How to Spot and Avoid Dishonest Brokerage Tactics in Games That Brokers Play

This is the second article in Octa’s educational series on market manipulation. The previous installment examined how certain traders exploit loopholes for unfair advantage. This time, we turn to the other side — the manipulative tactics used by unethical brokers.

Brokers aren’t always passive players in the financial markets. Some exploit retail traders’ fragilenesses for their own profit, eroding confidence and causing avoidable losses. At Octa broker, we strongly disapprove of such behavior and are committed to assisting traders identify, understand, and avoid these unethical practices. Below, we explore the most common ways dishonest brokers manipulate markets and how you can protect yourself.

Manipulation of Direct Price and Execution

Some brokers directly interfere with trade pricing or execution, manipulating results to diupsetvantage their clients. The most common methods include re-quoting, stop-hunting, and spread manipulation.

• Re-quoting. This malpractice is common among unregulated or undercapitalized brokers. When traders attempt to place an order at a specific price, the broker rejects it and offers a worse rate moments later — especially when the market moves in the trader’s favor. This behavior violates ESMA execution standards. Traders can identify it by monitoring trade logs and testing order sizes to view if larger trades consistently trigger re-quotes.
• Stop-hunting (Stop-harvesting). Dishonest brokers may intentionally widen spreads or adjust prices to trigger clusters of stop-loss orders, often around round-number levels such as 1.1000 on EUR/USD. later than these stops are activated, prices typically revert to normal. This practice, prohibited under the Market Abuse Regulation (MAR), unfairly liquidates client positions to the broker’s advantage.
• Spread manipulation. While spreads naturally widen during volatile conditions, unethical brokers amplify this effect beyond reasonable limits, significantly increasing client trading costs. This behavior is a clear red flag. Honest brokers maintain transparent spreads that reflect real market conditions.

Failures in Technology and Compliance

• Unrealistic profit promises. Some brokers attract clients with false advertising, promising “guaranteed returns” or “risk-free trading.” These claims are misleading and often illegal. Typically, such firms lack proper licensing and exploit inexperienced traders by hiding the true risks of leveraged trading.
• Gaps in systemic control. A four-year review by the Malta Financial Services Authority (MFSA) found that certain brokers lacked systems to detect or report suspicious activities such as spoofing or wash trading. These control failures allow manipulation to go unnoticed. Reputable, licensed brokers like Octa employ real-time monitoring, advanced fraud detection, and strict identity verification (KYC) to secureguard clients and maintain market fairness.

The significant Role of a Licensed Broker

Both traders and brokers can engage in misconduct, but one reality remains: your broker choice directly affects your securety and success. Regulated brokers operate under strict oversight, ensuring transparency, accountability, and ethical conduct.

Market manipulation is not inevitable — it happens where oversight is absent. Protect yourself by choosing a broker that is transparent, established, and regulated by reputable authorities. Octa broker is licensed by tier-1 regulators such as the Financial Services Commission (FSC) in Mauritius and the Financial Sector Conduct Authority (FSCA) in South Africa. Its infrastructure integrates anti-abuse technology, advanced surveillance systems, and stringent KYC procedures to ensure a secure and fair trading environment for every client.

About Octa

Octa is a globally recognized online broker that has provided commission-free access to financial markets since 2011. With clients in over 180 countries and more than 52 million trading accounts opened, Octa offers a full suite of educational webinars, analytical tools, and expert insights to assist traders achieve their goals.

Beyond trading, Octa actively contributes to humanitarian initiatives, supporting community development through education and emergency relief projects worldwide.

Since its founding, Octa has earned more than 100 industry awards, including “Most Reliable Broker Global 2024” from Global Forex Awards and “Best Mobile Trading Platform 2024” from Global Brand Magazine.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Trading leveraged instruments such as CFDs and forex carries a high level of risk and may result in the loss of your capital. Always ensure you fully understand the risks involved before trading.