Virtual Dealer Plugins!
Are they used against
Forex traders?

A software called Virtual Dealer Plugins, integrates with the MT4 backend system. This powerful piece of MT4 Plugin allows Forex Broker to do virtually anything to your trades before, during and after they have been set it in motion.

Virtual Dealer Plugin for MT4 trading platform

What are MT4 Plugins? and Virtual Dealer Plugin?

MT4 Plugins are computer softwares that can be “Plugged-in” to MT4 trading platform to give additional Functionality and Automation features to MT4.
 
There are several MT4 plugins, Virtual Dealer Plugin is one of those. 

Why Plugins are used in MT4 trading platform?

Even though MT4 is a powerful and fully functional trading platform, but still depending on Broker’s Business needs a Forex Broker can make it even more versatile, to automate some operations or to expand the functionality, for better user experience.
 
For example –
 
MT4 Bridge Plugin – This plugin connects a MT4 trading server to a Liquidity Provider.
 
Bonus Plugin – This plugin automates Client’s Bonus Calculation & Allotment process much less time consuming.
 
Online Payment Plugin – This Plugin connects to any online payment system and Automatically deposit funds to trader’s MT4 Accounts.

Are Plugins (Virtual Dealer Plugin) used against Forex Traders?

So far, so good. Plugins looks so holy, helping both Brokers and Traders.
 
But, the problem began, when for fast growth Retail Forex Brokers started trading against their own clients, and, instead of filling their client’s orders with Liquidity Providers, they started filling their client’s orders at their OWN Servers (i.e B Book).
 
“B Book” has increased Broker’s revenues, but, at the same time increased their Risk.
 
It’s because in “B Book” model, trader’s PROFIT is Broker’s LOSS.
 
To mitigate their Risk, Brokers & External Developers programmed a software called “VIRTUAL DEALER PLUGIN”, that integrates with the MT4 backend system.
 
This powerful piece of Plugin allows Broker to do virtually anything to your trades before, during and after they have been set it in motion.

So, Yes, Virtual Dealer Plugin are used against Forex Traders.

How "Virtual Dealer Plugin' is used against Forex Traders?

Some of the NASTY things “VIRTUAL DEALER PLUGIN” is capable of doing are:
 
  1. This Plug-in allows the Broker to intentionally delay an order placed by a trader from 2 to 15 seconds or more. It’s difficult for trader to notice this small delay.

  2. Widening spreads in order to trigger STOP OUT levels, mostly for Hedged Positions.

  3. This plug-in is used to Induce Slippages mostly asymmetrical Slippages (explained below).

  4. IgnoringModifying or Deleting outstanding (Pending) orders.

  5. Providing false or misleading prices

  6. On-the-fly reduction of leverage to force liquidation of large positions the broker’s customer may have open.

Virtual Dealer Plugin Window in MT4
Virtual Dealer Plugin for MT4
To keep this explanation short, let’s just take Slippage example to understand how Forex Brokers deliberately make money through Asymmetrical and Artificial Slippage using a Virtual Dealer Plugin?
 
What is Asymmetrical Slippage & Artificial slippage?
 
Before understanding these 2 terms, let’s first understand what is “Slippage”.
 
SlippageSlippage is defined as the difference between the requested fill price and the actual fill price. If your requested price is not available in market, in such case Broker will fill your order at next available price, this new available price can be both in your favor or against you (positive or negative slippage).
 
So, how does slippage happens? Why can’t our orders be filled at our requested price?
 
It all goes back to the basics, a true market consists of buyers and sellers. For every buyer with a specific price and trade size, there must be an equal amount of sellers at the same price and trade size. If there is ever an imbalance of buyers or sellers, this is what causes prices to move up or down.
 
So as a trader, if we go in and attempt to buy 100K EURUSD at 1.3650, but there are not enough people (or no one at all) willing to sell their Euros for 1.3650 USD, our order will need to look at the next best available price(s) and buy those Euros at a higher price, giving us “Negative Slippage”. But of course sometimes the opposite could happen. If there were a flood of people wanting to sell their Euros at the time our order was submitted, we might be able to find a seller willing to sell them at a price lower than what we had initially requested, giving us “Positive Slippage”.
 
With good Forex Brokers, there is a 50-50 chance that the price will move either in favor or against the trader as a result of slippage.
 
But with manipulative Broker, traders usually get “Asymmetrical” or “Artificial” slippage.
 
Hope, till now you understood the term “Slippage”. Now, let’s understand what is “Asymmetrical Slippage”? and how Brokers are creating it using a Virtual Dealer Plugin and make profit out of it.
 
So, when there is positive slippage which is Trader’s Profit, Broker takes a huge part of it. But, when there is negative slippage which is Traders Loss, broker pass it wholly to the trader.
 
This form of manipulation is called: “asymmetrical slippage”, which is done using Virtual Dealer Plugin.
 
This approach would make it difficult to identify if a broker is using the Virtual Dealer Plugin. Even if the customer has the occasional price improvement, the virtual dealer plugin is set to profit the broker
 
 
Now, let’s understand what is “Artificial” slippage and how Brokers are creating it using a Virtual Dealer Plugin and make profit out of it.

Virtual Dealer Plugin allows Broker to delay trader’s order by a period/time frame (2 to 15 Seconds) specified by the broker.
 
Market price usually changes during this delay period. If this change in price (slippage) occurs in favor of the trader i.e if trader gets a better price, the broker will not execute trader’s order at this better price but broker will execute the order at the original requested price by the trader. This allows Broker to takes the difference i.e all Positive Slippage as their Profit.
 
However, if the order is executed at the worse price (slippage), this cost is passed on to the customer.
 
As you can see this Virtual Dealer Plugin can be used by dishonest brokers to create “Artificial” slippage by delaying the execution time from 2 to 15 seconds to gain at the expense of their customer’s Loss.
 
If you are placing more than 10 orders a day, broker will use Asymmetrical or Artificial slippage with at least 3 to 4 orders in a day.
 
Shocked or Doubtful?

If you are still unconvinced, then here are some authentic proof that shows how Forex Brokers use Virtual Dealer Plugin to trade against their clients – 
ASIC cancels license of a Forex Broker
2. NFA (National Future Association, USA) has taken action against IKON GLOBAL MARKETS INC for using VIRTUAL DEALER PLUG-IN against their clients. You can read detailed official document at NFA’s website – https://www.nfa.futures.org/basicnet/CaseDocument.aspx?seqnum=2618
NFA action against IKON Broker

How to figure out if Broker is using a Virtual Dealer Plugin?

There is no real way to find out if your broker is using a Virtual Dealer Plugin.
 
The Virtual Dealer plugin works by delaying the execution of an order. So, if you notice a constant delay in execution of your orders for more than 2 seconds, this could be a sign that the broker is using the virtual dealer plugin.
 
However, these delays can also be attributed to a slow connection to the broker’s server or if the Broker is not big enough.
 
Some Experts have scheduled a series of scripts that allows to monitor the speed of execution. These tools can help you determine whether a broker is using the plugin. There are also free scripts out there that allow you to monitor your broker’s execution, but most are sold or subscription based.
 
Be assured, you will always have some occasional delay in the execution of your orders as technology is never infallible but be weary if this occurs too frequently.
If you enjoyed this post and think that this post can help you in protecting yourself from manipulative Forex Brokers, we would be very grateful if you’d help to spread this link – https://www.dojiforex.com/virtual-dealer-plugins/ by emailing it to your friends or fellow Forex traders, or sharing it on Twitter or Facebook or LinkedIn to create awareness about nasty Virtual Dealer Plugin. Thank you.
 
Happy Trading Tradestie!!

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