Personal Finance & Money Asked by J W on November 30, 2020
I traded forex using two different brokers in two countries. Forex.com in USA and alfaforex.ru in Russia. What I experienced both times was unexpected position sell-outs and fake quotes:
you open a position with a leverage. There is a price spike, your margin goes below a threshold value, and the position is closed. Then the price returns into the profitable area. You are not notified to add funds or address this otherwise.
another case(forex.com): broker claims that position in EURUSD is closed when margin% goes down to 100%. The position, however, is closed at 110%
you open a position with a stop loss. The price fluctuates just to hit your stop and comes back, your position is closed with a loss. You look at the price history from the same broker, the closing price is outside the low-high range of that candle bar (plus spread, if applicable)
with forex.com in USA, I also had issues with closing multiple trades of the same instrument and withdrawal.
You open 2 EURUSD positions, one is profitable and another one is not. You are trying to close the profitable to free the margin, but you can’t. You find explanation in the log later. It’s the FIFO rule, you have to close positions in the order in which you opened them. Remarkably, the details of this rule are not documented anywhere on their website. You are losing money because nobody told you the rules of the game.
you get fed up and login to your account to request a withdrawal. You see your balance, but when you switch to the withdraw funds view, it shows "zero available to withdraw". You contact support and wait while reading on trustpilot that lots of people could not get their money back for one or another reason.
My understanding is that the forex brokers are regulated. According to them, you should trust them because you are protected by their membership with the regulator.
I contacted the one that regulates alfaforex.ru first, and the answer was "their agreement is on their website. You joined them and could see the agreement". they pretty much repeated the reply from the broker. Issues above are not covered in the agreement.
I am preparing a complain to CFTC, the regulator for forex.com
But given the reply of the first regulator, I would like to ask for an advice. Am I going the right path? What do people do? Is there a way to join a class action suit? I looked at the reviews on trustpilot and posts here, and I see that many people have the same concern. Please kindly share your related experiences.
I may misunderstand the exact details of your experiences but:
position sell-outs: you open a position with a leverage. There is a price spike, your margin goes below a threshold value, and the position is closed.
That is completely normal and correct behavior as far as I know.
you open a position with a stop loss. The price fluctuates just to hit your stop and comes back, your position is closed with a loss.
Completely normal and correct as far as I know.
Ridiculously fake brokers: there are many absurdly fake "brokerages". Unfortunately they all now have decent-looking web sites! I have no clue if the two mentioned are ordinary normal brokers or just ridiculous fake brokers; perhaps someone on here knows.
Using a normal household-name broker: There seems to be little reason to use any broker other than just the 2 or 3 major household name ones.
Answered by Fattie on November 30, 2020
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