DD "taking opposite side of trade" explain why this is bad?

Hi,

Can someone kindly provide a CONCRETE, SIMPLE example of how exactly a DD taking your opposite trade is bad for you and good for the DD? How will they profit from this if half your trades are winners and half are losers? (from the point of view of DD)

Thanks

They do not profit it from YOU specificaly. They profit from all the trader on average as 95% lose anyway.

Also, they know where are the SL and TP of all the position so they have an hedge you dont have.

If you are one of the 5% of the successfull trader then it does not matter if they hedge your position or not.

Any trading entity would want anonymity and that's one of the reasons why anomymous multibank platforms got popular.

On the other hand, when you trade billions in a single bank's proprietary platform, then you're exposed, and if the bank doesn't hedge it, then the bank may
(1) decide to move the market to wipe out your position. Also,
(2) even if the bank does not move the market, the bank may wipe out your position when market reaches reasonably close to your stop.

Retail brokers don't have power to move market. But, they have power to wipe out your grandma's position when market's close enough to her stop, just like all banks do - but retailers would do this a little more often than banks and developed many skills (freezing, requoting, etc) to do that because they don't have any noble reputation or face to save.

But most importantly, big name banks have all the capital, info, skill, experience to take risky position. On the other hand, retailers are dangerous to do that. So if you win and your broker lose, then great. But if all of their clients win, and your broker lose, then they go bankrupt and you lose too. So if you want not to check your retailer's balance sheet every week or don't want to shout 'what was the low/high on EBS?' every time, then just choose strick NDD/STP with NO mark-up, and instead, pay commission. That's cheaper by far.



gl

They mostly profit from the spread.

However, there is some incentive to further pad their profits by quoting prices which will trigger various stop losses.

The concern you might have is when your market maker has spikes in their price graphs and yet doesn't seem to trigger any limit orders at those prices. It'll make you wonder.

Brokers with commissions generally get paid regardless of what happens, so they usually care less, however .. you have to wonder who their liquidity providers are and how much information they are sharing with them.

Sorry but why is anonymity important to me? Thanks, these are great responses!

What is freezing - can you give me a concrete example?

Also, I thought requoting was when the broker says they couldn't fill you in at that price (error) or you can enable deviation from price and get filled at another price. I thought this was natural due to the demand/supply nature of the market?

But how would they intentionally manipulate with "requoting", could you give me an example please?

Sorry, I didn't understand the Balance sheet and shouting reference.

What are mark-ups and why are they important to me?


Thanks a lot, that was a very insightful and speedy reply!
Looking forward to your next response

It is not bad. In fact, any trade you place on any market, anywhere in the world has a counter party. A DD makes a market for you because if they do not, you won't have one to trade with small positions.

You have to have a counter party to trade - and a DD provides that market.

For clear understanding of what is going on, please have alook at these two threads. They are excellent.

Darkstar


FXOpportunist

Rusty_forexman

Then go and pick a broker from the recommended list her on FF.

Cheers and success to you!