Can CFDs Be Manipulated?
- Liquidity risks and gapping:
Let’s explore these two unique terms many people might be unfamiliar with, which include gapping and liquidity risks. Since this industry is volatile, complex, and dynamic, the market conditions have a huge impact on the transactions, and thereby they increase the overall risk of losses. Whenever a market does not have enough trades for an underlying asset, the contract turns illiquid. Thereby, the CFD provider can easily close the entire contract and give you a lower price or demand additional payments from you.
Gapping is mainly the decrease in the overall price of a CFD mainly due to the dynamic environment of the market. This results in the trader paying the same amount and hence incurring a loss.
- Manipulations by brokers:
Let’s go over CFD broker manipulations which is why CFDs have been banned and CFD trading is considered illegal in countries such as the United Kingdom and Hong Kong. CFD trading is prohibited in these countries due to brokers manipulating and luring innocent traders by using their tactics.
These tactics include fiddling and manipulation on the broker’s end. Moreover, the CFD brokers are known as market makers hence they set their own prices for all their deals. In addition to this, the market is highly unregulated and it’s dynamic thereby, there are sudden price changes and fluctuations. The nature of this market makes it prone to increased manipulations by the brokers.
- Artificially setting price:
Along with other risks in the CFD industry the artificial price setting is yet another common and popular way for brokers to manipulate and scam customers. These CFD brokers can easily increase prices or they can set artificial prices for manipulating the traders and thereby gaining a much higher profit. These CFD brokers are very dishonest and they can easily scam people since it’s an unregulated market and there are no checks and controls on the overall market and its activities.
Furthermore, there is almost no government intervention and there is no financial institution that is monitoring and supervising the trading activities. The unregulated environment makes the CFD industry prone to artificial price setting tactics and thereby results in immense losses for traders.
Now in addition to other manipulative tactics by CFD brokers, requotes are yet another tactic commonly used by brokers to scam and manipulate innocent traders. This is one thing you want to avoid at all costs and you need to make sure that you’re avoiding this once you sign up with an online broker. I’ll give you a little tip to avoid these requotes , you need to notice how good brokers will always tell you that there are no requotes on their trading platform whenever you sign up with them. However, fraudulent brokers always tell you otherwise because they’re going to scam you. Therefore, whenever you are looking for a broker keep this in mind, any broker that demands requotes is 100% going to leave you penniless and a good broker will always go against this.
Thus, this makes it crystal clear that requotes are not a good thing and any broker saying they are is likely to be a fraud. Through this brokers can stop you from entering beneficial trade and as soon as you realise you can get a profit on the trade they’ll send you re-quotes.
Fundstrace as a resource:
Now you might be wondering where I’ve gotten all this information from, well, let me introduce you to Fundstrace.
Fundstrace is a website made solely for all new traders and CFD investors. I went and found all this information on the website. In addition to being an excellent source of information, Fundstrace specialises in all types of CFD scams and risks and is known to help customers report scams and recover money.
Do check out the website and if you ever feel like anyone is scamming you or your broker is being shady, report it, and this company will help you. Fundstrace will help you identify whether the broker is a scam, and if the broker is, then they’ll help you report and alert the appropriate authorities to recover your funds if you lost any.