forex for dummies

Forex market is a non-centralized market.Its mean that,in the forex market there is no common market place for traders and there is no ‘standard’ in the currency exchange price. Different Forex brokers will offer very different deals to their customers.

As an individual forex trader, you will totally depends on the broker to make a transaction in your trades, thus picking up the right broker is the most important part in forex trading.

You may wonder how does a faulty broker can cheat on your money as all investment call have to go thru your decisions.

here is some example:

Often a bad broker is not totally scams.

They are smart persons that trick money from traders that are not well-aware. These brokers, often known as retail market makers, will often encourage their clients to trade on margin and set stop loss orders, which allow the market makers to close out trades almost at will during busy markets at prices they have set. If the market maker does not offset the trader's position, the loss generated when a stop loss is triggered becomes the market maker's gain.

Trade prices are easily skewed one way or the other depending on the retail trader's position, which is known by the market maker.

Traders can be encouraged to take risky positions just before major economic announcements. If all else fails, the market maker can quote extreme prices (known as spiking) to trigger stop loss orders while the client is at work or asleep.

The vast majority of retail FX traders are not profitable. For those losing retail speculators, much of the funds they had on deposit will be, in some form or another, transferred to the market maker.