Bucket Shops in Forex
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Thread: Bucket Shops in Forex

  1. #1
    My views on Forex Bucket Shops

    A bucket shop broker is no more than a glorified bookmaker.

    From the old days per bucket shop was the regional downtown stock broker... nothing over a seedy betting shop. A trader did was walk into a bucket shop and wager on changes in stock prices as they were published out on a ticker tape. It was really profitable for your Broker (bucket shop) Even if they played with legitimately the changes on the tape produced a fantastic profit. Most of the traders were betting on a margin of just 3/4 of a stage, and it did not take much of a transfer in price to wipe out a trader's standing out.

    If you're a little trader, you had no choice but to accept the terms of the bucket shop. You needed a lot of money to go and trade in New York, Chicago or the Boston Stock Exchanges which were the only alternatives.

    It is no different now.

    Today the Forex bucket stores are such Forex brokers which you're dealing with on the Internet from the comfort of your own house. They offer you a free trading platform, an account which you may start with as little as $250 and up to 400/1 leverage, and they wait patiently for you to go bankrupt. It will not take long, usually less than a month. Because it was just $ 250, that's OK, and you also get payed out of the work. However the bucket shop broker is earning his pip on each $ traded via the spread.

    Why do I call these Forex brokers bucket shops?

    As they are doing exactly what people seedy brokers were performing back a hundred decades back in downtown america. They're serving you a redirected price right into a set of charts which they provide you. The feeds that attract those prices to your charts will be capable of being manipulated from the brokers, and they do it all the time.

    There's just two ways a bucket shop broker can pay for his risk in the market:He could operate a dealing desk, and transaction against you. He can control the feed to his charts and trading station, and offer you false price changes to suit himself. Bucket shop brokers do one, but frequently both. If you do not believe me, then obtain a trading station from a Electronics Communiions Network (ECN) broker and compare price, particularly around announcements. I've seen as much as a 50 pip version with one of the biggest brokers in the Forex arena.

    What do you do to combat this?

    Not much at the moment if you're a small trader. You need to have at least 2 displays and two sets of charts. The feeds moving into the charts have to be from various sourses... with one having an ECN feed. In case you've got the funds to open an account using an ECN broker, do so.ECN brokers are in the minority at present, but they're increasing in numbers. It costs a lot longer to open an account, and also the leverage won't be 400:1 but will be more likely 100:1 or even 200:1 at best. A number of the ECN's are already huge players in the Equity's markets, and they're only just beginning to go into Forex.

    I forecast that within 12 to 18 months these new brokers (ECN's) will move into the lower end of the market by offering accounts below $1,000 and up to 400:1 leverage. They'll wipe out the bucket stores, when they do. I feel that a few of the bucket shop brokers are already in trouble, and it'll only get worse.

  2. #2
    Thanks avlasov from a fellow Philly man!

  3. #3
    The expression bucket store is from the publiion Remenicenses of a Stock Operator. Larry Livingston, the book's main character, was kicked from bucket store after bucket store. He was kicked out because he was making money. He was a plunger.

    So if Foreign Exchange brokers are bucket stores, they are not imo, how come I still have accounts with brokers ive pulled a lot of cash out of?

  4. #4
    Merlin accused me (wrongly) of being a spammer, because he knew I couldn't reply (at the time)... very little of him.

  5. #5
    Pt49,

    I agree with some of what you're saying, but it still comes down to the trader him/herself. If you stick with one of the more popular Currency Market bucket shops and have a decent trading method, then there is not any reason you cannot still make a profit from them. I guess you have to recognize the areas they behave from you (ie around major news) , and work on them. Sounds simple enough, I know, but I concur it isn't sometimes.

    I also use multiple charts just like you suggest, mainly CMS, Oanda and Metatrader, and this gives me a reasonable idea that they behave pretty much in sync the majority of the times. You are searching for consistency, although you're going to find some descrepencies from time to time. Since their figures were way in comparison to other suppliers I dropped some time back to FXCM.

    Do your DD and select one that there isn't too many complaints about, have an adequate trading system that is compatible with your provider, and you should then do okay. There are times you're only a spec from the universe to them. Cheers.

  6. #6
    Thanks for posting this information. I am a bit disgusted with Forex right now and would like to align myself with people that are reliable. I would also appreciate advice on people that offer training.

    Thanks again.

  7. #7
    Good post. Would love to find a listing of reliable shop brokers.

  8. #8
    I'll be dammed if I'm going to record them, I'll leave that up to others.

    I posted about my latest experience with a popular bucket shop that runs hefty advertizing on this site, and my article got dumped. All I was doing was telling the truth.

    You can PM me for a few ECN's if you want, but I'm not naming any, good or bad, here. There is not any freedom of speech I'm afraid, and if I can't post the bad, I'll be dammed if I'll post the great.

    The ECN's do not advertize much, not in areas such as this. Massive quantities are traded in by their clientel, and you won't find people in such Internet forums in that league.

    Buff, do you know where CMS, Oanda and Metatrader get their feeds out of? It's pointless having multiple collections of charts should they draw the feed.

    Many distinct brokers and charting firm's draw their feed out of a particular major bucket shop broker, and it's a redirected manipulated bank feed, so it's conceivable that 3 charting softwares that you are using are getting exactly the same feed. I'd call each of them and figure out if I had been you.

  9. #9
    Forex Broker List

    Forex Brokers (ECN type models)
    </li> CoesFx Hotspot FX Interactive Brokers MB Trading Market Makers
    </li> ACM Alaron FX Alipes CMC Markets CMS Forex E*Trade Finotec Forex.com FXCM FX Direct Dealer FX Solutions Gain Capital GCI Financial GFT Forex IFX Markets US IFX Markets UK Man Financial MG Forex Oanda ODL Securities RCG Trader Realtime Forex RJO FX Saxo Bank TradeStation Trading Floor MetaTrader Platforms
    </li> FXDD Interbank FX SNC Investments





  10. #10
    First of all, where does the expression bucket stores come from?

    Second, if these bucket stores make money from each trade (the spread) plus they control the prices to activate stops and trade contrary to their customers together with inside knowledge, and their own market is constantly rising exponentially, then why are not they making huge profits?

    Why do you say - I believe that some of the greatest bucket store brokers are currently in financial trouble, and it will only get worse.

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