Here are the bad guys we keep mentioning earlier. Bucket shops are brokerage firms that have “questionable” trading practices (e.g., unusually frequent price misquotes or re-qoutes, slippage only favorable to the broker, stop hunting, etc.).
Have you ever seen Boiler Room?
Aww come on, don’t tell me you missed Ben Affleck’s legendary speech about money?!
“They say money can’t buy happiness? Look at the smile on my face. Ear to ear, baby!”
And it’s precisely this greedy, money-oriented philosophy that drives the people operating bucket shops.
The name comes from brokers back in the day who used to put their clients’ phone-in orders on slips and then dropped them (the slips, not the clients) in a tiny bucket instead of actually executing them.
Without putting the orders out into the free market, the client is actually betting against the bucket shop operators who are also known as bucketeers.
These old school bucketeers do not usually disclose the real price of the asset that their client is trading, which means that they could tell the client that the price moved or didn’t move–whatever was in favor of the broker!
But thanks to the invention of the internet–and improving regulations and enforcement–newbies have less to worry about these days. Unfortunately, bucket shops are still out there so beware!
Luckily for you, we at BabyPips.com are more than willing to help you avoid entrusting your hard-earned cash to these nasty bucketeers.
To help you separate the good brokers from the bad ones, we’ve come up with ReviewPips.com, where fellow forex traders were kind enough to post their feedback on brokers.
You might also want to check out our forex forums where friendly forex folks discuss their experiences with different brokers.
So, before you deposit your money with just anyone, make sure to do your due diligence and espionage so that you avoid fraudulent brokers and forex scams. Mind you, there are plenty out there and we’ll look more into that later on!