Hi all
I wonder if some of you senior guys can enlighten me on brokers, i’ve been lurking around the forums here for a bit and am still abit vague on how or why your broker is not on your side.
As far as i understand it, your broker makes thier money off thier spread (non ecn broker), so whether you win or lose they still make thier spread and then they margin call you to prevent you from losing more money than you have in thier account (hence protecting themselves).
So a few questions if the aforemention idea is true(plus a few others):
I’ve read here that if you are too succesful your broker may suspend/close your account - why would they do that??
Stop hunting - again why would they do that? How does your broker benifit by stopping you out??
What is a bucketshop? and how can you tell if the broker your dealing with is one?
Dealing desk vs non dealing desk - i seem to gather that most who claim to be non dealing desks are actually dealing desks. Again what is the advantage or disadvantage??
I’m currently demo trading with onada cause when I go live i’ll use them because of the small amounts i can trade to get comfortable and a good system in place. I find that a demo account kinda has to be unrealistic as I “win” way way more often than i lose… it simply can not be that easy.
Could that be another tactic of a broker just to get you to start trading with real money?? Seems kinda shady to me…
Look at it another way. Professional traders (ie retail brokers) get the chance to trade against complete novices like those who inhabit this site (who are more informed than the average). Its money for Jam. Often they are taking the counter position against you not laying it off into the market. Hence they get the spread plus whatever you lose on the trade. Like any business they are looking to maximise their profit. It doesnt matter if you retire hurt to lick your wounds there are a hundred others only too willing to take your place. Your broker is NOT your friend, please understand this
Let me start off by saying you could do a lot worse than opening
your live account with Oanda.
I have used Oanda for 15 months, demo & live, without
any problems which weren’t caused by my stupidity,
naivity, recklessness et al. Yep they possibly do stop hunt, but I have
never seen it, plus I have a successful system & I am still with Oanda.
But there are some rogues out there, the same as in other businesses,
who have given forex a bad name, they stop hunt (generally this is not
single accounts, I suppose it could happen though, but they will target
a specific level, a support or resistance line where they know a lot of
traders have their stop losses, result the spread plus a bit of your account)
Banning successful traders? I would say this is a 50/50 myth, loser traders
keep this alive because it’s an excuse, which they need to save face, better
to say I was banned for being too successful then to tell the truth, I bombed
my account because of my incompetence in trading. But the rogue dealers
also could do this, they want to take your easy money not you take from them.
In all businesses there are shysters, just out there to make a quick buck,
then off they disappear to the hills.
Not only are the markets fed by fear, the forex industry itself is fed by it.
On forums, by loser traders, by rogue brokers, et al.
So you need to do a lot of research, read all the forums with an open
mind & first & foremost learn the business, this includes not only technical
& fundamental analysis of the markets, but also how to sift through all the
ditritus on the various forums etc.
For more info on your questions follow these links.
I thought the same way. Look at the actual prices of the pairs you are trading and you can see if you are losing or not. If you went long on a pair and your platform is saying you are making a profit then look at some charts to make sure. I think that would be the way to check… Look for national futures association website or NFA and also look for cftc.gov which is commodity futures trading commission and you can get info on brokers.
I thought about something else. If you are a pro forex trader doing it for a living or are good at it and making money but maybe not pro, then these brokers all they have to do is follow your trades to make money too. I mean just follow the lead. They make their money on spreads and make money on your trades if they are that shady that they have to do that. I mean what incentive do they have to ban you if they can make money with you? Just my tcw
Okay, i think the light is turned on now… haha… thank you for your information
So the just of it is the chances are your broker will either hedge your position or take the opposite position.
So should a trade fail, they not only get thier spread plus they have won by taking the opposite position, and of course the latter version is where they make the most money, which kinda leads into the stop hunting, again by stopping you out early, they benifit as they have most likely gone against you??
And as far as the dealing vs no dealing desk, the latter is the better as theoretically there is no slippage & requotes??
NDD is better because a Dealing Desk broker is usually trading against you, whereas a NDD usually isn’t. That doesn’t necessarily mean that there won’t be any slippage or requotes. Slippage can occur with any broker if the market is moving quickly. Requotes are a ripoff and any broker doing that should be avoided.