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Market Manipulation

The predominant structure of retail Forex trading is based on a single market maker who provides traders with a two-sided price. This mechanism has inherent problems. During times of uncertainty or new information, the market can bounce quickly. This can cause slippage, which occurs when your execution price does not match your desired price. Although firms are taking precautions against this type of market pricing behavior, this will continue to be a major problem as long as traders have only a single choice of counterparties.

Traders should monitor price fluctuations leading up to an order execution. Leaning, which occurs when a market maker favors one side of the market to his own advantage, is unfortunately common in Forex. There is no proof that any particular market maker practices this behavior, but there are credible rumors, and traders have seen some strange price behavior that demands attention.


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