Many people wonder what bucket shops essentially are, and if they are good or bad to work with. They are, in all actuality of the word: scammers. They are fraudulent broker firms. They take the client’s orders, write them down, keep them in mind, but never actually put them through on the exchange.
Bucket shops tend to be against the clients they are working with, for their own means. This is to provide the ‘bucketeer’ with the money that the client gives them. They can then turn around, pocket the money, and say the dividends were never paid out or the stock crashed in the process. This greedy philosophy is what drives these bucket shops to do what they do.
Bucket shops acquired their name from the manner in which they execute business in. They write the phone orders of clients down on small slips of paper, and then drop the slips in a tiny bucket on a table. This is done instead of actually putting the order in through the exchange. They are then forgotten.
If the bucketeer does not actually put the order through, then the client in all actuality is betting against the bucket shop that they chose to work through. This can become stressful and a problem, and it gives you a loss of money since they pocketed all of what you sent to them.
The bucketeers are actually more conniving than you might think. This is because they do not actually allow the client to know the actual price of the asset that is being traded. This allows them to lie about the move of the product for the worst, and essentially against the client, so the client thinks they have lost their money in the long run when they actually have not… the bucketeer has just pocketed it.
However, with times changing, clients are much more apt to finding out the prices of their stocks and the return of their investments through the internet. This provides them with the information to know whether or not their broker is cheating, and skimming money off the top. This is one of the best ways to know about bucketeers, but there are also other ways to find out as well. Having knowledge about this type of transaction is key, and you should trust the broker you’re working with as they use your hard earned cash.
You need to separate the good from the bad when you are handing over cash in a transaction. You can peruse the internet for businesses who work through bucket shops from other users who have worked with them. This provides you with an idea of who is real, and who is not. A lot of the feedback through these forums is from brokers themselves allowing you to know which companies you should not go through.
Do your research and gain knowledge about working with brokers before actually working with one. Knowing the tricks of the trade might save you a lot of money in the long run. You should try to protect yourself against any scams and brokers who are out there just to make a quick buck. There are many out there, so ensure that the one you’re working with is sincere and works for you.
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