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If you have a profitable system, will brokers sabotage you?

  • #1
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  • First Post: Jan 10, 2015 6:54am Jan 10, 2015 6:54am
I have a question about a system ...

It's true that if you have a consistent profitable system at a time brokers will realize and do something against you just to not make money ?
Make choices and don't look back !
  • #2
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  • Jan 10, 2015 8:20am Jan 10, 2015 8:20am
False.
If a broker is trading against you & losing money they can close your account but they can't stop filling your orders @ current market prices.
If they close your account go to an ECN broker that charges commissions only & doesn't care about how much money you make with your system.
  • #3
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  • Jan 10, 2015 2:02pm Jan 10, 2015 2:02pm
Quoting srt
False. If a broker is trading against you & losing money they can close your account but they can't stop filling your orders @ current market prices. If they close your account go to an ECN broker that charges commissions only & doesn't care about how much money you make with your system.
Thank you . I have an ECN broker . I use Alpari & SaxoBank , but I think the latter is not ECN .
Make choices and don't look back !
  • #4
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  • Jan 12, 2015 9:44am Jan 12, 2015 9:44am
If you have a profitable system then you are exposing a market inefficency. When you win somebody else looses. If your edge exploits a broker inefficency (you don't give the broker a chance to hedge your exposure with their liquidity providers) then it will likely be short lived - The broker will either close the loophole or force you out of the market by closing your acct or giving you bad fills etc.

Best not to expose a limitation of your broker but other players further 'downstream'. IMO if you don't know who is loosing when you win then you really shouldn't be trading at all and I would go a step further to suggest that you most likely don't have an edge either

All just my opinion of course...

BBCMicro
  • #5
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  • Jan 12, 2015 11:57am Jan 12, 2015 11:57am
Quoting Purec
I have a question about a system ... It's true that if you have a consistent profitable system at a time brokers will realize and do something against you just to not make money ?
Why would they?

They make money whenever you trade, so it's in their best interest to keep you profitable and trading for as long as possible. Making you lose on purpose is counter-productive!
  • #6
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  • Jan 13, 2015 4:03pm Jan 13, 2015 4:03pm
Quoting 4exNinja
{quote} Why would they? They make money whenever you trade, so it's in their best interest to keep you profitable and trading for as long as possible. Making you lose on purpose is counter-productive!
Solid point . Thank you
Make choices and don't look back !
  • #7
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  • Jan 14, 2015 3:47am Jan 14, 2015 3:47am
Quote
Why would they? They make money whenever you trade, so it's in their best interest to keep you profitable and trading for as long as possible. Making you lose on purpose is counter-productive!
Not if they are handling your orders internally, as many brokers do.

All you have to do is be more profitable (per trade) than the commission + spread, fairly obvious isn't it!

Wake up!

Gladly, there are a few brokers out there who are giving traders a fairly honest deal, and do want you to hang around to pay the commissions and spread.
My comments are not to be taken as trading advice, not a financial advisor
  • #8
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  • Jan 14, 2015 5:06am Jan 14, 2015 5:06am
They can't do anything to you.
Maybe cutting conection or slowing data while big news releases slippage etc. They cant control your market or manual orders.
You just have to be sure that you are downloaded all data to get true information.
Most of brokers provide less history bars
  • #9
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  • Jan 14, 2015 6:00am Jan 14, 2015 6:00am
FXCM explains what they may do if a trader is consistently profitable:

FXCM also offers forex execution via a Dealing Desk execution model. FXCM can act as a dealer on some or all currency pairs. Note, however, that FXCM is the counterparty to any trades that you undertake. In this model, FXCM's compensation may not be limited to our standard markup and our interests may be in direct conflict with yours. Additionally, we face market risk as a result of entering into trades with you.FXCM may take steps to mitigate its risk arising from market making more effectively by, at our sole discretion and at any time and without previous consent, transferring your underlying account to our NDD execution offering. FXCM may also choose to transfer your account to our No Dealing Desk (NDD) offering should the balance in your account exceed the USD $25,000 maximum.

Source: http://www.fxcm.com/uk/legal/trading.../#dealing-desk
  • #10
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  • Jan 14, 2015 7:30am Jan 14, 2015 7:30am
Do you really think that the broker (a huge financial machine) sits there trying to rob particularly your money? It sound ridiculously for me. Brokers do make different maneuvers but they are not hunting for an individual successful trader. If you think the same way as the most traders think then the broker will definitely make lose you as the part of that crowd.
  • #11
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  • Jan 14, 2015 9:53am Jan 14, 2015 9:53am
Quoting EugeneBond
Do you really think that the broker (a huge financial machine) sits there trying to rob particularly your money? It sound ridiculously for me. Brokers do make different maneuvers but they are not hunting for an individual successful trader. If you think the same way as the most traders think then the broker will definitely make lose you as the part of that crowd.
it's interesting that comments like this always come from new members........
  • #12
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  • Jan 15, 2015 12:07pm Jan 15, 2015 12:07pm
Quoting 4exNinja
{quote} Why would they? They make money whenever you trade, so it's in their best interest to keep you profitable and trading for as long as possible. Making you lose on purpose is counter-productive!

I completely agree. There is no sense for a broker to make you loose. The results will be that you change broker or you are not investing anymore!
  • #13
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  • Jan 16, 2015 8:09am Jan 16, 2015 8:09am
Alpari UK entered into insolvency . My question is : how can i get my money out of this brokerage firm ?
Make choices and don't look back !
  • #14
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  • Jan 17, 2015 6:05am Jan 17, 2015 6:05am
http://moneyweek.com/alpari-uk-what-...ker-goes-bust/
  • #15
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  • Jan 18, 2015 7:40am Jan 18, 2015 7:40am
I think it all depends on the broker. If you have a good one, you should have no problems.
  • #16
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  • Jan 19, 2015 9:44am Jan 19, 2015 9:44am
Quoting Purec
I have a question about a system ... It's true that if you have a consistent profitable system at a time brokers will realize and do something against you just to not make money ?
Brokers have what they call the A/B books. It is just to categorize traders whether they are profitable or not based on your trading history.

If I'm not wrong, if you're a brand new client and they have no history of your trading, they will put you in the book where they will take the opposite of your trades (that's where they really make most of their money from cause they earn from your losses + spread). That doesn't mean that they are trading against you...they are just merely taking on the risk that you are amongst the 95% that actually lose money from trading. In their view, if you are going to lose money anyway, it might as well be to them.

But if you start to be really profitable, then they will regard you as toxic flow and shift you to their "Hedge" books or just transfer the risk to their liquidity provider. Then they just earn the spread/ commissions. BUT if you are using lagging data feed to profit, then that is a whole different story. They will basically shut you down as its considered illegal to them.

As for doing something against you, they generally can't do much if you don't have a super tight stop loss that is like 1-5 pips away from the market. Nowadays with the internet, brokers are very wary of their own reputation and are less likelier to pull funny stunts. Tarnishing their reputation is the last thing they want to do.

I know all this because I have several friends who are dealers in fx brokerages But trust me, they want you to be their customer for as long as you can.
  • #17
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  • Jan 25, 2015 3:06pm Jan 25, 2015 3:06pm
Quoting ND.Trader
{quote}BUT if you are using lagging data feed to profit, then that is a whole different story. They will basically shut you down as its considered illegal to them. As for doing something against you, they generally can't do much if you don't have a super tight stop loss that is like 1-5 pips away from the market. Nowadays with the internet, brokers are very wary of their own reputation and are less likelier to pull funny stunts. Tarnishing their reputation is the last thing they want to do. I know all this because I have several friends who are...
What is a lagging data feed? Do you mean being a day or swing trader?
  • #18
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  • Feb 11, 2015 10:43am Feb 11, 2015 10:43am
Yes
  • #19
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  • Feb 12, 2015 3:49am Feb 12, 2015 3:49am
My answer is no and here are couple of reasons why.

Regulatory bodies - There are regulatory bodies like the CFTC or NFA that regulates Forex brokers. If you are constantly being quoted different price from your broker compared to someone else who is trading with the same broker, you can simply take a screenshot to lodge a complaint to the relevant authorities. The broker could potentially lose it's trading license because of this, not a good risk to reward if you ask me.

Bad for business - Forex brokers make their money by earning the bid ask spread from their client's trading. So it is in their best interest for their clients to trade consistently over a long period of time, to continue earn the bid ask spread. However if they try to be funny by picking off their client's stops just to earn a few extra pips, it is a matter of time before their clients find out and move to a more reputable broker. And if a large number of clients start hopping over, they will soon be out of business.

fartist
Whether you can or you can't, you are both right.
  • #20
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  • Feb 12, 2015 8:41am Feb 12, 2015 8:41am
When you have a profitable system that is giving you a wining no broker will close your account, except they have a bad intention with this in mind, I will advise you to spread your trading accounts into two different platforms just in case. Forex trading is a profitable venture and if brokers go against the trader's trading account all because they are making more money from their system forex trading won't have gotten this good recognition it has today.
I am not saying all brokers are good they crooks out there and because they don't have good intentions, they end up messing traders account, it is very necessary to have an account with recognized and properly licensed brokers please do your diligent research on the broker you are about giving your hard earn money to best of luck
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