True or False: Brokers like you to make money | Forex Factory

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True or False: Brokers like you to make money

  • #1
  • First Post: Oct 20, 2007 7:47am Oct 20, 2007 7:47am
Brokers claim they like you (client) to make money.

I dont believe this one bit!

1. On ECN brokers, traders are pitted against traders and brokers make money through commission. So If one trader wins, the other loses. How can broker like both winners and losers at the same time? In this case, brokers are apathetic to our trades... Its all business. they are happy only when we trade regardless we make or lose money.

2. On Market Makers, traders trade against each other and sometimes, brokers take our trade directly. Naturally, they want us to lose! How can broker like winner traders at their expense?

So whenever brokers say "We want you to make money" dont believe em.
  • #2
  • Oct 20, 2007 8:16am Oct 20, 2007 8:16am
Hey Big Burger,

you are a bit wrong about ECNs here, ECN pit traders against liquidity providers, they make money on comission. Spreads still exist, so liquidity providers make money that way + they have a back log of institutional orders to fill...

It's not necessarily win/loose game, both sides can win...
  • #3
  • Oct 20, 2007 8:34am Oct 20, 2007 8:34am
  •  mld
  • | Joined Sep 2007 | Status: Pips Raining Cats & Dogs | 85 Posts
I've heard Saxo and FXCM don't like traders who gain high returns (lowest 100%) in a month or so, is that really true? FXCM is also a non dealing-desk so I wonder
  • #4
  • Oct 20, 2007 9:01am Oct 20, 2007 9:01am
FXCM do have a dealing desk, wake up.... helloo.... lol
  • #5
  • Oct 20, 2007 9:48am Oct 20, 2007 9:48am
  •  mld
  • | Joined Sep 2007 | Status: Pips Raining Cats & Dogs | 85 Posts
Quoting zek132
FXCM do have a dealing desk, wake up.... helloo.... lol
Isn't it obvious its stated on their ads banners everywhere? "non-dealing desk"
You going to leave us before you know? bye then lol
mld
  • #6
  • Oct 20, 2007 11:37am Oct 20, 2007 11:37am
I totally agree with you BurgerKing. The thing I find quite amusing is many brokers give you trading advice and even suggest entries for your trades! Talk about a huge conflict of interests. How could you even consider listening to a broker who has the other side of your trade!

oh, I'm a "senior member" now. How did that happen?
  • #7
  • Edited Oct 21, 2007 12:05am Oct 20, 2007 11:55pm | Edited Oct 21, 2007 12:05am
Quoting zek132
Hey Big Burger,

you are a bit wrong about ECNs here, ECN pit traders against liquidity providers, they make money on comission. Spreads still exist, so liquidity providers make money that way + they have a back log of institutional orders to fill...

It's not necessarily win/loose game, both sides can win...
I agree that traders are pitted against "Liquidity Providers".
However, who are the liquidity providers?

Liquidity providers are the big boys (Banks, Institutional accounts, huge lot traders) who place the buy/sell along with the small-fry individual traders. So, these liquidity providers are therefore, traders in purest sense. If they are strictly "Liquidity providers" then how come, during volatility, they all suddenly disappear? Simple: They trade just like you and me.

Likewise, if normal individual traders trade on ECN, they themselves provide the liquidity as well. You dont have to be a bank to be a liquidity provider; all you have to do is just trade on ECN platforms, no matter how big or small the volume, and you are a liquidity provider as well.
  • #8
  • Oct 20, 2007 11:57pm Oct 20, 2007 11:57pm
Quoting peterM
I oh, I'm a "senior member" now. How did that happen?
I think you dont have to post 1000 posts to be a "1KT" member. All you have to be is a logical, intelligent and responsible FF member.

Quoting mld
Isn't it obvious its stated on their ads banners everywhere? "non-dealing desk"
You going to leave us before you know? bye then lol
mld
I also read they give $5000 to anyone who are not happy with them.
* Point being, its not true. They *still* have a dealing desk inspite of what they claim.
Of course this is just my opinion. But I would rather be on the doubtful one than the gullible.
  • #9
  • Oct 21, 2007 5:23am Oct 21, 2007 5:23am
Quoting BurgerKing
I agree that traders are pitted against "Liquidity Providers".
However, who are the liquidity providers?

Liquidity providers are the big boys (Banks, Institutional accounts, huge lot traders) who place the buy/sell along with the small-fry individual traders. So, these liquidity providers are therefore, traders in purest sense. If they are strictly "Liquidity providers" then how come, during volatility, they all suddenly disappear? Simple: They trade just like you and me.

Likewise, if normal individual traders trade on ECN, they themselves provide the liquidity as well. You dont have to be a bank to be a liquidity provider; all you have to do is just trade on ECN platforms, no matter how big or small the volume, and you are a liquidity provider as well.
I do agree with what you are saying, but you missed one point. Let's say Toyota, needs to change 1billion USD into Yen, how do they do it? I suspect that they pass this order to their bank (liquidity provider) which tries to get them the best rate possible. I also suspect that the bank does not offload this sum right away, but rather tries to fragment the order into smaller batches and then feed this in a liquidity at a ECN... This is my theory at least.

Obviously a large part of the forex market is speculative, but i'm pretty sure a lot of it is not. Part is institutional, part is accomidative (collecting the spread and passing the order on) etc..

Thoughs and corrections welcome,

Best regards,

Vlad
  • #10
  • Oct 21, 2007 1:20pm Oct 21, 2007 1:20pm
plenty on fxcm ... ha . they will steal you blind !
Is interbank fx a ecn broker?
  • #11
  • Oct 21, 2007 2:10pm Oct 21, 2007 2:10pm
ECN dont like loosing clients

Market makers like clients loose their money. Good for them
If the Market makers dont exist, I bet no one "Retail Traders" knows FOREX.
  • #12
  • May 29, 2008 12:38am May 29, 2008 12:38am
i dont believe you....
  • #13
  • May 29, 2008 9:15am May 29, 2008 9:15am
i think it depends to which broker you work with
  • #14
  • Jun 3, 2008 7:05am Jun 3, 2008 7:05am
Quoting mld
Isn't it obvious its stated on their ads banners everywhere? "non-dealing desk"
You going to leave us before you know? bye then lol
mld

Please reference Page 7 of their trading agreement, "Counterparty Disclosure":

http://www.fxcm.com/docs_pdfs/trading_agreement.pdf
  • #15
  • Oct 28, 2014 2:32am Oct 28, 2014 2:32am
No, market maker brokers don't want you to be succesful. They act as a counter party to your trades, so it's in their interest for you to lose. If you start winning too ofter, they start having requotes, freeze your platform and eventually close your account. FXCM and Forex.com are notorious for this kind of shameful behaviour.
  • #16
  • Oct 28, 2014 3:16am Oct 28, 2014 3:16am
Quoting gravitist
No, market maker brokers don't want you to be succesful. They act as a counter party to your trades, so it's in their interest for you to lose. If you start winning too ofter, they start having requotes, freeze your platform and eventually close your account. FXCM and Forex.com are notorious for this kind of shameful behaviour.
FXCM is no longer a market maker
  • #17
  • Last Post: Oct 28, 2014 3:39am Oct 28, 2014 3:39am
Quoting BurgerKing
Brokers claim they like you (client) to make money. I dont believe this one bit! 1. On ECN brokers, traders are pitted against traders and brokers make money through commission. So If one trader wins, the other loses. How can broker like both winners and losers at the same time? In this case, brokers are apathetic to our trades... Its all business. they are happy only when we trade regardless we make or lose money. 2. On Market Makers, traders trade against each other and sometimes, brokers take our trade directly. Naturally, they want us to lose!...
I agree to an extent with what you're saying.

MM brokers obviously have a clear conflict of interest.

However, with ECN brokers, their interest could arguably be in your longevity since they only profit from the bid/ask spread or comissions.
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