What Are Bucket Shop Brokers?

The term " Bucket Shop" has more than one meaning. It also refers to stock and commodities brokers that encourage gambling with high fees. There are scammers in many industries.

funwisely said:
Reading Book - Renaissance of a Stock Operator, and come across this old practice, wondering if still exists!
More...
 
funwisely said:
Reading Book - Renaissance of a Stock Operator, and come across this old practice, wondering if still exists!
More...
These days, usually the ones operating out of Carribeans or Malta are the high suspects.

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There’s loads of ‘legal’ fx bucket shops, as in they do the bare minimum required by their jurisdiction but will gladly screw you and your grandmother in every which way. Pricing, execution, withdrawals etc. Easily avoided, they all use metascrotes
 
I could probably do my own research, but it's easier to ask it here: Where do Contract For Difference shops land as far as legality? I've never understood them. Mainly because I don't care. There are plenty of legit firms out there I could use with my 57, (one of which I'm currently using).
 
I just read Reminiscences again over the summer and it really is a big part of the start of the story to understand. The bucket shops Livermore is trading against in the book aren't actually placing orders. He is basically trading against the house. That is why at some point no one wants him trading at their bucket shop.
Then he finds that trading is different when the broker is actually placing orders.

funwisely said:
Reading Book - Renaissance of a Stock Operator, and come across this old practice, wondering if still exists!
More...
 
Anything that is B-book is a bucket shop broker in my opinion. This goes for OTC stuff too.

Here is a check list for you to use:

Does there exist a conflict of interest between the customer and the broker? Yes/No -> if Yes = bucket shop

Does there exist a counter party risk regarding the instruments being traded? Yes/No -> if Yes = bucket shop

Is the instrument traded on a transparent market/exchange monitored by state/govt actors? Yes/No -> if No = bucket shop

Is the instrument cleared and settled by an external transparent actor? Yes/No -> if No = bucket shop

Can the instrument in hold be transferred to another broker or entity using asset transfer? Yes/no -> if No = bucket shop
 
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