Forex bucket shops are brokerage firms that have “questionable” trading practices such as unusually frequent price misquotes or requotes, slippage only favorable to the broker, and stop hunting.

Forex Bucket Shop

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 forex bucket shop operators who are also known as bucketeers.

These old school bucketeers did 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, make your way to the Forex Brokers Forum, where fellow forex traders kindly share their feedback and experiences about a vast collection of 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!