guys, i am astonished by the lack of knowledge on this forum. so let me please help clarify so that this issue can be put to rest once and for all.
the question is: āWhich is your best broker?ā
the question should be: āHow do you determine which broker is best?ā
FACT1: the majority of retail traders will lose everything.
FACT2: a brokerage is a business, therefore not a charity, therefore exists for one reason only: NOT TO HELP YOU, BUT TO MAKE MONEY FOR THE BROKERAGE.
FACT3: knowing FACT1, many brokers are tempted to pocket the client losses as a profit for the broker instead of passing the orders straight through to the LPs and let someone else make the profit.
knowing all this, the ANSWER is:
[B]ā>[/B] A BROKER THAT WILL NOT BE TEMPTED TO POCKET THE PROFIT COMING FROM ITS CLIENTSā LOSSES KNOWING THAT MOST OF ITS CLIENTS WILL LOSE ANYWAY [B]<ā[/B]
so whether the broker offers an ECN venue or not, whether it is STP or not, is all irrelevant because underneath, the broker software keeps track of statistics on all its clients. this helps the broker categorize its clients and decide which client should be on the B-book (market maker model) and which client should be on the A-book (agency model, also sometimes DMA model but DMA could be implemented differently than the agency model, but either way, the broker is never the counterpart to your trades, whereas it is in the B-book model; now, you can have ECN brokers that have to be the counterpart to each of your trades (for hedging purposes and/or legal requirements between them and their prime broker who is extending the credit lines to your broker so that you and other retail trader can trade) but will not act as a market maker; so you see, you can have ECN with thee also broker the counterpart to all your trades, in which case the question becomes: will the broker be tempted?)
so if you can determine whether your broker will be tempted, then you will know. if you cannot, then you will not know if they trade against you. unless, of course, they tell you in the legal documents.
also, having the broker on the other side of the trade does not mean it is a problem. it becomes a problem if the broker becomes tempted to cheat you because they lose too much money and donāt have a way to hedge the trade risk.
so there are market makers who will not cheat the client. instead, once they realize their clients become to good and win more than the broker, the broker will hedge this client risk with external LPs (liquidity providers) BUT if they do not have the software infrastructure or prime broker/bank relationships to access external LPs, then they cannot and will have to cheat the clients by manipulating the price feed to either trigger stop losses, margin calls, requotes, and so on.
now, i hope this whole issue is clear once and for all.