Disclaimer: This content is for awareness and informational purposes only. These are my personal journal notes and research. No specific crypto broker is endorsed or involved. Treat this information as a learning resource to educate yourself. It may assist you in conducting research and due diligence to build trust in your chosen crypto broker.
Let’s see how a Crypto Broker might exploit and steal from you without you noticing.
Stage 1.
Trust Factor: How you decide whether to trust a crypto broker in your Country?
- You might be following a popular influencer who convinces you that they’ve been using a particular crypto broker for a long time, assuring you it’s genuine and always pays on time.
- Now you apply for an account with that crypto broker. On the homepage, you see in the footer that it’s a registered company with a valid license to operate and is regulated.
- Next, you might do some research to verify the broker’s license by searching online and checking news websites or you might skip this step entirely. //Well Good.
Big Game, Hidden Hands.
First of all, don’t trust me. Let’s ask ChatGPT and Gemini AI directly, they are World’s Top AI models, built to provide accurate and reliable information. They can’t lie to you.
Question – Can a licensed and regulated crypto broker still use code to manipulate trades?
Result Screenshot: Try and check truth yourself.
The harsh truth is that even if a crypto broker is registered, licensed, and regulated, it doesn’t guarantee their backend code is thoroughly vetted by regulators.
In many cases, no independent authority continuously monitors the code for manipulation or hidden exploits. And when things go wrong, you might not even find a trusted certification body to hold the broker accountable for the code they use to handle your trades.
You probably won’t find any organization or third-party code reviewer’s certificate on a crypto broker’s website and if you ask for it, they might dodge the question, saying, (It’s a business secret, and we can’t share it). A clever way to avoid accountability. //Nice Escape.
Do you really think brokers exist to build wealth for you? Are they just here to feed you profits? Or did they start this business to build their own fortune first?
Here again, Broker wins and you loss — The code is not opensource & no reviewers Certificate. //Regulation Doesn’t Guarantee Honesty.
Stage 2.
Power Factor: Do crypto brokers have the power to print prices and crush your trades?
- First, ask yourself. If you were the owner of a broking firm, wouldn’t you have the power to manipulate the price for own profits?
- If yes, then like any owner, crypto brokers can print prices and manipulate charts through code, since they control the servers and platform.
- Now go and compare BTCUSD price among different crypto brokers. You won’t find a single match. Now think, who is really controlling the price?
- Some say institutions control prices, some say it’s demand and supply, and others believe the broker’s software controls buy and sell orders. //Not Bad.
Your Trade, Their Rules.
Again, don’t trust me. Let’s do a similar exercise to know who has the control?
- Go check your bank statement, you might find small, unexplained charges quietly slipping through, even when you did nothing wrong.
- These small charges won’t make you poor, but they can quietly build massive wealth for the bank.
- Here, we don’t have any option to either build our own bank. Which ever bank you go, you might experience the same and they only have the full control.
- In the same way, if your crypto broker is printing their own prices on charts, you and I are just players in their rigged game.
- Here, you can’t do anything. Either accept their system or leave crypto and try other trading indices or instrument.
Alright, if you want to feel or experience it live then try out using the clues stated below:
Question – When can you observe the phenomenon of a crypto broker controlling the price in the charts?
You can observe this phenomenon by watching the candlestick momentum on very short timeframes, especially during low volatility, low volume, and off-peak trading hours.
Additional hints & clues:
- When you set a stop-loss in the brokers system, observe how the price quietly (and slowly) moves to hit your stop-loss.
- If you don’t place a stop-loss in the brokers system, the price might not hit that price level for quite a long time.
Important Note: (This is not a suggestion to avoid stop-losses, always use them and follow your trading rules.)
Stage 3.
Hidden Exploit Factor: How your crypto broker rigs the price charts using Feeder Algorithm?
First, let’s understand what is main line price printer and how does Feeder Algo feeds on it.
Question – What is the main line price printer?
A main line price printer is a server that matches buy and sell orders, processes transactions, and updates the price on charts accordingly similar to how an exchange operates.
Here, the crypto broker calculates the price of an trading pair on their servers and streams it to TradingView in real-time. //Clear..!!
Question – What is a Feeder Algorithm? Let’s break it down.
A Feeder is a AI algorithm designed to manipulate price movements for a short period to fill specific orders. It works by temporarily taking control of the main price printer, discreetly adjusting prices so that the broker’s system can execute its required trades without raising suspicion.
The Feeder algorithm moves prices in a controlled, calculated way just enough to profit from small price fluctuations and then exits, restoring normal price behavior. This makes it difficult for a normal trader to notice any irregularities in the price action.
In short, the Feeder quietly manipulates prices to secure profits, all while staying under the radar. Neither you nor I know whether crypto brokers have created their own accounts and are using a price feeder to make profits unnoticed.
PS: I named this concept “Feeder“. You won’t find this term on the internet.
Harsh Reality or Room for Improvement.
Ok, one last time don’t trust me. Let’s ask ourselves using a simple DIY brain check excerise. //Coder & Programmers already know this answers.
- Think about it: They build massive, complex crypto trading websites. Do you really believe they couldn’t create a hidden algorithm to tilt the game in their favor?
- Brokers pay affiliate commissions to influencers, but where do these payouts come from? Are they giving away money from their own pockets, or are they profiting from your losses?
- We often see crypto broker reviews on big news websites, but do you really believe those articles are genuine and trustworthy? Are news publishers abandoning their main work to trade, or are those reviews just paid promotions?
- Ever wondered why we still lose money, even when new coins launch on a crypto broker’s platform? Is it really fair to trade newly listed coins? Brokers often buy and accumulate first. By the time we enter, the price drops, and we end up as exit liquidity for the broker.
- The day you trading balance is over with losses, you will get unknown call from an investment advisory for stock tips. Your broker might be sharing your data but how would you prove it?
The last logic: Crypto brokers make money through interest. When you keep funds in your account, brokers can use that money to earn interest for themselves. But if your account balance is low, they earn less interest, meaning less profit for them.
So, if traders never lost money and withdrew their funds, brokers would struggle to survive. They rely on both your losses and the interest from your funds to keep their business running.
Room for improvement in Crypto Industry.
An example based on BTC/USD: We need to have a separate trading pair calculated from the weighted average price across all brokers worldwide. This would make it much harder for any single broker to manipulate the price.
A regulated agency should verify crypto platform’s backend algorithms in real time independent of their business operations. This would ensure we’re not blindly risking our hard-earned money on a rigged trading platform.
Conclusion: Awareness Fuels Evolution
You and I are just busy trading every day, addicted, dreaming of getting rich, and have no time to research or build awareness for ourselves. We are so dependent on others and blindly trust their words, without realizing we might be walking into a trap.
We’re like ducklings, blindly following the line in a race. At last, the main reason here is to not to firefight in trading until we know the odds.
Ask yourself, research deeply, and never stop questioning. Because in the crypto world, trust is the most expensive mistake you can make.
