How to Protect Yourself Against Forex Broker Scams

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Even if you feel like a dwarf among the big bad brokers, that doesn’t mean you have to put up with their violence! You should always be aware and protect yourself from broker scams.

If you’re discouraged because it seems that brokers have the upper hand, know that there are a few easy steps you can take to help even the odds.

protect yourself

Compare Price Feeds

Consider a horse wearing blinders. This horse’s vision is restricted to what he sees directly in front of him.

If an obstacle stands in the way, this horse has no choice but to put in the extra effort needed to leap over it. This horse is in a bad mood.

You’re dealing like a horse with blinders on if you just use the price feed on your trading platform.

Since you’ve confined yourself to your broker’s price feed, you have no idea what’s going on in the rest of the forex world.

You have no way of knowing whether your broker chose to expand spreads, manipulate prices, or run your stops if the switch mirrored the general market.

You don’t want to be a downtrodden horse. Because you are a smart trader, you want to have the most complete view of the market possible.

Subscribing to a second, third, or even fourth price feed is the safest way to do this. You’ll get a different perspective on the economy, and you’ll be able to check whether price actually moved the way it did.

Record Everything 

Keep a comprehensive journal of all of your transactions at all times! Still, always, always, always, always, always, always, always, always, always To make an argument, you’ll need witnesses, just as in a trial. You might FEEL robbed, but if you don’t have anything to back it up, it’ll just be a feeling.

The easiest way to keep records is to take a screenshot of each order you put, each trade you take, and other suspicious broker activity like odd price feeds.

This is not only good trade journaling, but it can also come in handy if you are a victim of an errant fill. If you keep meticulous records of your trades, you can be assured that you will still have the facts you need to back up your case if you ever have a dispute with your broker.

File Legal Action

If you are unable to resolve your disagreement with your broker, it is time to pursue legal action and protect yourself. When faced with the threat of legal action, most brokers would cave in, but if they don’t, you can file a complaint with the Commodity Futures Trading Commission (CFTC) or the National Futures Associations (NFA). 

The Commodity Futures Trading Commission (CFTC) has a Reparations program that offers an “inexpensive, expeditious, equitable, and objective platform to handle consumer grievances and settle conflicts between commodity futures customers and commodity futures trading professionals.”

Similarly, the NFA offers an Arbitration/Mediation service to assist in the resolution of conflicts. For more information, just head on over to the NFA’s website to get safe and protect yourself. 

Good Trading Habits

You should grow good trading habits, just like a disciplined nun who wears a habit. We know the joke doesn’t make sense, but it was amusing, so we’ll leave it here.

In any case, even though you have the necessary weapons to protect yourself against unscrupulous brokers, the most important thing is to improve your trading skills.

Know that no matter how sophisticated your charting software is, how much time you spend looking for the right broker, or how complex your trading system is, you will lose money if you lack discipline.

It’s all too tempting to blame brokers, but at the end of the day, the decisions are what get you where you want to go. 

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