I’m wondering what other people think about this paragraph I found on wikipedia about market makers (I know, not exactly the bastion of knowledge, but it got me thinking).
“In foreign exchange trading, where most deals are conducted Over-the-Counter and are, therefore, completely virtual, the market maker sells to and buys from its clients. Hence, the client’s loss and the spread is the market-maker firm’s profit, which gets thus compensated for the effort of providing liquidity in a competitive market. This extra liquidity reduces transaction costs and therefore facilitates trades for the clients, who would otherwise have to accept a worse price or even not be able to trade at all. Most foreign exchange trading firms are market makers and so are many banks, although not in all currency markets.”
Doesn’t that create a huge conflict of interest? If my broker (the market maker) can see my open position, it is in their interest that I loose money and that they make the money. When trading, aren’t I actually fighting against my broker? If I’m making money, my broker is loosing! Just like a casino. What makes matters worse, since my account is with the broker, and they have access to all my account data, they can see my stops and limits. And they loose when I win!! Since they have massive liquidity, they can throw a few million/billion in any direction in order to trigger stops/limits depending on what suits them most! Perhaps a solution is to just include ‘mental stops’. That way I’m not showing the ‘house’ what my limits are. This seems to explain why 95% of traders loose their money!
Does this make any sense? Would love to hear what others have to say on this topic.
95% of “traders” lose money because they don’t know how to trade. Retail access to the market, assuming you are involved with a reputable broker (ie. NFA registered at least), will never compare to a ECN style broker that offers the interbank rates and charges commission. But with the right broker, the extra transaction costs can be minimal and you can still trade just as profitably if you are indeed good at trading.
That said, I would never recommend scalping on anything but an ECN style broker. We are lucky that retail brokers exist, they offer you a chance to trade Forex with amounts of money way way too small for real interbank orders. In effect, you bite the bullet till you can afford to get better access to those interbank transactions that are whizzing by in 1million sized lots.
Making money in anything requires effort and forex trading is no different � there is no free lunch in any form of making money and you wouldn�t expect their to be Forex traders who fall for �its easy story� lose quickly.It is not gambling - it is an investment.
That wouldn’t make a difference, because they’d still know pretty well where all the noobs have got their stops - mental or otherwise. Remember they wouldn’t be just going after YOU and your specific stops, but as large a group of people as possible, by targetting a certain likely area of stops.
I am unclear about how exactly a forex brokerage is run, but I believe it is not comparable to a casino, as you are betting against the overall market and not the broker.
When you place a trade to buy 1 lot of the EURUSD, what is typically supposed to happen is that an electronic order is placed to take a loan of $100,000 USD, and use that money to buy its equivalent of EUR. So in effect you are expecting the worth of the USD to decrease and the EUR to increase. Any profit/loss on your side is with the exchange rate, when you sell back that lot.
The broker then becomes the ‘middleman’, not the retailer. If the scenario you mentioned was the case then it would be very easy for a broker to lose their entire firm if it had alot of good investors on their accounts, since the odds of losing is close to 50%. (Mind you the 90% [fake percentage] of traders that lose money don’t bet a million dollars each time, they’re probably new to the trade and have little money invested)
Of course for every trade there are people who bet counter to each other, eg there may be another person who sells 1 lot of EURUSD. So in effect, there needs to be no actual ‘buying’ or ‘selling’ between banks because the effect is cancelled.
Brokers make money by the spread, when you buy one lot of EURUSD, you would (typically) be down by 2 pips already (the difference between buy/sell price). This is how brokers make money.
forex rigged? yes in a way… once you understand retail account for 2% of movement and intrabank is about the other 98% … but if you think they see you and trade against you to take your money then thats just a conspiracy
how far do you think we could move the market if we got all 2% of the transactors together and all short/longed the same pair… maybe one pip that would be eaten by bank movement… they dont care and brokers dont control banks.
The trading platforms are rigged…banks trade by secret candlestick or bar code the only way to beat to the system is trade the big moves with the pros even then when you follow there moves they will stop you out… Wealth is distributed among the select. Nothing is governed by chance.They have had years of social manipulation to protect there wealth.As for the pro traders who think they have all the secrets they usually work for the banks or brokers who line each others pockets.The truth is they have to keep the common folk suppressed and there knowledge & secrets are guarded with there conspiracys & media lies.The old saying big fish eat little fish.Thankfully there is a pure energy called god that will overcome there greed.All truth and knowledge comes from god!Although even religion has been manipulated by money.Seek your own inner truth & next time the market moves against your definite trading win.Remember they are always watching you & your trading platform is perfectly rigged to go against you!
It aint a rant when platforms have pip slippage & lockouts & delayed feeds with spread changes yeah there all very honest,thats a fact of truth!The only one who gets the last laugh is the bank & broker…Ive even seen chart changes from broker to broker,i never said you cant make money,but i guarantee its always just enough to make you feel like a satisfied customer,while the broker is the real winner.
With a pseudonym like master to supplement your ego,why not title yourself lord or sir?Or is this alittle to prententious?As for the tin foil head band it seems to be receiving the frequencys to keep my P/L with a smile!
Those who havnt realised the scrupulous ways of trading platforms can hardly call them self a master{master being enlightened one}.Perhaps jedi is a better reserved title for one,my son like stars wars & he is 2 years of age!Just a thought!
My screen name came from a comedy movie called “Kung Pow”. There is no pretentiousness to it. Master Tang gets his a$$ kicked routinely in the film. He’s a master of nothing.
Why the hell did you thread dredge almost 2 year old topics to piss and moan about rigged markets, only to finally say your p/l is good?
Brokers make money by the spread, when you buy one lot of EURUSD, you would (typically) be down by 2 pips already (the difference between buy/sell price). This is how brokers make money.
Agree with you. But know that broker must translate all client’s transactions to interbank, at that rate you can be sure in his fair-dealing.
