There are different types of brokers and one such type is the bucket shop brokers where traders should avoid to the maximum extent. This type of shop and its brokerage accepts different traders and trade. They just want to make the trade happen with no market action but as a casino. Therefore some differences occur between bucket shops and forex dealers. In forex trade if there is a possibility of risk occurrence then the forex dealers would prefer to stop the trade but in case of the bucket shop brokers they simply want to place trades no matter what by agreeing to accept all the transaction on the other side.
Fraud Transactions by Bucket Shops
Bucket shops as compared to other brokers have the reputation to show quotes which are closely in line. The reason behind this is due to its own pricing the bucket shops do not lose money. And sometimes a bucket shop may quote higher or lower prices when most of the traders are on trading at one side and therefore at this time traders lose money and in contrast bucket shops make money.
And due to this contrasting feature question may arise how can bucket shops become a good broker for investors? But the answer may be it is not possible. Therefore traders should avoid bucket shops.