How to Make Sure You Get Fair Pricing

Let’s take a look at how to make sure you get fair pricing as a forex trader.

As retail traders, we expect the prices quoted will closely follow the underlying market.

But how similar these prices are to the “market” depends on the forex broker. 

Forex brokers adopt discretion in price setting, especially during periods of high market volatility.

This use of discretion causes some retail forex.

And CFD trading platforms have an unclear and confusing pricing methodology.

A pricing method is the process or procedure used by a forex broker to determine what prices to show its customers.

Sometimes customers of certain forex brokers have filed formal complaints to regulatory agencies about unfair pricing practices.

Examples of complaints include:

• How the prices were not determined fairly and they showed customers prices that were not even close to the prevailing market price at the time they made a trade!
• How the forex broker unfairly exercised its own discretion to close out positions of its customers, resulting in realized losses!

The problem is that prices are not readily verifiable as there is a lack of transparencies surrounding the process in which retail forex brokers.

And CFD providers display prices to their customers.

Here are some online resources that you can use to gauge how close the prices your forex broker offers to what others are offering:

• Integral OCX
• TradingView
• LMAX Exchange
• FXCM

Remember, since the FX market is an OTC market, there is no single price. So while prices may not be exactly the same, they should only deviate by a tiny bit. A pip or less, depending on the currency pair.

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