you are trading in a dealing desk environment.
Which brokers are not market makers among the largest forex brokers?
Yes there is, there are type of brokers called as ECN brokers. ECN brokers do not have dealing desks. They give you true transparent access to the interbank market. ECN brokers do not trade against their clients as they do not incur any loss or profit when you close your position. ECN brokers earn profit from commissions which they charge you when open a trade. So make sure you opt for a good ECN broker.
Do not get fooled by the extra bonuses, iPads and whatever they offer to lure you into their trap. Even some of the largest forex brokers can be scams so be aware of them.