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Quoting Quickly
{quote} It’s not "in a market". CFD’s are not a market. They’re bets. The $1M isn’t real. It isn’t there to be paid to anyone. Your trades are not passed to any underlying market when you use an unregulated, high-leverage broker. 99% of their clients gradually lose, and they keep the money. This is what you need to know. I know it’s not what you want to know. I know you probably hate hearing it. But sadly it’s true. For people who are listening and know what to listen to, those fraudster brokers are all telling you loud and clear that that’s how...
Hello Quickly,

Thank you for explaining to me. This is an educational discussion. I am very use to Futures market trading. I only come to Forex to run a no stop loss forex algo I created, 100% win rate. Futures intraday requires closing trades a market session, so I cannot run a no stop loss strategy because the overnight margins on NQ is like $22,000 for NQ, and MNQ it is $2000. Forex, I can hold the trade for days and days as long as margin in my account and risk capital. So all the regulation discussions is never discussed in that market.

Question:
1. So for example, if I make $200 today on the EURUSD market the unregulated broker, the $200 in my account is not real? Is it like I am trading a SIM account with unregulated broker?
  • Post #22
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  • Edited 5:38pm Jul 1, 2024 4:53pm | Edited 5:38pm
Quoting Quickly
All the offshore, unregulated, unlicensed counterparty scammers and fraudsters who make their livings by letting people bet against them understand that too. And they make a living from it.
Hello Quickly,

Can you please explain what you mean by " make their livings by letting people bet against them understand"? What do you mean by betting against them? If I trade with unregulated broker, I am betting against them? I do not understand.

Can you give example for my understanding of broker betting against me?
Quoting Quickly
{quote} Yes, these two. I'd put AAFX first, Midas second. Third choice = N1CM (Number One Capital Markets) in Vanuatu, but both deposit and withdrawal there are by cryptocurrency only for U.S. customers. All these three are pretty questionable but they still probably have the least-awful reputations, in the industry, out of the very, very few available to you. The others Karl mentioned above really are "avoid at all cost, don’t even think about them!!" Trade futures instead!
Hello Quickly;

When you say trade futures, are you referring to CME Futures like ES and NQ, or are you referring to Forex currencies futures?

I would like the ability to hold the trade over night with very cheap margins.
Quoting goodoboy
I would like the ability to hold the trade over night with very cheap margins.
I understand. I don’t think you can do that, with futures.

I understand why spot forex is more suitable for what you want to do.

The only way I can see that working for you is if you use a legitimate, regulated broker (and I don’t mean "regulated" in Vanuatu or St. Vincent or the Seychelles!) that offsets their net liabilities in a genuine underlying market (so the $1M will exist and be there to be paid to you). And the only way I can see you doing that is if you use a CFTC-regulated one like Oanda or forex.com. And the only way you can do that is by being limited to 50/1 leverage.

Quoting goodoboy
When you say trade futures, are you referring to CME Futures like ES and NQ, or are you referring to Forex currencies futures?
Either/both/any. As you know, there are some currency futures on CME as well. I did mean CME, yes. But the currency futures there are very limited, they’re only 6A, 6B, 6C, 6E, 6S, 6N and 6Y, I think? (And a mini one for the Euro, M6E or something?). I understand that the overnight margins don’t suit you, though.

At the start of the conversation, I didn’t realise you were a futures trader and new-ish to forex, sorry. It’s the FF forum, so I mistakenly assumed you were a forex trader not knowing much about futures. Sorry!

Quoting goodoboy
Can you give example for my understanding of broker betting against me?
It’s you betting against them, technically. They each have their own “products”. It isn’t really “trading” at all, it’s just betting on the price movements of their own "product"/"instrument". No currencies change hands. They’re not brokers in any meaningful way. They just pretend to be. They’re actually counterparty market makers.

Quoting goodoboy
If I trade with unregulated broker, I am betting against them?
Yes.

They hold the other side of your trade. Some pretend not to by calling themselves "STP" or "ECN" or "NDD" or other bullsh!t terms they use to try to make you believe that currencies change hands and/or that they're a "broker". But they hold the other side of your trade.

Quoting goodoboy
So for example, if I make $200 today on the EURUSD market the unregulated broker, the $200 in my account is not real?
Yes. That’s right. Of course, they’ll pay you out the $200 with no problem (out of their takings from other customers) whenever you ask for it. They won’t risk bad publicity for $200, but when it’s $200,000, they will.
Quoting Quickly
{quote} I understand. I don’t think you can do that, with futures. I understand why spot forex is more suitable for what you want to do. The only way I can see that working for you is if you use a legitimate, regulated broker (and I don’t mean "regulated" in Vanuatu or St. Vincent or the Seychelles!) that offsets their net liabilities in a genuine underlying market (so the $1M will exist and be there to be paid to you). And the only way I can see you doing that is if you use a CFTC-regulated one like Oanda or forex.com. And the only way you can...
Good Morning Quickly,

Thank you. I really appreciate your help.

Sorry let me explain a bit more.

Yes, I trade ES and NQ futures market, intraday, where all trades have to be closed at 3pm central. Overnight margin is really high. I run algos on this market, tuff, but I do it.

My goal was to run a few algos on Forex market with position sizing that grows the account from $1K to $1million using a hands off algo I designed and built. The algo is scalping. An advantage to Forex market is it 24 hours, so I do not need an stop loss, its all or nothing designed. Yes, high risk of going bust, but high reward of scaling to a million dollars as well.

Using MT5, the back test shows it works awesome for 500:1, hits my $1 million target. Using a 50:1, only make about $50K. So this is what prompt my research in unregulated brokers vs regulated brokers.

So my plan was to deposit $1K in an unregulated offshore broker and it let it grow to $100K or $1M, take the money out.

But from what I am understanding, the probability of the unregulated giving me the $100K or $1M is about 0-5%, correct?
Quoting Quickly
But they hold the other side of your trade.
Hello Quickly,

Just to make sure I understand you. When you state the hold the other side of my trade, what do you mean?

For example, if I enter a 20 LOT EURUSD trade, with say cost of $5000, they will not execute the trade to the market?
Quoting goodoboy
if I enter a 20 LOT EURUSD trade, with say cost of $5000, they will not execute the trade to the market?
The unregulated ones won't. There could possibly be a tiny minority of them that might, but there's no way of knowing which ones, anyway? They'll hope you lose (like almost all their customers do, eventually).

Quoting goodoboy
from what I am understanding, the probability of the unregulated giving me the $100K or $1M is about 0-5%, correct?
I believe so, yes.

I think if you ask 100 people who have worked in the industry, at least 95 of them will tell you that, too.

Quoting goodoboy
the back test shows it works awesome for 500:1, hits my $1 million target. Using a 50:1, only make about $50K
Have you actually done this, live, and banked the $50k? Or even $20k? Or even $10k?

This should surely be your starting point?

Quoting goodoboy
my plan was to deposit $1K in an unregulated offshore broker and it let it grow to $100K or $1M, take the money out.
I follow your logic completely.

I would want to build it to $5,000, myself, withdraw the initial $1,000 and put it back in my bank account so that net loss is no longer possible, and withdraw another $3,000 so that I could "play on" with three more additional brokers, depositing $1,000 with each, as "extra chances".

Maybe there’s something in the theory that trying a large number of brokers increases the chances of getting paid out?

I’m not optimistic, though.

I’d definitely be withdrawing a few thousand first, just to make sure of getting paid something!

Unless you’ve already been doing this, of course, and are now ready for a "home run"?

It’s an interesting conversation, anyway - I won’t argue with that!
Quoting Quickly
{quote} The unregulated ones won't. There could possibly be a tiny minority of them that might, but there's no way of knowing which ones, anyway? They'll hope you lose (like almost all their customers do, eventually). {quote} I believe so, yes. I think if you ask 100 people who have worked in the industry, at least 95 of them will tell you that, too. {quote} Have you actually done this, live, and banked the $50k? Or even $20k? Or even $10k? This should surely be your starting point? {quote} I follow your logic completely. I would want to build it...
Hello Quickly;

Thank you for the response.

No, I have never traded live forex before at all. The plan was to use 500:1 leverage and go for it on 1 highly recommended unregulated broker who allow US clients.

Yes, that is a good idea.

Deposit $1K in 3 unregulated brokers and hope and pray when 1 or all of the accounts gets to +$100K, at least 1 (or all) will pay me all the profits earned. If not, $300K can possibly be loss including my initial deposit of $3000

Or simply just trade on a 50:1 regulated and make $82K Ugghhhh, this sucks.
Quoting goodoboy
Or simply just trade on a 50:1 regulated and make $82K Ugghhhh, this sucks.

Yes, it kind of sucks.

My suggestion is not to let it suck so much that it prevents you from making anything at all for the work you’ve done.

Could you not do this with proper, regulated forex accounts, say with Oanda and forex.com, and 50/1 leverage, and build your $1,000 up to $10,000 and then try it with a few unregulated, very-high-risk, very-high-leverage ones, and see how far you can get with them?

Maybe withdrawing the first few thousand from each, before the hammer drops? At least you’d make some profits, that way. As the director of the UK’s FCA (probably the world’s best regulator, from the customers’ perspective) said to a parliamentary committee, last year, the entire spot forex industry is set up to prevent retail traders from making long-term profits, and the FCA knows that among the millions of accounts they regulate, far fewer than 1% are long-term profitable. And those are the best regulated ones! Just imagine how low the figure must be among the unregulated ones!!

I wish you very good luck, Goodoboy, but I honestly can’t see how unregulated (or lightly regulated) "brokers" are going to be your solution.

Apart from this, I can’t add anything to what Quickly said. (Except that he’s right, obviously, but I appreciate that you already know that.)
Quoting goodoboy
Or simply just trade on a 50:1 regulated and make $82K Ugghhhh, this sucks.
I'm not so sure.

It "sucks" compared with something that doesn’t really exist at all.

Maybe making $82k (maybe repeatedly? maybe on multiple accounts?) would put you in the top 0.1% of retail traders anyway, and isn’t so bad?
Quoting KarlKraus
{quote} Yes, it kind of sucks. My suggestion is not to let it suck so much that it prevents you from making anything at all for the work you’ve done. Could you not do this with proper, regulated forex accounts, say with Oanda and forex.com, and 50/1 leverage, and build your $1,000 up to $10,000 and then try it with a few unregulated, very-high-risk, very-high-leverage ones, and see how far you can get with them? Maybe withdrawing the first few thousand from each, before the hammer drops? At least you’d make some profits, that way. As the director...
Good Evening Karl,

Thank you for the responding. I really appreciate your time, effort and energy and helping me understand and potentially avoid a mistake with unrealistic expectations.

You offered some good comments. Thank you
Quoting Quickly
{quote} I'm not so sure. It "sucks" compared with something that doesn’t really exist at all. Maybe making $82k (maybe repeatedly? maybe on multiple accounts?) would put you in the top 0.1% of retail traders anyway, and isn’t so bad?
Good Evening Quickly;

Thank you so much for your time and energy and making me understand.

Yes, you are correct. I am not sure an unregulated broker will let me accumulate nearly $100K to $1million on an account and give me the payout. You are right.

I talked with forex.com today and will allow me to open up 3 accounts at 50:1 leverage. I can run the same EA advisor there on all 3 accounts and that will satisfying enough for right now.

Question please:

1. So why I see and hear on the internet so many USA clients taking risks with unregulated brokers seeking high leverage if they know the odds of not getting pay out is so small? How are these unregulated brokers staying in business and why USA clients keep going to them? Just trying to understand.

Thank you,
Quoting Quickly
{quote} I'm not so sure. It "sucks" compared with something that doesn’t really exist at all. Maybe making $82k (maybe repeatedly? maybe on multiple accounts?) would put you in the top 0.1% of retail traders anyway, and isn’t so bad?
Hello Quickly;

Still thinking about how "some" unregulated brokers perform.

Is this an example of "possible" scenario?


They have a few $million on the side, betting the Forex trader lose, then just keep taking their loss money

So if trader A deposit $3000 in their unregulated forex account, they just say "hmmmm, yeah this guy is probably going to blow this $3000, lets just not send his order to the real EURUSD exchange and keep his orders here on our SIM feed, he will probably lose the $3000 any way"
in a few months Trader A loses the $3000 from a series of bad trades.
They unregulated broker made $3000

Is that how they operate.
Hello Quickly and Karl,

Just curious. Why do Forex unregulated brokers require deposit in Crytpo and bitcoin? Just curious.
Quoting goodoboy
{quote} Hello Quickly; Still thinking about how "some" unregulated brokers perform. Is this an example of "possible" scenario? They have a few $million on the side, betting the Forex trader lose, then just keep taking their loss money So if trader A deposit $3000 in their unregulated forex account, they just say "hmmmm, yeah this guy is probably going to blow this $3000, lets just not send his order to the real EURUSD exchange and keep his orders here on our SIM feed, he will probably lose the $3000 any way" in a few months Trader A loses the $3000...
Research “A book” and “B book” in relation to FX brokers
Quoting goodoboy
I talked with forex.com today and will allow me to open up 3 accounts at 50:1 leverage. I can run the same EA advisor there on all 3 accounts
Good - that sounds a good way to start? At least bank a few thousand first, then reconsider how to progress from there?

Quoting goodoboy
why I see and hear on the internet so many USA clients taking risks with unregulated brokers seeking high leverage if they know the odds of not getting pay out is so small?
I think they don’t know. But mostly they don't win significant amounts, trading CFDs anyway (who does?) so they don't learn, either.

They’re really ill-informed because they learned at Babypips, and here, and from Youtube, and from websites selling them stuff.

They mostly think that counterparty marketmakers are brokers. They don’t really even understand what a “broker” or a “market” are.

I know I sound rude (sorry to anyone offended!!) but that really is the level of naivety and misinformation of many people.

They think that currencies are actually changing hands, when they “trade” with a forex “broker”!

To be fair, the whole industry is pretty much set up to keep them ignorant (it’s ridiculous that the firms where they bet are allowed by law to call themselves “brokers” at all, but that’s how people - very wrongly - think of them.)

Quoting goodoboy
How are these unregulated brokers staying in business
Mostly with non-US clients.

Quoting goodoboy
why USA clients keep going to them?
Not that many do, but mostly because they imagine high leverage (which of course also means unregulated, though the customers often don’t know that and don’t even really know why it matters!) will help them - and indeed it might, in theory, if only it didn’t also mean unregulated-by-choice and crooked!

And then there’s also a small but very vociferous group, mostly Americans, mostly libertarians, partly conspiracy theorists, partly deluded, who genuinely don’t understand that real regulators were set up in response to persistent and increasing public demand, are independent, and are quick to take the customers’ side in the event or suspicion of broker-malfeasance.

These people typically imagine that regulators are part of some huge “nanny state conspiracy” set up to damage and/or control them.

These are people who would honestly, literally, seriously rather say Goodbye to an account than say Hello to a regulator.

These deluded souls are collectively very good fodder for the industry, of course, and “brokers” obviously love them.

Quoting goodoboy
lets just not send his order to the real EURUSD exchange and keep his orders here on our SIM feed, he will probably lose the $3000 any way" in a few months Trader A loses the $3000 from a series of bad trades. They unregulated broker made $3000 Is that how they operate.
Yes, exactly.

Some will maybe, very rarely, make $10,000/$20,000 instead of losing $3,000. But for every one of those there are probably 100 who lose the $3,000.

If someone ever makes $200,000, though, then that's a whole new and different ball-game, and that they can't pay out.

Quoting goodoboy
Why do Forex unregulated brokers require deposit in Crytpo and bitcoin?
Few “require” it. Many “accept” it.

Look at what happened to the directors of the poker sites that accepted US players. Some were arrested. Crypto avoids a paper trail, I think. That’s what it’s for, isn’t it? (I know nothing about crypto!).

And another thought: some probably can’t process payments any other way, because no banks, credit-card companies or even online payment-processors will do business with them? (So maybe we shouldn't, also?!).

Requiring payment by crypto is probably a huge red flag, in itself, actually?
Quoting Quickly
Requiring payment by crypto is probably a huge red flag, in itself, actually?

That’s for sure!

If banks, credit-card companies and payment-processors have looked at a business and rejected them, only someone really gullible would do business with them online by sending them crypto payments?!

I haven't ever actually seen a brokerage that requires deposits/withdrawals by crypto, but if I did, I would have absolutely ZERO expectation of it being legitimate.

Here's the point: if my bank, and Visa, and MasterCard (all of whom have readily available in-house facilities to investigate people’s financial reputations) won't even deal with them, then why the hell would I want to?!
I have an account with forex dot com which I consider my "safe" account. Obviously they do not offer crazy high leverage but I do find comfort in using a regulated broker. My positions with them are typically open for several days at a time and I've never had any negative interactions on the deposit or withdraw side of things.

I also have an account with osprey fx. They are not regulated, offer 500:1 (I think). I keep less then $1k in this account and to be transparent I have used them for about 6 months. I've made a couple withdraws but my strategy with them has been to keep those withdraws under $250. Any cash I pull out of this account I add to my forex dot com account. I will say that I really like their trading platform "tradelocker". However, you need to pay attention to the spread on currency pairs as they fluctuate a lot.
This question is for KarlKraus and Quickly based on the discussion here, but anyone else is welcome to chime in also -- I have been a member here for a long time but I don't think I ever posted anything, so I don't have the clout yet to start a new thread on my own, so I thought I would begin by asking my question here.

Do the regulated U.S. brokers such as Oanda and Forex dot Com == do they put my trade through to an underlying instrument? Or are they simply making their own market as well?

I have been trading spot forex for quite a long time somewhere in the neighborhood of 10 years I think, and as would be expected I have taken my lumps at it -- but slowly I have gotten better -- I tried a few different things, but I have eventually settled on what I consider to be my instinctive method. I was always drawn back to it because it just made sense to me and I just like it -- it keeps me engaged

I think it must be something similar to what the original poster is describing here except that I don't use robots or expert advisors -- I do it completely manually. it has a very high win rate but the problem is the losers are catastrophic if you don't do something to control them -- and of course that has been my problem over the years -- periods of success followed by precipitous downfalls!! But I have been playing with peanuts while going on with the rest of my life so it hasn't been a disaster or anything but just an ongoing saga -- that for the most part I don't even talk about to the folks around me

Anyway slowly I have gotten better at cutting those catastrophes short and maintaining a good mindset throughout, I keep the losses smaller relative to my account size and I am learning to be able to get profitable again in a more timely fashion after a loss -- it used to be one of those big losses would put me on tilt and it would be many months of chop before I would find my groove again -- as I indicated I seem to be better now at taking the loss without being knocked off my groove for long. The way I trade involves a kind of price averaging I guess, and I suppose it could also be presented as a kind of managed martingale -- which I know is a bad word among professionals -- but like I said I kept coming back to it because I felt like I could understand what I was doing and I felt like I knew there was an edge there if I could learn to manage the pitfalls. But unlike the original poster I do it in a very discretionary way, which I know can also be bad but I think I am overcoming that with mindset and experience,

So anyway 2024 has been very very good for me, but we are still talking about peanuts here -- but they won't be peanuts long if it keeps going this way. I trade with one of those regulated U.S. brokers and I agree 50/1 ain't so bad.

But will they hang with me if I start to make some pretty good money? And what about if I start to make some really big money? I can't imagine that they wouldn't find an excuse to kick me out if they are not putting my trades through to an underlying instrument (I trade USDCAD almost exclusively).

Yesterday we had the big Cloudstrike outage -- so I had no access to my trading platform for the whole day on Friday -- I had a position on but didn't panic too much because it was moving generally in my favor, I was watching the price on yahoo finance.

With 30 minutes to go I called them and asked them to close all my positions (due to my method my big position was actually many small positions pointing in the same direction on the same instrument)

The person on the other end of the call said no problem and I noted her language that she would put in the request to close at that current price and she specified the price, all good!!

At the end of the day when I got my daily report email -- it did not reflect these closures. I wasn't too surprised by this especially in light of the way she had worded it. But this could still mean a couple of different things:

Maybe my trades had been put through to an underlying instrument and they did close them but they just didn't have time to make that show up in my disabled MT4 account.

Maybe my trades had been put through to an underlying instrument but they were not able to close them and they plan to just make it up to me.

Maybe my trades were not put through to an underlying instrument and they are just gonna fix it in the final mix as they say in the music biz

Maybe my trades were put through to an underlying instrument and they tried to close them and couldn't do in time and they are just still open is all

I am sure there are other possibilities as well, but you get the picture.

So again my questions, are they putting my trades through to an underlying instrument? And if they are not then what would happen if I got big enough for it to be a problem for them? Sorry for running on and thanks!!
Quoting pedro803
This question is for KarlKraus and Quickly based on the discussion here, but anyone else is welcome to chime in also -- I have been a member here for a long time but I don't think I ever posted anything, so I don't have the clout yet to start a new thread on my own, so I thought I would begin by asking my question here. Do the regulated U.S. brokers such as Oanda and Forex dot Com == do they put my trade through to an underlying instrument? Or are they simply making their own market as well? I have been trading spot forex for quite a long time somewhere...

They describe their execution policy in ToS. Most of the time I see something like, sometimes we may act as execution venue for your orders, sometimes route them to other counterparty.
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