I want to know how Brokers work
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thread: I want to know how Brokers work

  1. #1
    Member bmom's Avatar
    37

    I want to know how Brokers work

    Hello all,
    I have a few questions in mind for some days.
    We deposit money to brokers for trading. Thus far I know that brokers earn from the 'Spreads' out of our trades we open.
    But I wonder just how much money they make from this spread to conduct a broker? Is it sufficient for them or there are other resources?

    My another question is if we lose money then where it belongs? I mean who receives it? And should we make Profit then whose money we're getting? Like I know that Forex is a market place, it's not a commodity. So it's does not have own income source, it's all traders money.
    Once I read somewhere that at first Brokers handle their traders by their own money and if it exceeds limit they then switches trades in open market. Might it be true or potential?

    Frequently I hear whether a trader get rid of money then the individual broker gets profited. How?

  2. #2
    Member
    70
    There might be some helpful info about how forex brokers operate as explained in this thread,
    The Structure of Forex Brokers

    You should also Google search (filtering for forex brokers) on terms such as A book or B publiion or B-booking or aggregator, which described how brokers manage client order flows. The second part of your query is related to market structure (where did the money come from, where did it move to) and explained in subsequent links and reports, courtesy of Seneca Pilot at his thread
    Ramblings of a Forex Junkie.

    The bible is Exchanges and Trading by Larry Harris. Not a book but worth the read.

    Additionally http://www.georgetown.edu/faculty/ev...files/tour.pdf

    And http://faculty.haas.berkeley.edu/lyo...y micro FX.pdf

    And http://www.amazon.com/Market-Microst.../dp/0631207619
    My present to the very few that are willing to spend the time to find out (see attached). picture
    Attachment 1241969
    https://www.cliqforex.com/attachment...9460915677.pdf
    https://www.cliqforex.com/attachment...1901558242.pdf
    https://www.cliqforex.com/attachment...1601632493.pdf

  3. #3
    Junior Member sokaypatuda's Avatar
    26
    Hello all, I've some questions in mind for some days. Cash is deposited by us to brokers for trading. So far I know that brokers earn from the 'Spreads' from our trades we start. However, I wonder just how much money they make from this spread to run a broker? Is it enough for you can find different resources or them? My another question is when we lose money then where it belongs? I mean who gets it? And should we create Profit then whose money we are getting? As I know that Forex is a market place, it's not a commodity. So it's does not have own revenue source, it's all traders...
    mmaker has put you up with some very good information.

    Happy reading!

  4. #4
    Member bmom's Avatar
    37
    There may be some useful advice here, The Construction of Forex Brokers You can also use Google to research some nice articles about how retail Foreign Exchange brokers operate, might be quicker to receive your response. quote quote image
    Thank you a lot. I'll examine them and try to become proper thought.

  5. #5
    Member bmom's Avatar
    37
    Hello mmaker, I am going through that thread and completed. Then I will go through that PDF. I hope that I'll be able to finish it.

  6. #6
    Excellent PDF mmaker! Thanks

  7. #7
    Junior Member apple18's Avatar
    13
    Can't be bothered, or do not have the time to read all of this to concur or disagree, but ultimately each broker will have different setups and agreements with liquidity providers and/or dealing desks on how they earn their money.

    Whatever you can do is choose a controlled broker in a decent state like UK or Australia and do not do anything dodgy. I have talked to people before who freely admitted trying to arb broker prices, then get annoyed when the broker fights back, but if they trade normally, everything is ok.

    Don't be a bastard, and you'll probably find they are fine to you also.

  8. #8
    Junior Member sokaypatuda's Avatar
    26
    Do not be a bastard, and you'll probably find they're fine to you also.
    Among the smartest things I have read on Currency Market mill.

  9. #9
    Junior Member apple18's Avatar
    13
    quote One of the smartest things I have read on cliqforex.
    Thanks! I try...

  10. #10
    Do not be a bastard, and you'll probably find they're nice to you as well.
    Very Correct. There aren't just difficult Brokers; there are also many difficult clients.

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