Are all Market Makers evil?

Beginner Questions
#1

I have been planning my trades in Tradeview and trading my plans in a FXCM MT4 demo.

Today I looked at signing up for a FXCM Standard account which I can use to work on the emotional side of trading. I then realised that the Standard account will be the Dealing Desk option and FXCM will be the Market Maker.

In school I learned that this is not a good thing as I am basically not trading in the market. This reminded me of Binary Trading so I was put off the idea of signing up for a standard account.

I remembered learning in school that not all brokers are evil. Obviously I don’t know who are and who`s not.

Another question that just came to mind. Is the Tradeview platform also a product of FXCM and can one use it to trade?

Any thoughts on this.

#2

Looking at their regulatory history gives some pretty unmistakable clues.

I think it’s right to say that no other brokerage has ever had so many adverse regulator-rulings against them, arising directly over the ways they treat their clients, as FXCM has.

We all decide for ourselves where and how to trade. Personally, I prefer to trade with brokers who [I][U]haven’t[/U][/I] repeatedly been fined millions of dollars by regulators [I]over issues directly related to the ways they’ve treated their clients[/I].

[B]Case Information

#3

I can speak from personal experience as a client of FXCM for going on 5 years, I have never had any real issues, I trade off of their Trading Station platform and have never felt there was anything underhanded going on behind the scenes. They have a pretty good educational team and do a lot of market analysis web cast for members. I have explored a few other sites, trying their platform on a demo account, and never found one I liked better. For me FXCM has become a bit of an old pair of shoes, I am comfortable with them and do not care to break in a new pair

#4

Very interesting, thank you.

#5

Thanks for the feedback

#6

1st. in general i agree with Lexys.

2nd. yes all market makers especially in forex are evil as you trade against them. no matter if you are dealing desk or not you are tradibg against someone who is a market maker.

3rd. evil is the wrong word. as this is a competitibe world where the fittest survives and it has nothing to do with evil or good, its nothibg personal its just business. it is what it is you cant blame water for beeing wet.

4th. i am trading with fxcm among other brokers but i am not usingg their software for charting. i have a charting software which is not connected or managed by a single broker and is not metatrader which is getting its datas from the same broker you sign up for. whatever. there has never been a divergence in the quotes of what i see as ask/bid price from fxcm and what is beeing displayed to me by 4 different sources of quotes on my charting software. so i was not able to spot any fraud or cheating or whatever.

only once a few months ago fxcm had a server problem and quptes did not move for 2 hours and were differing from the real quotes. but that was onve and it was a server problem and fxcm made up for that and reimbursed me all i wanted to be reimbursed.

#7

[QUOTE=“TURBONero;765517”]1st. in general i agree with Lexys. 2nd. yes all market makers especially in forex are evil as you trade against them. no matter if you are dealing desk or not you are tradibg against someone who is a market maker. 3rd. evil is the wrong word. as this is a competitibe world where the fittest survives and it has nothing to do with evil or good, its nothibg personal its just business. it is what it is you cant blame water for beeing wet. 4th. i am trading with fxcm among other brokers but i am not usingg their software for charting. i have a charting software which is not connected or managed by a single broker and is not metatrader which is getting its datas from the same broker you sign up for. whatever. there has never been a divergence in the quotes of what i see as ask/bid price from fxcm and what is beeing displayed to me by 4 different sources of quotes on my charting software. so i was not able to spot any fraud or cheating or whatever. only once a few months ago fxcm had a server problem and quptes did not move for 2 hours and were differing from the real quotes. but that was onve and it was a server problem and fxcm made up for that and reimbursed me all i wanted to be reimbursed.[/QUOTE]
Hi dear turbonero
What chart software do you use

#8

Bro, I reckon you’re doing all the right things because your post shows a little research. Always download a potential new brokers PDS. They are easy enough to find and have a regulated layout/template. If they can’t be found or are abstract, walk away.

But one thing you will need to comprehend and will make things clearer for your decision making.[B] NONE of us trade the markets.[/B] We speculate on price movement within a market [B]OFFERED[/B] as an [B]OTC DERIVATIVE[/B]. Your broker regardless of the wording they use [B]IS [/B]always your [B]counterparty [/B]to your trade.

From my broker IC Markets PDS;

You have the risk that IC Markets will not meet its obligations to you under the CFDs. IC Markets’ CFDs are not Exchange traded so you need to consider the credit and related risks you have on IC Markets. As IC Markets is the CFD product issuer, you are exposed to the financial and business risk, including the credit risk associated with trading with IC Markets. If IC Markets becomes insolvent, ICMarkets may be unable to meet its obligations to you.IC Markets believes that your counterparty risk on IC Markets is low, especially due to its Hedging Policy, Margin policy and risk management. The potential adverse outcome of this risk is very significant to you since, if it occurs, you could lose all or some of your investment.You can minimise your counterparty risk on IC Markets by limiting the amount you pay IC Markets, trading prudently and requesting payment to you of any surplus in your Account which is not required for prudent Margin management

#9

When we are trading with ECN broker which offer [B]Direct Market Liquidity[/B] then this is not the case…

#10

best there actually exists. you have everything that can be traded on any stock exchange on this world. starting from soy beans to mini products and mini markets like even raps oil production in egypt to all forex, indexes, stocks that exists on this world and are freely traded in any of the biggest 100 markets of this world.

I found it to use this software because it offers various sources for quotes starting from little brokers to the stock exchanges quotes directly and sources like deutsche bank or UBS etc. for brokers (interbank market quotes on forex).

main reason why i use it is because you need for every product yore trading another broker. With commmerzbank im trading raw food products like US future wheat and corn and DAX stocks occationally, with VonTobel im trading certificates and options on stocks within the S6P 500, Dow and Dax, with FXCM im trading CFD’s on indexes like dow, dax and on oil and gold.

#11

Thanks for the replies guys.

I had a chat with my broker and this is what he said:

Quote " [B]We are primarily a NDD broker[/B] so our DD account is actually a hybrid of DD and NDDHere is how it works. In the NDD model, FXCM acts as a price aggregator. We take the best available bid and best ask prices from our liquidity providers, add a commission, and stream those prices to the platforms we provide. That’s the price you see. FXCM’s liquidity providers include global banks, financial institutions, and other market makers. This large, diverse group of liquidity providers is one of the things that make this model special.When you place a trade on NDD, we route it straight to the liquidity providers.

On DD, our dealing desk can provide our clients with liquidity but we place a limitation on our desk so that we do not have too much exposure or riskFor example, we can say that we will only take on 10 million in EUR/USD exposureWhen our client trade past that, we flip a switch on our back end and all the remaining orders go on NDDAs for your positions, [B]we are not trading against you. We simply take on a flow of orders and end up with a large amount of one position. We must manage that position. Management of this position should not affect your trading[/B].

Our DD pricing is based on the NDD feed. "

I might signup for their $50 account soon that is also being advertised on babypips and see how it goes.

#12


Suppose one just has to read the PDS. Can’t believe I have to post this s|h|i|t twice in one day.

If the wording is not similar to this then they ain’t ECN and/or regulated!

Typically there are two types of CFD models the Direct Market Access Model and the Market Maker model. The Direct Market Access model results in a corresponding trade in the Underlying Exchange for the instrument over which the CFD is based. On the other hand the Market Maker model uses the price of the Underlying Instrument on the relevant exchange to determine the price of the CFD however a trade may not necessarily be executed in the Underlying Exchange.

IC Markets offers its CFDs based on a modified Direct Market Access pricing model. IC Markets makes hedge contracts at around the same time as it issues the CFD to you by making a corresponding hedge contract with its Hedge Counterparty (not by placing orders directly into the market).

IC Markets’ Hedge Counterparty may in turn choose to hedge directly into the market or it may make a market in its pricing to IC Markets, depending on the market for the underlying investment and the exchange hours. IC Markets’ bid and offer prices to you are based on the corresponding prices offered by the Hedge Counterparty to IC Markets. Generally the prices of IC Markets’ CFDs are set on the trading platform to give competitive pricing but you should be aware that IC Markets is responsible for setting the prices of opening and closing CFDs. IC Markets does not act as your agent to find you the best prices.

Definition

A CFD is a sophisticated over-the-counter financial product which allows you to make a profit or loss from changes in the market price of the CFD’s Underlying Instrument, without actually owning that financial product or having any direct interest in the financial product. Dealing in CFDs does not give you any beneficial interest in the Underlying Instrument nor any right to acquire the Underlying Instrument itself. This is different from direct trading in the Underlying Instrument where you acquire a beneficial interest in the actual financial product.

Definition

Hedging The term ‘hedging’ refers to the process where a financial services provider such as IC Markets reduces their exposure by entering into a corresponding trade with another entity referred to as a Hedge Counterparty.

Establishing CFD Position Here is brief outline of the steps.

  1. Client pays into IC Markets’ client moneys trust account.
  2. Client moneys are withdrawn from trust account to pay as Initial Margin to IC Markets.
    Steps 3, 4 and 5 are virtually simultaneous:
  3. CFD issued to client.
  4. IC Markets 100% hedges with Hedge Counterparty.
  5. Client’s payment of Margin to IC Markets (step #2) is used only for immediate payment to Hedge Counterparty for its hedge.

So unless you have the funds to trade with a prime broker, this is the best the rest of us has access to. Can’t say I read anything there indicating my trade even comes close to being traded in the markets. Dont be fooled by marketing bro.

#13

Thanks fot the info. Yes there are a lot of folling going on in the FX market.

#14

Don’t fear the market makers. You are far more capable of losing your money than they are. And what Bobbill said.

-Adrian

#15

I think “evil” is too simplistic a term for the situation. They’re not evil in the sense that they’re not moustache-twirling comic book villains, but they are dispassionately greedy and that’s not in a trader’s best interest, obviously.

#16

Call me a skepchick, but I suspect there are probably even some of those involved in the industry, too. :27:

#17

All NYSE stocks are traded through a market maker. Is that evil? Should you avoid NYSE stocks because of that fact?

-Adrian

#18

ehh what?

could you explain your statement up there i dint quite understand it

#19

The NYSE for decades used “specialists” which were traders that traded in a given stock and made the market for it. When you bought or sold a stock, you typically did business with the specialist. They modified this role around ten years ago and now they call the current market makers “DDMs” (Designated Market Makers). If you buy or sell a stock at the NYSE, you are likely doing business with the DDM unless he/she matches your order to another trader rather than filling it him/herself.

This model of using market makers at the NYSE has been touted as fair and honest and superior to other market models for many decades. Only in FX has there been this cry of fear and loathing of market makers.

https://www.nyse.com/market-model

-Adrian

#20

Seems I started a good discussion? I just asked the question as I were about to signup. The word “evil” is what I learned in school.

It was mentioned in school that “Not all Market Makers are evil”. I assume there are very few of those?