How does a broker work internally?

Hi there,

I'm pretty new to all this Forex stuff and I read a lot in this forum. Numerous people report brokers cheat on them and they cannot do anything about it. Since some brokers are pretty way off, as it were, with their pricing there must be more than one reason. Now my question is can anybody of you point me to an article or tell me how does a broker work internally? Specifically, I'm interested in answers to the following questions:
1) What happens if one or more traders open/close a position with a broker?
2) How does a broker hedge all its open positions?
3) Who needs to pay commissions to whom? Broker to bank(s), trader to broker. How much money is it in relation to the trade? When do they need to pay commissions and does the size of the commission change at a particular time (News or so)?
4) How does the clearing work?
5) What happens if the broker gets more and more traders?
6) Does the broker need a specific amount of own money and why?
7) What happens if the number of successful traders rises?
8) Why do some brokers reject scalpers?
9) Does a registration with the NFA, for example, really mean a broker won't cheat on you?

Thanks a lot in advance. Your input is highly appreciated!

Cheers,
Dietrich

dfahren:

simple answer is
do with a reputable broker and you avoid all the puzzles
(at least you know only by theory that tricks could happen, but not have to pay money to try it)

click sort to rank the >50 feedback and 4 star then 3 star brokers here and read every feedback.

before your final decision, you can still come back to ask specific questions so answer could be specific about one broker... this saves both efforts.

http://www.forexpeacearmy.com/public...broker_reviews (edit update links. initial post was wrong link)

you specifically ask about broker compliance so this is the page you need to know (actually every broker should show it but they hide it somewhere)
http://www.nfa.futures.org/complianc...ert_020107.asp

Hi billye,

thanks for your response. That's great someone is willing to help me out. My primary concern, however, is not to get a reputable broker in the first place but to understand how brokerage firms do work. Once I understand what's going on inside, I'm able to better ask brokers the appropriate questions. So maybe there is someone who worked for a broker and can explain what happens inside.

Thanks and best wishes,

Dietrich

it is said that this essay explains market-maker structure.
it did not read through, see if it answer your question.

http://www.forexfactory.com/showthread.php?t=7484

for your question 9) this nfa alert piece is a must read if you don't want to be scammed.
9) Does a registration with the NFA, for example, really mean a broker won't cheat on you?
http://www.nfa.futures.org/complianc...ert_020107.asp