Why do people say brokers steal from traders no matter what? | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Can MT4/MT5 Brokers steal Indi/EAs? 35 replies

why people say Elliot is hard to learn? 27 replies

Why do so many people have accounts with just awful brokers? 21 replies

Why do 99% of the people who wants to be traders fail? 182 replies

will brokers steal your charts 39 replies

Attachments: Why do people say brokers steal from traders no matter what?
Exit Attachments

Why do people say brokers steal from traders no matter what?

  • #1
  • First Post: Dec 11, 2015 12:30pm Dec 11, 2015 12:30pm
Hi,

I would really like to know this, because...

What I understand now, is that brokers don't care either you win or lose, they just charge you comissions, they're just in the middle of the chain, the ones who lose and win are the buyers and sellers.

So why do some people say that brokers steal money from the traders?

I know some of them over charge ammounts, for this and that, I don't care about that, people should realize, I'm talking specifically about "trading".

So, how could brokers could benefit from you losing all your balance? I think that's bad for brokers, since they won't be able to charge comissions on you anymore.

Please, I wanna see the truth lol
A good strategy for trading is... the opposite of having a bad strategy.
  • #2
  • Dec 11, 2015 4:14pm Dec 11, 2015 4:14pm
Quoting PowerTrade
Hi, I would really like to know this, because... What I understand now, is that brokers don't care either you win or lose, they just charge you comissions, they're just in the middle of the chain, the ones who lose and win are the buyers and sellers. So why do some people say that brokers steal money from the traders? I know some of them over charge ammounts, for this and that, I don't care about that, people should realize, I'm talking specifically about "trading". So, how could brokers could benefit from you losing all your balance? I think that's...
Simply look at the people who claim that brokers steal their money, and the answer will be clear. Most people trade a horrible system, which allows for huge drawdown in pips, maybe 800 pips, and when a person says that the broker stole their money it's because they got margin called, and then the order reversed after their account was burst. Basically, deflection is the reason why people claim that the brokers caused the loss. What makes those things hard to prove is actual PROOF. Most, if not all, the people who claim to have lost because of the broker, never have video or even a trade explorer which supports their claim. Those claims should be taken lightly and even ignored all together.
  • #3
  • Dec 11, 2015 4:30pm Dec 11, 2015 4:30pm
Quoting NoobPie
{quote} Simply look at the people who claim that brokers steal their money, and the answer will be clear. Most people trade a horrible system, which allows for huge drawdown in pips, maybe 800 pips, and when a person says that the broker stole their money it's because they got margin called, and then the order reversed after their account was burst. Basically, deflection is the reason why people claim that the brokers caused the loss. What makes those things hard to prove is actual PROOF. Most, if not all, the people who claim to have lost because...
I totally agree.

A few months ago, I was assitings to some trading classes, one of the assistants worked for a broker, the teacher told her:

"I know what you do, I respect your work, but I don't respect what brokers do."

WHAT THE F%"#$% DO BROKERS DO???

He also said:

What brokers want is...

A= Wins B=loses
A= Loses B=Wins
A= Wins B=loses
A= Loses B=Wins
A= Wins B=loses
A= Loses B=Wins

What does it matter???

I think that a broker makes LOTS OF MONEY IF THIS HAPPENS:

A= Wins B=loses and quits.
A= Wins
A= Wins
A= Wins
A= Wins
A= Wins
A= Wins
A= Wins
A= Wins
....

Because they will get comissions for ever.

Is there a secret, so that brokers steal us, and that they will reign, and conquer the world and the galaxy?

Is there something I don't know? Illumintis? Bermudas triangle? The Kennedys? Something?
A good strategy for trading is... the opposite of having a bad strategy.
  • #4
  • Dec 11, 2015 5:13pm Dec 11, 2015 5:13pm
Quoting PowerTrade
Please, I wanna see the truth lol
And you ask that on the internet?! Oh good lord!

Kidding aside though, it depends on the model that "broker" is operating. Genuine brokers life (mostly) of commission (there are a few other sources of income like interest on your deposit but to cut it short here: your losses are none of them).
It's a bit more complicated with market makers ... not all of them are bad but there is definitely a conflict of interest.

Quoting PowerTrade
So, how could brokers could benefit from you losing all your balance? I think that's bad for brokers, since they won't be able to charge comissions on you anymore.
That assumption is correct. If you have a real broker, not a market maker, it's very important for them that you stay motivated, robbing your account would most probably lead to the opposite (considering I live 10 minutes from my brokers office it'll motivate me to do something else ).
Actually if you get in touch with a real broker, have a properly sized deposit and a rather big monthly volume you'll notice the difference in how they treat you from the first day on. But all the internet newbies moaning and insulting around here seem to have a bad habit in picking brokers (half-naked girls, fast cars, leverage as high as possible irrespective of the current market situation ...) sometimes you really have to wonder how many "traders" on here are actually over 15.
  • #5
  • Dec 11, 2015 7:40pm Dec 11, 2015 7:40pm
Another thing people say is that if you have a STP or market maker broker then one is more credible then the other. Simply look at it this way. If you as a client places a buy order, and 95% of transactions placed is stopped out, then why wouldn't a broker take the opposite side of your trade? A broker taking the opposite side of your trade doesn't mean that he is moving the market against you. It simply means that he is wagering against you, kind of what options are to begin with. If I as a broker take the opposite positions of my client, I could use that as a "contract" which I could turn into any sort of option.
Once again it all comes down to a trader not wanting to take responsibility for his action or in the case of bias traders "in-action". A broker is a scammer, if all of a sudden you open your account and one day you see your entire account balance is gone, but it isn't fair to call a broker a scammer, or say they are out to get your money because you placed an order which ended up going against you 1000 pips which stopped you out! The broker isn't responsible for that.... You as the trader are!
  • #6
  • Dec 11, 2015 11:59pm Dec 11, 2015 11:59pm
Quoting JensG
{quote} And you ask that on the internet?! ...your losses are none of them).
That
Quoting JensG
...it's very important for them that you stay motivated, robbing your account would most probably lead to the opposite (considering I live 10 minutes from my brokers office it'll motivate me to do something else ).

lol

And also the regulators.


Quoting NoobPie
The broker isn't responsible for that.... You as the trader are!
That

---

Those two opinions, was what I was expecting, so, in the end, is up to you and only to you.
A good strategy for trading is... the opposite of having a bad strategy.
  • #7
  • Dec 12, 2015 2:20am Dec 12, 2015 2:20am
book a/b aside, i guess what they mean by stealing is price quotes differentials. sure, one can say cause they use different lps but that would only affect the differences marginally instead of this, see SS. both of eurusd pairs. btw these 2 are my prime broker accounts which should be getting the best true rates in accordance to market
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 1.JPG Size: 38 KB
Click to Enlarge Name: 2.JPG Size: 27 KB
  • #8
  • Dec 12, 2015 2:27am Dec 12, 2015 2:27am
Why do people say brokers steal traders no matter what?

They do it because they can.
It would be very naive to think they don't have weekly meetings to devise the best ways to get the most money out of their customers.
I know this is a fact because OANDA just screwed with my account. I am filing a complaint.
  • #9
  • Dec 12, 2015 9:03am Dec 12, 2015 9:03am
I read a story that one person had multiple accounts and somehow concluded that the accounts performances were different over time running the same strategy. Sounds a bit hard to prove but if you have a mechanical system that consistently works in one account and then you started running it on another account and it stopped working, that might prove that something fishy is going on - such as some brokers or accounts being 'bucketed' in a manner where the odds of success or failure change.

It could well be that there's some small traders being given consistent success as long as they stay within certain size, so they then can keep posting, serving as indirectly paid promoters. This forum has a few long time posters that seem to have consistent success, yet if they traded big size, you'd think they'd own some yachts by now and got bored of trading. The question remains - where are the retail trader (customers) yachts?
  • #10
  • Dec 12, 2015 9:09am Dec 12, 2015 9:09am
Quoting Mingary
Why do people say brokers steal traders no matter what? They do it because they can. It would be very naive to think they don't have weekly meetings to devise the best ways to get the most money out of their customers. I know this is a fact because OANDA just screwed with my account. I am filing a complaint.
I am curious please tell me more about what Oanda did to your account. A larger portion of my account is deposited with them as well so it's actually important for me.
  • #11
  • Dec 12, 2015 9:29am Dec 12, 2015 9:29am
Quoting NoobPie
If I as a broker take the opposite positions of my client, I could use that as a "contract" which I could turn into any sort of option.
This kinda gets into why I think uninformed lower frequency trading fails consistently (and in current market, I doubt the 'smart money' is doing much better). All the retail directional trading are hedged/turned into options if the positions just remain open. There might be initial retail counterparty in a bucket shop but eventually the shorter term retail counterparty (I'm saying counterparty as a way to describe the accounting happening so that zero-sum stays valid) close their position and then the longer term traders "position" would end up somewhere - hedged into options.

So from this we could say that if one is trying to swing trade or position trade or whatever, especially with big size, then it's very likely the position ends up hedged and the retail fx brokers hedge that into options that decay in value. Given the prices are a two-way street, the decay in option values works to change the spot quotes in a way to become reflective of the lost value, effectively going against the "bag holders".

So effectively, even if you open a position in a bucket shop, eventually due to all that, the price is very likely to start going against you if there's no one else holding even bigger opposite loser open. Now those long options do pay sometimes, rarely, but I'm almost 100% sure the market has been 'rigged' in a way that option sellers have to sleep at the wheel to lose as long as they know what they are doing. It's not much different from insurance companies coming up with all sort of stuff to avoid paying awards.
  • #12
  • Dec 12, 2015 12:04pm Dec 12, 2015 12:04pm
Quoting fxjesus
{quote} This kinda gets into why I think uninformed lower frequency trading fails consistently (and in current market, I doubt the 'smart money' is doing much better). All the retail directional trading are hedged/turned into options if the positions just remain open. There might be initial retail counterparty in a bucket shop but eventually the shorter term retail counterparty (I'm saying counterparty as a way to describe the accounting happening so that zero-sum stays valid) close their position and then the longer term traders "position" would...
I value your post, but I honestly don't look into what "they could be doing" because in no way shape or form does that effect the manner in which I trade. All I am sure of is that in ANY market condition, the market always trades in the same exact way. The market could be choppy or the market could be in breaking out. Either way, the conspiracy of the broker "stealing funds" from clients, in most cases is a crock of $h!t. People simply complain that their position turned into a big fat loss, and once they were stopped out, the market then reversed... They seem to believe that the broker has the ability of doing that under "normal market conditions".
  • #13
  • Dec 12, 2015 10:22pm Dec 12, 2015 10:22pm
Just the fact that there is a flourishing market for "virtual dealer plug-ins" (i.e MT4 parasite software to "skin" clients) tells all...

There is even one called "Anti-Scalper" plug-in...

You can Google it, but here is some literature:

http://www.tools4brokers.com/products/Virtual_Dealer
http://www.forexpeacearmy.com/commun...r-plugin.9019/
http://www.financemagnates.com/forex...ing-practices/
  • #14
  • Dec 12, 2015 10:56pm Dec 12, 2015 10:56pm
Quoting MasterGuru
Just the fact that there is a flourishing market for "virtual dealer plug-ins" (i.e MT4 parasite software to "skin" clients) tells all... There is even one called "Anti-Scalper" plug-in... You can Google it, but here is some literature: http://www.tools4brokers.com/products/Virtual_Dealer http://www.forexpeacearmy.com/commun...r-plugin.9019/ http://www.financemagnates.com/forex...ing-practices/
Man thanks, this is great, thanks for sharing, there's even a youtube video!
A good strategy for trading is... the opposite of having a bad strategy.
  • #15
  • Dec 12, 2015 11:12pm Dec 12, 2015 11:12pm
Quoting Kilian19
{quote} I am curious please tell me more about what Oanda did to your account. A larger portion of my account is deposited with them as well so it's actually important for me.
Please tell us.

Quoting Mingary
Why do people say brokers steal traders no matter what? They do it because they can. It would be very naive to think they don't have weekly meetings to devise the best ways to get the most money out of their customers. I know this is a fact because OANDA just screwed with my account. I am filing a complaint.
I don't have an account with them, but it's always good to know, just in case one of us face the problem in the future.

Quoting NoobPie
{quote} I value your post, but I honestly don't look into what "they could be doing" because in no way shape or form does that effect the manner in which I trade. All I am sure of is that in ANY market condition, the market always trades in the same exact way. The market could be choppy or the market could be in breaking out. Either way, the conspiracy of the broker "stealing funds" from clients, in most cases is a crock of $h!t. People simply complain that their position turned into a big fat loss, and once they were stopped out, the market then...
I agree with you, but look at this from the link MasterGuru posted.

http://www.financemagnates.com/forex...ing-practices/

Quote
Those with good memory will remember that only 6 months ago Gain Capital was slapped with $459,000 fine for abusing its Virtual Dealer plugin and configuring it to unfair trading settings.

Quote
The main idea behind these plugins is to protect the broker from being exploited by certain traders who will try to gain pips they shouldnt gain when they give an order hoping that by the time the order is accepted by the broker the market already moved a pip or two in their favor. This obviously makes it not trading but exploiting loops in brokers systems. On the other hand, brokers (some would even say that most brokers) exploit the configuration of these plugins and set them to only accept orders when the market moves against their clients...

I don't care about the plugin, I care about the idea of the zero riks for the broker.

What is the risk? What I understand is that the broker has no problems, because they live from their comissions, what does it matter if the price moves in favor or against the customer, anyway they'll get their comissions.

Please someone explain to me
A good strategy for trading is... the opposite of having a bad strategy.
  • #16
  • Dec 12, 2015 11:41pm Dec 12, 2015 11:41pm
A year ago I met the owner of a New Zealand based brokerage (by the way: DO NOT trust any NZ-based brokers), who told me that on the yearly Forex Expos there are numerous companies selling the very newest parasite "virtual dealer plug-ins".

He also told me that many (mostly Russian) brokers do not even contract with Liquidity Providers, i.e. they B-book everybody. Should a client be a profitable trader, then they try to make him leave by an arsenal of "plug-ins". If they still cannot make him go, then they simply delay or refuse paying out profits... In other words: these brokers are interested only in the 95% of the traders, i.e. in the losers. As strange as it is, but this is a profitable Forex broker business model...
  • #17
  • Dec 12, 2015 11:45pm Dec 12, 2015 11:45pm
Quoting MasterGuru
A year ago I met the owner of a New Zealand based brokerage (by the way: DO NOT trust any NZ-based brokers), who told me that on the yearly Forex Expos there are numerous companies selling the very newest parasite "virtual dealer plug-ins". He also told me that many (mostly Russian) brokers do not even contract with Liquidity Providers, i.e. they B-book everybody. Should a client be a profitable trader, then they try to make him leave by an arsenal of "plug-ins". If they still cannot make him go, then they simply delay or refuse paying out profits......
But I thought Brokers just earn money with comissions, no with traders money.

I invited this guy to this thread: http://www.forexfactory.com/showthre...41#post1775741

So, 90% of traders do earn money all the time, the broker goes into bankrupcy (I don't know the word).
A good strategy for trading is... the opposite of having a bad strategy.
  • #18
  • Dec 12, 2015 11:55pm Dec 12, 2015 11:55pm
Quoting PowerTrade
{quote} But I thought Brokers just earn money with comissions, no with traders money. I invited this guy to this thread: http://www.forexfactory.com/showthre...41#post1775741 So, 90% of traders do earn money all the time, the broker goes into bankrupcy (I don't know the word).

According to a Swiss fund manager (who knows Forex brokers better than me, as "due diligence" is main part of his job) practically all trades below 50 lots are "B-booked" by the brokers, i.e. the brokers are betting against 99% of their retails clients. Which makes sense (from the brokers aspect), as they profit not only the spreads and the commissions, but also the client funds which 95% of Forex traders lose.

You are right, if 90% of traders won, then brokers would go bankrupt. Which is why they "have to" use the "virtual dealer plug-ins". Especially against successful scalpers.

All-in-all: Forex is a "funny business". Serious traders do not even trade Forex, but they trade the centralized and highly regualated Futures markets (incl. currnecy futures) or stocks.
  • #19
  • Edited Dec 13, 2015 12:18am Dec 12, 2015 11:59pm | Edited Dec 13, 2015 12:18am
Quoting Kilian19
{quote} I am curious please tell me more about what Oanda did to your account. A larger portion of my account is deposited with them as well so it's actually important for me.
I have an account with them since about 2006. Never had any issues until now. I sent some money to cover a margin call. The money arrived on time, but OANDA decided to block / hold the funds until I answered some administrative question regarding "cross border" transfers in my account. By the time this was cleared up it was too late.
IMO, the total disregard to their fiduciary obligation is dishonest. I will be escalating to the FSO.
  • #20
  • Dec 13, 2015 12:05am Dec 13, 2015 12:05am
Quoting MasterGuru
{quote} According to a Swiss fund manager (who knows Forex brokers better than me, as "due diligence" is main part of his job) practically all trades below 50 lots are "B-booked" by the brokers, i.e. the brokers are betting against 99% of their retails clients. Which makes sense (from the brokers aspect), as they profit not only the spreads and the commissions, but also the client funds which 95% of Forex traders lose. You are right, if 90% of traders won, then brokers would go bankrupt. Which is why they "have to" use the "virtual dealer plug-ins"....
As this is becoming more obvious and keeps more people out of forex. FX Brokers now promote "forex Binary Oprions" ... the new slot machine in the forex casino (:
0 traders viewing now