What happens inside of a brokerage firm/Exchange | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Starting a forex brokerage firm 3 replies

Good idea to form your own brokerage firm? 10 replies

Brokerage debate 12 replies

Need a brokerage with demo and web based realtime charts 8 replies

fx brokerage 0 replies

What happens inside of a brokerage firm/Exchange

  • #1
  • First Post: Jul 9, 2024 7:36am Jul 9, 2024 7:36am
I stumbled lately a few times over what happens exactly inside of a Brokerage FIrm or Exchange.

If I have something like:
date time type bidP bidSize askP askSize
12/15/2010 25:51.3 Quote 970 5 985 5
12/15/2010 25:52.7 Quote 965 15 985 5
12/15/2010 25:54.1 Quote 980 20 985 5
12/15/2010 25:56.6 Trade 985 5
12/15/2010 25:56.6 Quote 980 20 990 30
12/15/2010 25:57.9 Trade 990 25
12/15/2010 25:57.9 Trade 990 5
12/15/2010 25:57.9 Quote 980 20 1000 15
12/15/2010 25:57.9 Quote 985 5 1000 5

If these quotes have a different size at every moment/seconds I do not get why do not all get matched as trades, if are the same (including new ones for different sizes) where are the trades that changes the size/volume?
Then, again, the Quotes would be the prices in the Stock/Brokerage, the volume shows the orders of traders or are already registered as available to order for traders (would be some kind of accounting issue inside the Firm).
I will come back with other questions, including regarding liquidity and how the Brokerage/Stock keeps orders of traders that must later be 'released'/absorbed liquidity on the market.
Any clarifications would be great.
AlxT
  • #2
  • Jul 9, 2024 7:54am Jul 9, 2024 7:54am
Quoting AlxT
Any clarifications would be great.
You’ve misunderstood what a broker is (and maybe also what an exchange is).

A broker is someone who executes on his clients’ behalf trades in a market to which those clients don’t themselves have access (in this case of spot forex, it's the interbank market) without himself being financially involved in the outcomes of the trades. In other words, spot forex "brokers" are not really brokers in any reasonable or realistic sense of the word.
  • #3
  • Jul 9, 2024 11:58am Jul 9, 2024 11:58am
Quoting Quickly
{quote} You’ve misunderstood what a broker is (and maybe also what an exchange is). A broker is someone who executes on his clients’ behalf trades in a market to which those clients don’t themselves have access (in this case of spot forex, it's the interbank market) without himself being financially involved in the outcomes of the trades. In other words, spot forex "brokers" are not really brokers in any reasonable or realistic sense of the word.
"
The forex broker's role
A broker is a place where buyers and sellers go to buy and sell instruments, such as currencies.
The forex broker operates as a middleman between you and the market. In other words, in order to find a buyer or a seller of currencies, you can go to a broker and they match you up with either a respective seller or a respective buyer.
However, instead of just being the middleman between you and another buyer or seller, they are also the middlemen between you and what is called a “liquidity provider”.
"
It is not the only source. Can you be more clear regarding on what is I misunderstood ?
  • #4
  • Jul 9, 2024 12:07pm Jul 9, 2024 12:07pm
Quoting AlxT
Can you be more clear regarding on what is I misunderstood ?
A spot forex/CFD broker is your counterparty.

Your trades aren’t in a market.

No currencies actually change hands.

You’re only betting, not trading.
  • #5
  • Jul 9, 2024 12:20pm Jul 9, 2024 12:20pm
Quoting Quickly
{quote} A spot forex/CFD broker is your counterparty. Your trades aren’t in a market. No currencies actually change hands. You’re only betting, not trading.
spot forex/CFD broker is your counterparty. : Ok, no worries here.
Your trades aren’t in a market. No currencies actually change hands. : But the orders are, and they do affect the prices.
You’re only betting, not trading.: Ok... No exchange of currencies, but the Broker has multiple orders/trades of buy and multiple of sell, from multiple individuals.
According to you, what is the pathway of those orders (after you make them, for the broker/ reference to Accounting)? / Reference to order flow as well.

Alxt.
  • #6
  • Jul 9, 2024 1:03pm Jul 9, 2024 1:03pm
Quoting AlxT
what is the pathway of those orders
I think there’s no way of knowing this with certainty/proof.

But for sure anyone and everyone who has ever worked in the industry a bit will tell you that all the terminology like “STP” and “NDD” and “ECN” can absolutely be ignored.

Brokers have come up with these terms to encourage their customers to imagine that they are actually trading, that currencies change hands, etc.

They don’t change the reality that you’re betting against a counterparty (I’m not suggesting there’s anything intrinsically wrong with that, as long as you understand clearly that that is what’s happening).
  • #7
  • Jul 9, 2024 2:04pm Jul 9, 2024 2:04pm
Quoting Quickly
{quote} I think there’s no way of knowing this with certainty/proof. But for sure anyone and everyone who has ever worked in the industry a bit will tell you that all the terminology like “STP” and “NDD” and “ECN” can absolutely be ignored. Brokers have come up with these terms to encourage their customers to imagine that they are actually trading, that currencies change hands, etc. They don’t change the reality that you’re betting against a counterparty (I’m not suggesting there’s anything intrinsically wrong with that, as long as you understand...
Yes, but I am still at the first question.
  • #8
  • Jul 9, 2024 3:03pm Jul 9, 2024 3:03pm
Quoting Quickly
{quote} A spot forex/CFD broker is your counterparty. Your trades aren’t in a market. No currencies actually change hands. You’re only betting, not trading.
This is the only remotely legit response

There is no pairing of your order....there never is or was in modern "FX".
  • #9
  • Jul 10, 2024 9:10am Jul 10, 2024 9:10am
Quoting Southeast
{quote} This is the only remotely legit response There is no pairing of your order....there never is or was in modern "FX".
That (data) would be in a stock market. A 'centralized' one.
  • #10
  • Jul 10, 2024 1:45pm Jul 10, 2024 1:45pm
Quoting AlxT
{quote} That (data) would be in a stock market. A 'centralized' one.
The stock market has taken the same model now. The liquidity providers are taking the other side; there was too much money left on the table.
  • #11
  • Jul 10, 2024 6:09pm Jul 10, 2024 6:09pm
Quoting Southeast
{quote} The stock market has taken the same model now. The liquidity providers are taking the other side; there was too much money left on the table.
Yes, I get that.
Also, it is a non-developed country, hence (the stocks of the exchange for that country) not as traded internationally as for the developed countries.
  • #12
  • Jul 22, 2024 3:16pm Jul 22, 2024 3:16pm
Quoting Southeast
{quote} The stock market has taken the same model now. The liquidity providers are taking the other side; there was too much money left on the table.
Do you mean markets became more rigged or what? Centralized is good but has many drawbacks, like manipulations
  • #13
  • Last Post: Jul 30, 2024 6:23am Jul 30, 2024 6:23am
The price that you receive is always not same with execution..it is different

what you see is not same what actual price being trade at the back.
We provide MT5 Bank Level: Join Telegram https://t.me/manwithbank
0 traders viewing now