The number of stories about people being deceived by the brokers is countless.
If we think that they are all true we would probably never open an account with any broker, especially of CFDs and Forex.
Why CFD and Forex and not other assets?
Well, because it is in those instruments when the problems arise more often.
Normally we should be very sure when we are with a stock market broker due to the fact they have good reputation.
In the futures and stock brokers we usually have another kind of problems, like execution, undesired costs, and bad platforms or in the worst case the broker bankruptcy.
Apart from that, unless they are some sort of illegal institution, those brokers are usually quite legit.
The only thing they want from you is trading a more trading.
In essence, they do not care if the customer wins or losses.
When we venture in the new world of market maker brokers, like that of CFDs or Forex, not to mention binary options, we are in a more complicated battlefield.
Contrary to the traditional brokers, the last ones win not only the commission, but also the spread, being, brokers and market makers at the same time, at least many of them.
The potential of profit is undeniable.
We cannot know for sure what broker is going to scam us or not but we can take some measurements to make it more difficult to happen.
First of all we should always open accounts with regulated brokers by the most important countries in the World.
Every country has its own regulator, like FCA, NFA, CNMV, MiFID, CSEC, ASIC.
Second, and this is important, we should never risk too much of our money in this kind of brokers.
I have read cases of people that opened 20, 30, 50 or more thousand pounds complaining bitterly about this.
Well, first of all, someone with a significant amount of money should open the account in one of the traditional stock brokers, even though it is more expensive.
When it is futures, we should look for an American broker, which is the best and safest way to trade those markets.
CFD and Forex markets makers types
If the market maker does not charge commission, but uses a spread, we should not open very big accounts with them. This kind of broker is better for small or medium sized accounts.
I say it because the number of stories with this kind of problems is too big for us to ignore them completely.
I do not know if those stories are true or not but just in case we rather be cautious.
If we want to open a several thousand accounts, then it is fine. In principle there should not be a problem.
On the other hand we have the other kind of brokers, the ones that have the best reputation in the sector, brokers such as Saxo Bank, IG Markets o Admiral Markets, some of the best CFD and derivatives brokers out there.
In these cases they usually charge commissions for CFD stock trading, which makes them not adequate to use for small accounts.
In Spain, for example, we have a lot of introducing brokers of Saxo Bank, which charge a commission as well.
However, for this kind of brokers and commissions, it is not advisable to open small accounts. We do not open a 1.000 GBP account if we are going to pay 10 in commissions every trade.
If we have a small account then the best choice will be brokers without commissions.
If we have a significant amount of money opening accounts with the likes of IG or Saxo, should be fine.
We have another type of market maker brokers like Oanda, which are very safe and secure, although some of them do not offer stock CFDs.
Some things we can do in case of trouble is try to expose the scammers in the social media as much as possible.
Besides we should keep a history of our trades so we can claim them in the future, especially if we are making money.
There are even stories of brokers that delete customers operations and things like that.
The truth is that there is every kind of story.
If we apply some of those security measures as well as choosing brokers regulated by serious jurisdictions, we will make it very difficult that we will have problems in the future.
In any case, the number of consistent winners is not too big, so in my opinion the majority of brokers do not worry about trying to scam its customers.
The customers are already very good at screwing themselves.
In this sense the problem comes with the fact that many brokers try to use tactics of all kinds to make that the traders lose more money easier.
Of course, if we think that our broker is using strange tactics we should run away.
Jesse Livermore and bucket shops scam
Remember that the bucket shops tried to scam Jesse Livermore very often.
Eventually he had to stop trading in those kinds of market makers of the past, due to the fact that they did not like someone who used to win so often.
In the case of Livermore it is obvious that someone who was trading an amount equivalent of today 100.000 USD and winning was not very welcome.
Finally Livermore had to go to the real Stock Market in New York.
We should do the same when and if we achieve that kind of money.
Whether we are professionals or not in case our account is big enough we should go to the real market.
We should look for ECN, DMA, depth of market and such things.
For someone with a lot of money, then the futures and the stock markets are the answer.
To learn and apply strategy, market makers are the best option, but always being quite conservative, just in case.