does you broker ban arbitrage on manipulated price quotes?

I have been reading one of my previous live broker's explanations on all kinds of not-allowed tradings... it did not happen to me but many people's profit got removed on withdrawal & broker claim that the trader did those not allowed arbitrage.

2 kind of banned-trading seems especially interesting:
i) not allow to trade on sudden glitches in price quotes (that do not exist in real market of coz, I guess it's the stop-hunting for someone)
ii) not allow to trade on price quote that show differences from real market for a few seconds and arbitrage on that
say when real price for EU is 1.3635, but your broker is 1.3633
when real price for EU is 1.3638, but your broker is 1.3640
so you buy somewhere for the real price and hedge the position at the broker with manipulated price, so you can arbitrage from the price manipulation that vary around the real price... this actually can be done by some machine trading so broker identify you if you do hundreds of this in one hour.

it seems to me that by claiming not allowing these trades, the broker is actually claiming that they do stop/hunting by manipulated glitches and do manipulate prices for a few pips against trader... and also when that manipulation happen, broker does not allow people to profit from that...

sounds like a self-declared bucketshop thing... what do you think?

Your reasoning for why they do this is all wrong. The reason they dont allow this is because they are not in the business of losing money. Banks would tell you the same thing. I personally dont agree with brokers taking profit back and I have never had such a thing happen to me. I have however had banks go back on a trades but I was always notified within the same day and if I incurred losses because of this it was on me not them.

However, the reason they dont allow this usually has to do with the quality of their technology. For whatever reason their technology or their liquidity's technology is not showing acurate pricing and they cant allow traders to arb their technology. This happens on the interbank level from time to time and trades usually get rejected. The banks know when they are off as do brokers. When banks are off they stop their clients from hitting their indicative pricing and most brokers do too. This is one of the issues traders and brokers have to deal with when dealing with one or two liquidity providers.

Traders need to stop thinking that all brokers are hunting their stops. First, of all you need to realize that the forex market is a manipulated market from the Central bank level all they way down to the retail broker level. Most of the time when your stops are hit it is due to the fact that your stops are placed at key levels and the big boys (not your broker) can move the market to those key levels to make a quick profit. Now I am not saying that ia retail broker wouldnt move their market a few points past the market they receive to wipe out a few more or a lot more orders. Of course they would and so would anyone that is good at making market. If a market maker has the ability to move the market in their favor they will do it more times than not. In order to be successful you need to learn how the game is played and adapt.

My 2 cents.

hi fxtrader42

thanks a lot for your explanations, it makes sense...
so basically you're saying that what they do is reasonable in real market.

It makes sense if they tell you immediately and cancel the trade...

Some broker say they're too busy to validate every trade, so they only verify on withdraw request,
(in extreme cases people withdraw after a year and noted due to illegal trade all profit in the year removed.)

I think that's also okey if they were honest... we can withdraw 1$ every month to force them do a verification.