Who gets the money from a loss trade?

So, the question is about the structure of the money flow. It keeps me thinking but I can't figure it out. So, when I make a trade and it's a loss, who take that money? The broker?

If your broker took the other side of your trade and you lose, then your broker gets your loss, the broker is the counterpart at the opening and closing of the trade. But if your order is routed to the market and you lose, there isn't some individual entity that takes your loss, your position simply lost market value.

Countless times I've read that every loss a trader makes is gathered in profit by single other trader that takes the other side of the trade...I have no idea how that makes sense...is the counterparty in openning the trade the same counterpart when you close it? If you buy a house from a seller and it loses value, and you sell it to a separate buyer at a loss, no 'one' took your money, your asset simply lost value and a new counterpart comes along. On the same lines if you buy a house that lost value, did you 'take' the previous owner's loss as profit? Heck no, unless the opening and closing counterparts are the same, no single person takes your loss, it's your position losing value in the market.

You "do" if you sell it after it has appreciated "back to normal"?

But you weren't the first one who sold the house to the seller in the first place to buy back at a later devalued date, the opening and closing counter parties are different.

Imagine a smooth trend on a currency pair, it can have many buyers that sell at higher prices to new buyers that sell at even higher prices, whilst continued demand drives price up and up. There are no losses to be taken. If at a later date some of the late buyers get stopped out by early sellers of a trend reversal, they are merely links in a never ending web of chains of shifting counterparties that we call the market. If the closing counterparty 'took' your loss, then they must have been your opening counterparty. The new sellers in the example were not the ones who paired the trades to the buyers in loss. The new sellers themselves can lose, and their counterparty buyers can lose and it goes on.

Good topic, may be we need some more technical information here, it might make it clear and bring some sense to it.

you have to see that as an aggregate, not on an individual basis.
If market is trending up. Then the net buyers will be the winners, while the net sellers are the losers. So the net buyers' wins will be the net sellers' losses.

That I totally get, the aggregate wins and losses, like a never ending poker game. I just disagree with the idea that for closed trade in loss, the counterparty is the taker of the loss (even though they weren't the opening counterparty), but rather the ongoing aggregate of winning and losing trades. So that the 'one' that gets all the losses from losing trades is the aggregate/market.

Hi,

Imagine you bought a car last year. $20k. You sell it today. That's a used car. You get $17k.
Who took the missing $3k? (here there's no broker!) The car salesman?

Instead, keep the car 20 years in a garage. That's now a vintage collection car. You sell it $100k.
Did the car salesman lose $80k?

It makes sense your are just looking at it from the wrong side. A position is not a single fixed good. A position is a mix of two currencies. You long EURUSD you buy euros and sell usdollars (borrow if you account currency is dominated in euro). So you got a positive balance of euros and a negative balance of usd now. You had two counterparties for that trade. One for selling you euros and one for buying usds from you (which your broker/bank lends to you since you are naked selling them - not owning them). In between is your bank/broker which acts as a lender for your leverage + naked sells which you provide your account balance to for as collateral. From now on you don't really have a single position like your trading terminal shows you and you don't have any affiliation with your counterparties anymore. Your account balance will change on any change in the value of euro or value of usd. If euros rise and usd fall or rise less then euro your overall account balance goes up since the values if your euros increase more than the values of your usds (which you still owe to your broker/bank - you want them to fall in value since that means once you pay your bank/broker back the original lended amount it will be worth less than what you borrowed -> you made a gain on that side of the trade). If euros rise you make a gain on too of course because you bought something at a lesser price which is now worth more.

Your examples with car / house value rising/falling is the same example. It has nothing to do with your initial counterparties. If there is inflation and euro falls in value more than the usdollar then your overall exposure will fall too. Your combined investment in both currencies will now be worth less than at the beginning of your trade. Does that matter for your counterparties? Not at all. They might have already reversed their positions or went on to entirely different positions long before you e.g. The one that sold you euros might have done that in a EURAUD trade to buy AUD. He might then have sold off those AUD and bought USD. Whatever... Currencies are a floating/trading good that you only own a tiny part of and just because you buy it from someone does not mean you have to sell it back to them. You can sell it back to anyone else who wants to buy it from you.

Someone always realizes the loss. But it will almost never be your original counter party since once you exit / reverse your trade you will deal with a different counterparty. But for you to own those euros someone and if it was years back! had to sell his euros to someone and so on until you got them from someone else. For you to realize a winning on your position someone else somewhere in the chain had to realize a loss on his position. That loss might have been in an entirely different position with just one matching currency though.

If you buy flowers from some depot in holland you don't have to sell them back to them but sell them to whoever wants to buy them from you at your local market. If you sell them for more you made a gain. Your initial counterparty doesn't make a loss (if he sold them to you for more than his operating / production costs) and you don't make a loss either if your overall costs were less. You could say your new counterparty realized the loss in that case since he bought flowers from you that are worth less than he payed since he could have bought them from the holland depot though + he destroys their monetary value by putting them in a vase. This new counterparty provides the money for both you and your initial sellers gain.

A correct broker will not provide you with simple account statements like metatrader. They will provide you with correct account statements showing 4 transactions for each single round turn in a position. They will show you your euro buy, usd sell and then eur sell and usd buy along with exchange rates based on your account currency and so on.