Why your broker is your friend and your enemy

Why people say that their brokers want you to lose money? That they hunt your stoplosses changing the quotes by 1 or 2 pips...? That they always have slipagge in their favor.... I've heard many things

It is true that every time you put an order, it is like if they put an order with a 100% winning of the spread pips. You pay it to them. They want you to put many orders. Not 1 per month. They make money with the spread. But also they make money investing in forex as traders do. And they use money of everyone in the broker. So if everyone wins, there will be more money to invest.

When you put small lot trades you are getting the money from your broker because it is faster execution, but when you trade many lots your broker has to confirm that with the banks and the money will come from the banks. So, in the first case, if you win, your broker pays you the money, but until you don't withdraw your money, it is still there for the broker to invest it. If you lose, you pay the money to the broker. If they don't have traders they couldn't run the business... In return.. brokers give you the leverage which is fantastic.

so... Why a broker would ever want you to lose your money?

Ya emda i agree here :-) wow rocky mountain tell us a storie that market is owned by natural laws ;-)

revoke

There are some dodgy Brokers which hunt your stops or give automatic slippage. Just look at the videos in the OctaFX thread for instance:
https://www.forexfactory.com/showthr...1#post10447021 - A constant 2 pips slippage against you isn't due to missing liquidity. Especially if the Broker claims to be ECN / STP.

It also depends on who you are Trading with: A true NDD or DD broker. If you trade with a DD (Dealing Desk) Broker (which most are), they will take the opposite of your position and thus allow you to open a position literally at any time of the day or night, without having to match you with any real opponent on the market (Seller vs Buyer), which might cause delay and slippage.

And since 90% of traders lose, a DD broker wins 90% of the trades they take against you. And this can cause a "Conflict Of Interest". If you are a constantly winning trader, they will eventually stop taking the opposite of your position and route you to the real market, even if they are a DD. This is more lucrative for them.

So if you are with a bucketshop offshore Broker, it might be their business model to want you to lose, because thats where they win.

Have a look at this video. Take it with a grain of salt tho. He uses strong words and knows what he's talking about. But in the end he also just wants you to sign up for his training course. But still, what he says is pretty true:



No. A regulated Broker has to have clients money on segregated accounts. This means he has no access to the money and can't use to invest it.

The broker is neither! If you trade one min charts, maybe! I have experience with two brokers. And they are not even top brokers. The one I use now it gave me soo much more positive slippage than negative! Your success it's not in your broker, it's in you! If you do not understand the market, the players game, and the liquidity, do not trade! Or at least try to learn on your own. I'm trading live accounts for at least 9 years and I've just starting to really understand what the hell is going on in the markets! This is the most frustrating thing that one can do and it's not that rewarding either!

Brokers want successful clients.

The more a client trades, the more a broker makes in commission and/or spreads.

If a client is successful, they will trade (and make the broker money) for many years to come.

If a client blows up their account, the broker makes no more money and has to find new clients (at a cost e.g. advertising).

That's how I see it anyway... :-)

Look, I’ve only been trading for two years, so I’m no guru, but here's the deal: brokers make their money when you keep trading, not when you blow your account and vanish. Some shady ones might play games with spreads or stops, but most just want you active, racking up those transaction fees. pick a legit broker, not some no-name outfit. I read stoic stuff on staying chill under pressure, because half the time, we traders mess ourselves up more than any broker could.

Nice to see an 18-year-old thread still going strong.



What you’ve said there is definitely true of brokers.

CFD “brokers”, however, aren’t actually brokers at all, in any meaningful sense of the word.

They’re your counterparty, winning when you lose and losing when you win.

That’s just as true of the ones who call themselves “STP” or “DMA” or “NDD” or “ECN” or any of the other abbreviations they use to try (often pretty successfully) to fool gullible customers into believing that their “broker” might actually be a broker and be incentivized for them to win, rather than to lose.

If you trade options, or bonds, or stocks, or futures, of course, those are a whole different ball-game, and your broker really is a broker and wants you to win, not to lose.

People are pretty easily fooled, though.

Especially retail spot forex customers, many of whom really want to believe that what they’re doing is actually “trading”.

Some of them even believe that currencies are actually changing hands when they “trade”.

And to be fair to them, the whole industry’s set up to encourage them to believe that.

That doesn’t make it true, though.

And it isn’t true.

Brokers profit from spreads and volume, not your losses. While "stop-hunting" myths exist, reputable brokers hedge trades in liquidity pools. They benefit from active traders (win or lose) through spreads and leverage use. Your deposits provide operational capital, but their business model relies on trading activity - not individual outcomes. Choose regulated brokers for fair execution.

I also used to be suspicious about brokers 'hunting' for my SL levels when I was a noob... still am a noob..
But regulated ECN brokers that follow the rules make money from the number of trades you make, not when you lose money/blow your account.

I use a commission-based account (pay a small commission fee everytime I put in a trade) instead of a spread account. This way, I get the most accurate numbers on my chart which I find useful during high volatility periods