All possibilities of how one real broker earns.
Oct 18, 2012 at 06:29
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6 Replies
forex_trader_75987
Member Since May 02, 2012
117 posts
Oct 18, 2012 at 06:29
Hello all,
I would like of remove a doubt that could be useful to others..
Well, what exactly the brokers worldwide earn with your clients? I mean, only honest companies.
Its an important question because The broker will never accept that one trader obtain gains against the company, of course.
e.g. If don't exist win-win condition so would be very difficult one broker survive...
So, let's suppose that one mega trader wish invest 10K in market maker (or ECN) and wanna take a hightest profit, how the broker get benefits by this clients?
Obs.: the mega trader uses an excellent EA.
How is possible to establish a win-win condition without provoke disputes?
I know that the spreads are divided between trader and broker... but what ALL possibilities of gains by the broker?
Thanks,Igor
I would like of remove a doubt that could be useful to others..
Well, what exactly the brokers worldwide earn with your clients? I mean, only honest companies.
Its an important question because The broker will never accept that one trader obtain gains against the company, of course.
e.g. If don't exist win-win condition so would be very difficult one broker survive...
So, let's suppose that one mega trader wish invest 10K in market maker (or ECN) and wanna take a hightest profit, how the broker get benefits by this clients?
Obs.: the mega trader uses an excellent EA.
How is possible to establish a win-win condition without provoke disputes?
I know that the spreads are divided between trader and broker... but what ALL possibilities of gains by the broker?
Thanks,Igor
Member Since Jan 14, 2010
556 posts
Oct 18, 2012 at 09:53
Igor123472 posted:
Hello all,
I would like of remove a doubt that could be useful to others..
Well, what exactly the brokers worldwide earn with your clients? I mean, only honest companies.
Its an important question because The broker will never accept that one trader obtain gains against the company, of course.
e.g. If don't exist win-win condition so would be very difficult one broker survive...
So, let's suppose that one mega trader wish invest 10K in market maker (or ECN) and wanna take a hightest profit, how the broker get benefits by this clients?
Obs.: the mega trader uses an excellent EA.
How is possible to establish a win-win condition without provoke disputes?
I know that the spreads are divided between trader and broker... but what ALL possibilities of gains by the broker?
Thanks,Igor
First possibility the broker is a bucketshop (dealing desk) and all your trades never get to the interbank and are counter traded by the broker - they win when you lose and vice versa. This is why the broker will do anything to make you lose either by misquoting you, hitting your stop/orders or interrupting your access to the trading platform.
Second possibility the broker is a true ECN/NDD/STP broker and they make money only on the spreads/commissions - they don't care if you make money or lose money, then only care about the volume of trades - the more often and large the trades are, the more money they make.
Third possibility is a combination of the above.
Many brokers just can't create enough profit with the second optoin and since this is an unregulated market, many brokers do the first method.
Oct 18, 2012 at 10:04
Most of the retail broker is a combination of both methods 'James_Bond' mentioned above. Smart broker divide traders into two groups, winner and losers depending on their previous performance. Then they will connect the winners directly to the raw feed and counter trade losers.
Its not illegal if a broker counter trade your positions based on your previous performance as long as he doesnt manipulate price.
Its not illegal if a broker counter trade your positions based on your previous performance as long as he doesnt manipulate price.
Member Since Jan 14, 2010
556 posts
Oct 18, 2012 at 12:35
Rocky2012 posted:
Its not illegal if a broker counter trade your positions based on your previous performance as long as he doesnt manipulate price.
Issue arises when the broker stops losing his so called 'bets' and plays dirty to get the losses back and some more.
forex_trader_75987
Member Since May 02, 2012
117 posts
Oct 18, 2012 at 14:45
So, the most of broker like to play dirty with traders...unfortunately.
Giving one example. One trader execute 10 lots orders per month and get one nice performance.
Supposing 1 lot = 1,000 usd in one period not counted... so 10 lots = 10,000 usd in one month... Mathematically is easy to do that but thinking economically is difficult.
The broker would accept one kind of trader like this?
Is this win-win condition?
Thinking mathematically is easy but may exist another variables.
Giving one example. One trader execute 10 lots orders per month and get one nice performance.
Supposing 1 lot = 1,000 usd in one period not counted... so 10 lots = 10,000 usd in one month... Mathematically is easy to do that but thinking economically is difficult.
The broker would accept one kind of trader like this?
Is this win-win condition?
Thinking mathematically is easy but may exist another variables.
Nov 01, 2012 at 17:55
Yes the broker would happily accept any position so long as you have the margin, and not exceeding their stipulated size per trade, some pairs its 20 lots some 50, then you could do multiples
Brokers always win, but thats okay we need as as much as they need us. unless ?? and this is where i hope rocky or JBond will fill in some blanks
Brokers always win, but thats okay we need as as much as they need us. unless ?? and this is where i hope rocky or JBond will fill in some blanks
We are all faced with a series of great opportunities, brilliantly disguised as unsolvable problems - John W Gardener
Member Since Nov 09, 2012
76 posts
Nov 12, 2012 at 07:33
Jaypipin posted:
Brokers always win, but thats okay we need as as much as they need us. unless ?? and this is where i hope rocky or JBond will fill in some blanks
Of course broker always wins. It's go-between. The more we trade, the more it has a profit. But for bad broker the formula would be: the more we lose, the more it has a profit.
If you want to end up with a nonaverage net worth, a “learn from someone else” attitude is paramount. Putting your ego aside and admitting that you don’t know it all isn’t easy, but it is the mindset of true winner ----Paul Tudor Jones.
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