Who will pay for your money ? | Forex Factory

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Who will pay for your money ?

  • #1
  • First Post: Feb 24, 2009 10:35pm Feb 24, 2009 10:35pm
what do you people think from it ? is a forex broker company is a casino ?

its like when you join a forex broker company for 10k and you win for 200k, who will actually pay for it, of course the forex broker will pay for it, but where they will get the money ?
is it the money from the company indeed ?

so the company is hoping that the customer lose then the company will profiting from them ? Its okay if the broker charge for commision, fees , and interest. is it enough to pay for the winning ?

But what profit do you people think if they are free from all fees and interest, (such as fxopen, marketiva) which are spread profiting.
  • #2
  • Feb 24, 2009 10:38pm Feb 24, 2009 10:38pm
you haven't heard about brokers being bailed out? everyone else is....
  • #3
  • Feb 24, 2009 10:51pm Feb 24, 2009 10:51pm
Quoting Mulyanto
so the company is hoping that the customer lose then the company will profiting from them ? Its okay if the broker charge for commision, fees , and interest. is it enough to pay for the winning ?
Forex is a zero-sum transaction.
For every buyer there must be a seller and vice-versa for the transaction to be executed (you can't buy if nobody is selling, you can't sell if nobody is buying). Thus, for every win there is a loss elsewhere.

The company profits from the volume of the transactions as they get to keep the spread whatever the outcome will be.

Traders profit from the market... in which some give, and others take, and the next day it goes the other way around... or not.
  • #4
  • Feb 25, 2009 7:54am Feb 25, 2009 7:54am
Quoting doblece
Forex is a zero-sum transaction.
For every buyer there must be a seller and vice-versa for the transaction to be executed (you can't buy if nobody is selling, you can't sell if nobody is buying). Thus, for every win there is a loss elsewhere.
Thats clearly wrong. Even when prices are established, there has to be a liquidity provider in there somewhere and, in most cases of retail forex, the broker provides that liquidity. So, yes, the broker will actively play a role in your trade, funding the other side, whether there is an exact match or not on the other end.
  • #5
  • Feb 25, 2009 12:52pm Feb 25, 2009 12:52pm
Quoting LongToBeFree
Thats clearly wrong. Even when prices are established, there has to be a liquidity provider in there somewhere and, in most cases of retail forex, the broker provides that liquidity. So, yes, the broker will actively play a role in your trade, funding the other side, whether there is an exact match or not on the other end.
Indeed, in small transactions the counterpart buyer or seller can be the broker itself who choses to manage the trades "in-house" and hedge its risk, or transfer the risk to another retail institution, or to their own liquidity provider.
This doesn't change the fact that for every win there is a counterpart loss.
  • #6
  • Feb 26, 2009 12:17am Feb 26, 2009 12:17am
Quoting doblece
Forex is a zero-sum transaction.
Small note: I agree with what you say, except for the fact that there are spreads and commissions, thus making trading a negative sum game not zero. For example, a buyer and seller enter at the exact same moment and exit a second later. Both would lose money due to spread. The only one who makes out is the broker.
  • #7
  • Feb 26, 2009 2:46am Feb 26, 2009 2:46am
Quoting PiedPipper
Small note: I agree with what you say, except for the fact that there are spreads and commissions, thus making trading a negative sum game not zero. For example, a buyer and seller enter at the exact same moment and exit a second later. Both would lose money due to spread. The only one who makes out is the broker.
Agreed.
  • #8
  • Feb 26, 2009 1:47pm Feb 26, 2009 1:47pm
The zero sum ideology isn't exactly true.

Further pondering is required.
The harder I work,the luckier I get.
  • #9
  • Mar 5, 2009 5:32am Mar 5, 2009 5:32am
i guess broker got to lose out if we win big. but then, they will offset the loses from others who loss big. so as long as u are happy with ur broker, u didnt suspect your broker are screwing u, then happy trading. if not then change broker. Who cares who loss money as long as we can win money and the broker pays it. No way the broker runs away unless u win USD 1 bln.
  • #10
  • Mar 15, 2009 3:20am Mar 15, 2009 3:20am
Quoting woopypooky
i guess broker got to lose out if we win big. but then, they will offset the loses from others who loss big. so as long as u are happy with ur broker, u didnt suspect your broker are screwing u, then happy trading. if not then change broker. Who cares who loss money as long as we can win money and the broker pays it. No way the broker runs away unless u win USD 1 bln.
So we are 'striving to steal' from the broker or other people money ?
isnt that not good ? stealing other people money ?
  • #11
  • Mar 15, 2009 3:25am Mar 15, 2009 3:25am
Quoting Mulyanto
So we are 'striving to steal' from the broker or other people money ?
isnt that not good ? stealing other people money ?
I did not sneak into their house and steal it, nor did I hold a gun to their head and rob them. IF they are stupid enough to make a bad trading decision and I made a smart one, then they DESERVE to lose their money. Not sure where you are from but here trading Forex is voluntary.
  • #12
  • Mar 15, 2009 6:42am Mar 15, 2009 6:42am
Dumm question: What happens if everyone wins?
Do the prices start to make out of the winners losers again?
  • #13
  • Apr 4, 2009 6:11am Apr 4, 2009 6:11am
Quoting green
Dumm question: What happens if everyone wins?
Do the prices start to make out of the winners losers again?
No I think i everyone wins in the broker, they have to pay large load of money, but the question is where is the money to pay from ??
  • #14
  • Apr 4, 2009 6:31am Apr 4, 2009 6:31am
wake up... after 4 weeks still thinking of this question?

open 2 trading platform, one is mt4 demo with backend ecn price feed, other is a dedicate platform like fxsol, oanda, etc

if you fill limit order base on ecn price and m-m broker fill it every time.

you're basically trading as if with a ecn. if you win or lose here, you win or lose anywhere else...

there is nothing to worry about... I never worry about this question again since I do that.

market maker tightens spread and finds a reverse deal for you... that saves you going on ebay and find someone to exchange at 1% spread...

Quoting Mulyanto
No I think i everyone wins in the broker, they have to pay large load of money, but the question is where is the money to pay from ??
  • #15
  • Apr 4, 2009 6:36am Apr 4, 2009 6:36am
Quoting doblece
Forex is a zero-sum transaction.
That's a topic to discuss. Michael Stumm from Oanda did say that this is not true. There was an interesting thread about it here:
http://www2.oanda.com/cgi-bin/msgboa...6;t=000915;p=1
  • #16
  • Apr 4, 2009 6:44am Apr 4, 2009 6:44am
haha ED PONSI from fxcm who wrote forex patterns and probabilities also said it is not true...

he says
A buy at 1.33, and sell to B at 1.34
B buy from A at 1.34, and sell to C at 1.35

so~ A and B are not win-lose or zero sum. hahaha

but who is that clever guy who can always buy low and sell high?

oh, that is the broker itself by definition of spread... so the real 'no loss, 100% win, higher leverage the more money' trading style lies in the broker.

Quoting Xaron
That's a topic to discuss. Michael Stumm from Oanda did say that this is not true. There was an interesting thread about it here:
http://www2.oanda.com/cgi-bin/msgboa...6;t=000915;p=1
  • #17
  • Apr 4, 2009 2:04pm Apr 4, 2009 2:04pm
one NEVER knows WHY someone else sells or buys --- lets say Im long and i reach a resistance point, after a 100 pip run and just want to get out of the trade ---- am i a dumb bunny because someone else buys with the idea/knowledge that they will play the coming "breakout ?" WHO won or lost on that trade ?

what if im short, and i sell my shares to another who is going short who then sells those shares to someone who is a "position" trader, trading the H4 or daily as a LONG ? the first two trades are a wash as all thats happened is we have TWO traders who have sold so as to enter a short position and the position trader doesnt give a hoot if the currency goes down for a while --- WHO WINS OR LOSSES ON THAT TRADE ?

Personally, I think a lot of testosterone is being wasted over trying to make the silly game of trading into a WAR between one trader and another and its really nothing but a GAME, played with real money and whose root basis is to try to improve and add on to your equity stake.

to be honest, making pips is what I do and why I play the game (pips equal money, so lets not get into THAT discussion) and i find it very enjoyable to move around the monopoly board and end up on park place every day, but NEVER does any consideration come into my mind that I am destroying another to make myself richer ---- its pure fruitcake to even begin thinking that way !

enjoy and trade well

mp
  • #18
  • Apr 4, 2009 2:49pm Apr 4, 2009 2:49pm
everything has a reason, ... just there are things not worth digging deal with good broker then no need dig it I agree. no hurt understanding though.
  • #19
  • Apr 5, 2009 4:21am Apr 5, 2009 4:21am
mp[/quote]

"its pure fruitcake to even begin thinking that way !

enjoy and trade well

mp[/quote]

A Zero sum game, As far as i can think
I would say that a lot of the money that is food for traders comes
from factorys, goverments, industry and all people just changing
cash.
German factory A needs 2 million USD.
They go to a bank.
The bank takes their Euros and buys 2 million USD.
This is a one way transaction. Long.
Because the Dollar is more expensiv than 1 month ago
they are paying cash that goes to the fx traders.
For the factroy this is not a loss. They are just paying
the spot price for the Dollar.
Factory B wants to get rid of their Dollar savings.
They sell it for a price that is lower than a month ago.
A one way trade. Short. For them it is just the spot price.

So are there a lot of sources feeding the market??


haahaaa just read the oanda link from above, they say the same thing i was thinking!
  • #20
  • Apr 5, 2009 8:48am Apr 5, 2009 8:48am
You're right, green. Really big chunks of money are transfered and changed into other currencies where those initiators doesn't really care about the current price or if it goes up or down after that...
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