Brokers prefer to win or lose ? | Forex Factory

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Brokers prefer to win or lose ?

  • #1
  • First Post: Jul 6, 2007 9:09am Jul 6, 2007 9:09am
It is a general believe that it's better for brokers when traders lose.

But, no matter a trader win or lose in the sea of forex traders.

When one win in a broker system, one will lose in another boroker system in the networked system of forex.

So, brokers should prefer that their traders win, since winner will stay in the business.

Any idea? it should results in good discussion about the way of trading in forex.


P.S. One may think it is more appropriate for Broker Discussion forum, but I believe the results are useful for the forex trade. Anyway, if the moderators think in this manner, please move it
  • #2
  • Jul 6, 2007 9:26am Jul 6, 2007 9:26am
It's definitely better for a fair broker to have their clients win rather than see them loses...

The longer they stay, the more commission the broker gets (well its supposed to be a non commission but everyone knows that commission is included in the spread right ? )

But some brokers are known to play with their price in order to hit the SL or not reaching the TP in order to in the first case profit from the difference.

I think this is plain stupid and unfair (not the case with my broker )
  • #3
  • Jul 6, 2007 9:33am Jul 6, 2007 9:33am
Yes I totally agree

it distinct good and bad brokers.

In fact, there are always loser in forex, thus, it's better for a broker to gather professional traders who win as they open trade several times as it is their job.

But apparently, the propaganda of forex broker is to attract newbies (I don't know why)
  • #4
  • Jul 6, 2007 9:43am Jul 6, 2007 9:43am
I believe that many, not all, brokers have a business model in which they have to keep attracting new customers because they keep taking money from the losers in forex trading.
  • #5
  • Jul 6, 2007 10:13am Jul 6, 2007 10:13am
yes that's right

beginners are always losers

in fact, brokers do in favor of the forex business, though, it is expected to do in favor of themselves
  • #6
  • Jul 6, 2007 10:45am Jul 6, 2007 10:45am
Large brokers don't need to make money off rigging the game, there's more than enough profit in simply taking the spread. I originally started FX through one of the brokers now (deservedly) on the Dead Dealer Walking list; that was a different story, and also maybe a decade ago, when retail FX was thin enough to almost force brokers to take opposing positions to their clients in order to maintain a market. But I haven't had any problems for the last 5 or six years (at least) that weren't of my own doing....
The advantage of attracting new (self-immolating) clients is the tendency of new traders to reverse at idiotic times, looking for the first hint of wobbliness to short a rising trend, jumping on news with tight stops, etc. This provides liquidity when traders with better survival instincts simply stay out. I'm not making fun of people here, just recounting my own autodidactic experience
  • #7
  • Jul 7, 2007 12:02am Jul 7, 2007 12:02am
agree that the good one would love use to win.
imagine the paper work for processing each newbie , while the survived custommer tend to compound...
teaching newbies become common, imagine doing it again and again with live chat.....
  • #8
  • Nov 14, 2017 10:25pm Nov 14, 2017 10:25pm
Expansive brokers don't have to profit off gear the diversion, there's all that anyone could need benefit in just taking the spread. I initially began FX through one of the brokers now (deservedly) on the Dead Dealer Walking list; that was an alternate story, and furthermore perhaps 8 years back, when retail FX was sufficiently thin to nearly constrain brokers to take contradicting positions to their customers keeping in mind the end goal to keep up a market. Yet, I haven't had any issues for the last 5 or six years (at any rate) that weren't of my own doing.
  • #9
  • Apr 19, 2018 6:37am Apr 19, 2018 6:37am
Quoting Gwan
agree that the good one would love use to win. imagine the paper work for processing each newbie , while the survived custommer tend to compound... teaching newbies become common, imagine doing it again and again with live chat.....
Yes, they also make money by trading spread, so definitely good brokers would like to more trades & more success.
  • #10
  • Apr 19, 2018 6:37am Apr 19, 2018 6:37am
Quoting Gwan
agree that the good one would love use to win. imagine the paper work for processing each newbie , while the survived custommer tend to compound... teaching newbies become common, imagine doing it again and again with live chat.....
Yes, they also make money by trading spread, so definitely good brokers would like to more trades & more success.

Yes, they also make money by trading spread, so definitely good brokers would like to more trades & more success.
  • #11
  • Apr 19, 2018 7:25am Apr 19, 2018 7:25am
All depends whether we talk about market maker or market execution. Market maker takes trade against you.
  • #12
  • Apr 22, 2018 9:18pm Apr 22, 2018 9:18pm
If you are a winning trader the broker will hedge your positions into the market and only make the spread. If you are a losing trader most brokers take the other side of your trades and keep them on their internal book. The idea is they make the spread in addition to the gain by taking the other side of your trades.

Either customer is profitable to them.
  • #13
  • Apr 23, 2018 12:55am Apr 23, 2018 12:55am
Quoting jakub.pajer
All depends whether we talk about market maker or market execution. Market maker takes trade against you.
yes it is. for that reason most of time we the traders who are particularly newcomers always become loser when trading practically.
  • #14
  • Apr 24, 2018 2:29am Apr 24, 2018 2:29am
There are two types of Brokers:
1) Market Makers: They are already looking for losing traders, because the Market Makers wins from their loses. That is why, they are providing many bonuses and cash promotions, because they are looking for short term client relationships... They are giving some little bonus when registration, then they are taking all of your money very soon
2) Commission based brokers: They are client friendly brokers, because no mater that you win or that you lose, they are receiving their commissions from the orders That's why, they are looking for long term client relationships, and it is better for them if the trader wins. Because if the trader wins, he will keep trading, the broker will keep receiving commissions and everyone will be happy That's why I prefer to use a commission based broker, because I will be sure, that they will not do something against my pocket ; If I win, they will win also
  • #15
  • May 3, 2018 10:34pm May 3, 2018 10:34pm
The traders we have above all the beginners always think, only real good knowledge and experience can bring good result in Forex trading but practically in spite of having good knowledge that’s not possible at all to ensure wining rate by trading without a complete support from a right broker, because a broker always can affects the result of our trading with certainly.
  • #16
  • May 16, 2018 6:06am May 16, 2018 6:06am
Quoting AdamCrist
The traders we have above all the beginners always think, only real good knowledge and experience can bring good result in Forex trading but practically in spite of having good knowledge that’s not possible at all to ensure wining rate by trading without a complete support from a right broker, because a broker always can affects the result of our trading with certainly.
Yes, agree. Every trader should carefully select his broker. The success chance is bigger, if you trade in client friendly broker
  • #17
  • May 16, 2018 6:50am May 16, 2018 6:50am
Quoting DwainUK
{quote} Yes, agree. Every trader should carefully select his broker. The success chance is bigger, if you trade in client friendly broker
Yes, it’s very much important issue! Actually, regulated brokers are making money by spread or commission; they want traders success!
  • #18
  • May 17, 2018 4:47am May 17, 2018 4:47am
In the whole macro system you have only certain amount of money, which is constantly circulating from hand to hand. So when somebody is winning, somebody else inevitably is losing.The only way to assure yourself that your broker doesn't care whether you win or lose is to choose working with STP one with strictly commission based revenue model, i.e. one which is truly acting only as intermediary.
  • #19
  • May 17, 2018 5:11am May 17, 2018 5:11am
There are 3 types of Brokerage models.
1. Market Makers (Dealing Desk) brokers (A.K.A. DD/MM) - These brokers (can) trade against their own clients (i.e. traders) and prefer losers. This is why there is a lot of turnover (in terms of traders) with them and they constantly need new clients.

2. Commission based brokers (DMA/STP) - A commission based broker takes a fee from both sides of a trade (from the buyer and seller), so regardless of the success rates of the client the broker will get paid. However, this kind of brokerage model is incetivised to provide best trading condition to their clients simply because when a trader is successful he will stay with that broker and trade with them longer -> more commission fees (profit) for the broker.

3. The so-called Hybrid broker model - Also known as ECN brokers. This type of brokerage model is usually marketed as ECN/STP because in they do transfer the orders to the liquidity pool in their network, however in most cases these brokers have their own bank in the liquidity pool and will fill orders via it. Thus actually acting as a Market Maker when a trader is making a losing trade and passing that order to the other liquidity pool nodes when the trader is successful/winning. From a business point of view it's an incredibly smart business model because they profit both from commissions/fees as well as being the market maker when viable.
From a trader/customer's POV (point-of-view) that is a money-grabbing-get-rich-quickly scheme that should be banned. And such brokers disbanded, dismantled and sent to the prison camps of North Korea to work for a cup of rice a day.
  • #20
  • May 17, 2018 2:36pm May 17, 2018 2:36pm
Quoting bradley79
There are 3 types of Brokerage models. 1. Market Makers (Dealing Desk) brokers (A.K.A. DD/MM) - These brokers (can) trade against their own clients (i.e. traders) and prefer losers. This is why there is a lot of turnover (in terms of traders) with them and they constantly need new clients. 2. Commission based brokers (DMA/STP) - A commission based broker takes a fee from both sides of a trade (from the buyer and seller), so regardless of the success rates of the client the broker will get paid. However, this kind of brokerage model is incetivised...
Thank you Sir , for your nice post with great detail.
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