Three Ways Brokers Take Your Money and Simple Ways To Stop It


money trap

In previous years price charts were reviewed by derivatives traders in their favor until financial experts came in and stopped these operations. But brokers discovered new ways to take away traders’ capital. Well, online trading platforms are designed to make money for their owners, there are legitimate strategies such as spreads and there are not so legal ways as well. Fraudulent brokers have a variety of tricks to get extra money from you and keep it in their pockets.

Here are the three most common ways they do it and tips on how to protect yourself from it.

Encouragement of fast trading

This method takes advantage of human emotions. Greed, above all.

Markets are often targeted by traders who want to make money quickly. One way to do so is to trade short positions, 60 or even 30 seconds long.

Brokers realize how difficult it is to know where markets are going in a timeframe of 60 seconds. A 1-second fluctuation can render a trading position against you. And with price fluctuations that occur every millisecond, it is highly probable you will end up losing. Each 1-minute loss of your income brings additional cash for your broker.

Commissions for trading

Any trade that you make incurs a small fee, whether you accept it or not. Consider a derivative with a return of 75%. Where are the remaining 25% going? This “secret fee” is what your broker earns. Note that many brokers offer 1-minute trades. If within one minute 100,000 successful transactions are made, the 25 percent fee is enlarged accordingly.

You can not avoid commissions entirely, but by trading slightly less, you can be sure you will pay less in fees too.

commissions when trading

Early exit

Numerous brokers with online platforms offer traders a chance to exit before a deal expires. Certainly, if a transaction is failing, you won’t regain all of the original investment. You would only get a tiny portion of it. The rest of the amount surely goes to the broker.

It is recommended to use the early exit option with great caution. If there are still chances it will end up well for you, – wait regardless. If you end the transaction before the end time you will receive only a fraction of what you could potentially earn. However, if a trade goes against you and you know that the situation will not turn around, exit before expiration. In this way you will lose less than if you waited until the end.

What you can do to defend yourself against these three tricks?

Patience is the crucial word.

patience-and-principles-in-trading

High-level trading is a game of patience. In order to improve your performance, you should patiently test trading strategies on the Binomo practice account before using real cash.

I always suggest opening positions for five minutes or longer. You will then have the time to evaluate charts carefully before favorable trading conditions emerge. Most successful traders examine price charts for hours anticipating optimal conditions. At first, it can be quite difficult and exasperating. Even if you have made a good review and chosen a good approach, you might still discover that not all of your trades are beneficial.

It is impossible to avoid fees completely. But by opening fewer transactions, you can ensure that you pay less in fees. You will also earn the time for more precise analysis so when powerful trading positions develop, you will be able to keep a significant portion of your profits.

Lastly, avoid exiting trades too early. When you take part in a deal that lasts 5 minutes or more, you do not have to be overly worried about the markets. Long-lasting positions ensure that you do not have to abandon successful trades often.

I hope your trading goes smoother with these few tips I have shared in this article. If you have any comments, please kindly share them in the comments section below.

Good luck!

 

Bart Bregman

Fulltime Day trading, and help Binomo wiki in my spear time to build an awesome platform to help beginners out there. #digital nomad, traveling all over the world.

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