Who Wins Who Loses
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thread: Who Wins Who Loses

  1. #1
    Junior Member elchopo's Avatar
    27

    Who Wins Who Loses

    Hello everybody,

    I joined this forum a couple of days back and I am a beginner.

    Started reading about Forex.

    Can the broker lose when you triumph?

    Seems to me but correct me if I am wrong, a broker is somewhat like a casino.

    They (broker) understands that the majority of traders lose.

    Who or where does the money come from if you triumph?
    Brokers account??

    Is the broker constantly taking the other aspect of your transaction? (wager )

    Thanks!!

  2. #2
    I am no expert on brokers, but I think various brokers utilize various egies to profit. Like you say they know most of the traders will lose money.

  3. #3
    Junior Member elchopo's Avatar
    27
    So that they command their own mini-market?

    Imagine if your in a major profit scenario and you would like to close your trade?

    Imagine if the broker does not have sufficient vendors?

    He's controlling his own market from what your saying.

    I figured the broker makes his money (commission) off the spread.

    Do all brokers also have dealing desks where they hold your trade execution till they earn x $$ amount.

  4. #4
    and what about an ECN broker?
    Someone enlighten me on how exactly an ECN functions? Same questions as that made the thread,
    Thank you,

  5. #5
    So they control their own mini-market?

    Imagine if your in a major profit situation and you would like to close your trade?
    That's the market maker's problem.

    Imagine if the broker doesn't have sufficient vendors?
    Ditto
    He's controlling his own market from what your saying.
    Yes, uless you're using a brokerthat hasdirect touch InterBank (or what ever it is, I have had a few beers )
    I figured the broker makes his cash (commission) off the spread.

    Do all brokers also have coping desks where they maintain your trade execution till they make x $$ amount.
    Yes, and possibly. If they don't create the trade they do not get the spread. They are a lot more preapared and informed (read better in this) than the ordinary trader, their occupation is even more serious than we can comprehend as'non professional' traders, ie, they perform to nothing!
    The bottom line is they makethe market, if you would like to play, you play it by their principles. That does not mean that you can't win though
    cheers.

  6. #6
    Junior Member snergle's Avatar
    26
    Read three sticky-threads here https://www.cliqforex.com/general-fo...day-trade.html

    A lot of valuable info there.

  7. #7
    Junior Member elchopo's Avatar
    27
    If brokers control our transactions then why can we trade in the first other than try to create money with our investment and should do we risk our funding?

    Are their brokers out there which are not our for their own best interests and the brokerage house they perform for?

    Anyone here have a broker that they genuinely believe is honest?

    Just asking questions.

    Thanks!!

  8. #8
    Steve, hi.

    For sure, trust and honesty are critical elements into the client/broker relationship. No revelation there.

    A lot of traders certainly refuse to utilize coping desk brokers. Store is the derogatory term that is favored. They insist, with good reason, ECN brokers are the only (relatively) secure way to trade retail fx. Trust is still an important factor, despite an ECN, for motives other than just price manipulation issues.

    Btw, these three threads Peke5 pointed to're essential reading

  9. #9
    Steve,

    You might want to explore trading currency futures listed on the CME. This orders flow though a exchange. Fantastic luck.

  10. #10
    There's quite a little discussion on this, as well as difference of opinion regarding how brokers operate.

    There are a number of things we understand, such as, the broker doesn't run to the interbank each time that I trade my portion of a mini-lot. In fact, any trade on the actual inter-bank market greater than a few million $ is an annoyance.

    So, what do they do with our little trades? There are only two choices - choose the other side of the transaction , or pair them up along with other transactions in the opposite direction.

    They need to do it in such a way as to minimize their risk exposure.

    Thus, lets assume for a moment they match up ALL trades. As long as trades match equally, everything's fine, the broker has no risk. When things get out of balance, then the broker assumes the risk of carrying another side of a few of the trades. They then can either purchase a choice, or wait till the transactions get out of balance by a few million $ and proceed to interbank to offload the extra.

    Now, on the flip side, let us assume that most new traders DO blow their accounts. The 95% collapse figure is another item of endless discussion on FF, however, I'd lay my money on newbies' accounts being discounted instead of growing.

    Why would a broker supply service to a $1000 account (platform, bandwidth, client service, etc. ) ) for your pennies they would collect in spreads? That's a lot of investment and problem for a little money.

    For only a little more effort (programming) they might have all the money. Instead of earning maybe $50 in spreads from the time the person blows the $1000 account, they might have the entire $1000 simply by taking the other side of the transactions . That is a lot of money for slightly more trouble.

    Furthermore, if the transactions matched up against other newbie accounts' transactions, then there is absolutely no RISK to the broker. They simply sit back and let the newbs blow accounts and the money is theirs. The interbank market need never find those orders.

    Some say this doesn't happen, but the brokers need to manage the trades somehow, and they're in business to make money, as all of us are. It would be a very simple matter to keep track of who's profitable and who is not, and decide whether or not to choose another side of the trader's transactions (that is what computers are for). It would be rather stupid to not, can there be any simpler money? Further, I think that it's rather naive to believe the broker would not do this.

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