Do brokers have to shell out profits to sucessful retail consumers in the Forex Market?
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DislikedDo brokers have to shell out profits to sucessful retail consumers in the Forex Market?Ignored
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STP and ECN brokers that require no intervention from the broker - the client is dealing on the true fx market.Ignored
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Yes a conflict of interest does exist though that does not mean that every broker is out betting against you.Ignored
DislikedWhich is why I said potential conflict of interest.
They're counterparty and it's anyone's guess what they do with an order once they've filled it, presumably they hedge nett exposure above some sort of predefined risk parameters but we don't know that. We also don't know how/where they derive their streaming quotes, nor if they shade price, widen spreads, create artificial spikes etc etc etc......it's all well within their capabilities, probably extremely lucrative, and what's more perfectly legal!
The best we can hope for is...Ignored
DislikedThe 'true fx market'?
I can't think of one broker who isn't counterparty to clients trades, they have to be as the trading agreement/contract is between client and broker and not with any other party. Thereby a potential conflict of interest always exists.Ignored
DislikedI know of at least one broker whose level 2 market depth displays quotes from 4 liquidity providers (all major banks / brokers) - the client can choose which one to trade with - the deal is done and, of course, the broker then steps into the transaction as the counterparty - but the client chose whom to place the deal with and at what rate. The broker is paid for his services through the commission, not the pip spread.Ignored
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What about the Futures market where the market is centralised? I suppose the same applies as you still have to trade via a broker rather than doing a direct deal with the opposing party.Ignored