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What's happening in the background? In lower-end forex shops, you're simply authorizing your broker to calculate how much money you would have won or lost had
by patio11 12y ago
What's happening in the background?
In lower-end forex shops, you're simply authorizing your broker to calculate how much money you would have won or lost had the trade actually occurred and debit/credit your account accordingly. No foreign currencies change hands and no financial instruments are implicated.
These are called "bucket shops" and they're so slimy that Bitcoin exchange operators feel obligated to describe that they're not like them.
- PhantomGremlin 12y agoWow. The more things change, the more they stay the same. More than a century ago, Jesse Livermore[1] made and lost several fortunes trading stocks via bucket shops. Not unlike what happens to current day card counters, the bucket shops banned Livermore. Bucket shops (at least for stocks) have long been illegal in the USA. [1] https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Operator https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Opera...
- Tycho 12y agoWhat exactly is slimy about it? It's all based on a published exchange rate, right? The original bucket shops were only slimy because they could have real traders at the exchange manipulating the price to wipe out customers in the bucket shop. (as far as I know)
- SamReidHughes 12y agoTo me, it seems slimy because the shop could find itself unable to pay out the money it owes to customers.