Definition: What is a Bucket Shop?
A forex bucket shop is a shady brokerage firm that engages in questionable trading practices such as:
- ❌ Frequent price misquotes or requotes
- ❌ Slippage that always benefits the broker, never the trader
- ❌ Stop hunting (deliberately triggering your stop-loss orders)
These brokers often don’t route your orders to the actual forex market. Instead, you’re trading against them, not with them.
🔍 Origin of the Term
The name “bucket shop” comes from an old practice where brokers would take phone orders, write them on slips, and drop them into a bucket — never actually executing the trade. Clients were simply betting against the broker, who manipulated prices as they pleased.
🎥 Pop Culture Reference: Remember the Movie Boiler Room?
Ben Affleck’s famous “money can buy happiness” scene reflects the same greed-driven mentality that runs bucket shops — all about profiting off traders, not helping them succeed.
💸 How Do Bucket Shops Scam You?
- Manipulated Spreads: Making spreads wider than market average to earn more on each trade.
- Requotes: Blocking your trade and presenting a new (worse) price.
- Delayed Withdrawals: Making it difficult or impossible to access your own funds.
- Fake Trading Platforms: Creating the illusion of real trading activity, while you’re just gambling against the broker.
🧠 How to Avoid Bucket Shops
Before you deposit money with any forex broker, ask yourself:
- ✅ Is the broker regulated by a known authority (FCA, ASIC, CySEC, etc.)?
- ✅ Can you find genuine reviews from traders on trusted platforms like Forex Peace Army or TradingView?
- ✅ Is their customer service responsive?
- ✅ Do they clearly disclose their fees, spreads, and execution model?
📌 Pro Tip: Check out the Forex Brokers Forum to read real trader reviews and experiences before making your choice.
🛡 Final Word: Do Your Research!
The forex industry has improved thanks to tighter regulations, but bucket shops still exist—especially targeting traders in unregulated regions or new traders unfamiliar with the warning signs.