Let me start with your welcome, it’s actually my pleasure to try and help. Firstly when I say help, I don’t mean do your work. I mean help you to do your work. I will help you by first telling you that most of your answers can be found at the babypips school and google. Next all my posts are my opinion and my understanding and what I base my trading on. That doesn’t mean it’s necessarily facts. For example I believe the majority of forex brokers are not scammers but legit businesses. That’s my opinion. 2+3=5. In my opinion that’s a fact. Now onto your questions.
Most traders will agree that brokers would be classified into the following: Dealing Desk/Non Desk. Babypips or Google will define the difference. From there we break it down to: Market Maker, STP, DMA, ECN; same thing babypips school and/or google will give you answers. It’s better for you to do this work, because deciding on what broker and how to choose a broker is key to long term success. Now I’m not trying to be cute or evasive to “where does the lost money go?” If I was lazy and didn’t want to do the research, I would say. . .”Who gives a Sheet?” “It’s not going in my pocket, so I don’t care where it goes as long as I’m not being cheated. I’m more concerned as to why and did I do something that caused the loss. How do I figure out if I’m being cheated? I go learn basics of how brokers are classified from babypips school, then I research the broker to see, then I make an informed decisions based on relevant Facts, Real Options, then I pick the Least of the Evils; not fool proof, but works based on the balance of probabilities long term. (If you don’t understand what that phrase means, “balance of long term probabilities” make sure you look it up, understand it don’t stop until you do then live it. Generally speaking your losses go to the other side of the trade as well your broker takes their cut. For example in my case my broker charges me a % based on lots I trade, so If I had a losing trade and I was long, the short side of the trade gets my loss, my broker gets the % they’ve charged me to trade with them. Like I said Generally.
As far as responsibilities to your account, that’s your broker. Again found at babypips school. Yes brokers take the other side of your trade, and it depends on your definition of cheating. In my opinion, taking advantage of an uniformed situation is not trading. Is it cheating if a broker takes the other side of your trade if you are over leveraged, over trade, don’t have a loss protector? Like you, most brokers who take the other side of your trade are playing long term balance of probabilities. As well I would also say yes some do cheat but personally I don’t believe it’s wide spread, again only my opinion. Brokers will categorize you depending on your winning, losing and profitability. They’ll place you in what’s called “A” and “B” books. I read this somewhere and questioned my broker about it he said in some cases probably true, but in my brokers case he said they take their commission and send it to market. This is what I read; As a new broker client, Forex brokers will keep your trades “in house”. Basically your trades aren’t sent to the real market. The broker will execute your trades and bet against you, taking the other side of your trade. Why do Forex brokers put you in the “B” book? Firstly, because the “B” book is a profitable business model. Statistics prove that 90% of traders lose all of their deposits within 6 months. So the stats favor the broker. IG Markets holds the biggest “B” Book in the world. Why do Forex brokers put you in the “A” book? Brokers will put you into the “A” book if you’re profitable. Brokers send profitable traders out to their liquidity providers because no one wants to bet against profitable traders.
Anyway thanks for the question. Hope I Helped