Does every forex broker derive their gain directly from client losses?
What is the difference between forex brokers and exchanges - based on the topic?
How would you defined a trader who might be labeled as being a “liability” to brokers? To what extent?
There’s no doubt that there’s definitely conflict of interest in the industry. How can we all have a win win situation?
A liability trader would be in the A book a better trader in the B book…
If you was a broker what would you do to limit and control your risk, exposure ?
Who is a “better” trader?
It is wrong to term it a conflict of interest just because your broker takes the other side of your trade. Your broker is just the passive market-maker, offering you both bid and offer prices. It is your choice which you choose!
If you want to trade the market at all then you need someone to take the other side of your trade otherwise there can be no trade. The entire industry is based on continuous bid/offer availability and, as a little retail trader, you are only likely to access this via a broker. But even if you could directly access the real interbank market you would still be dealing with a market-maker.
Your broker cannot independently move prices against you contrary to the market in general, although they can widen their spreads according to their own policies.
You broker makes money from a variety of sources including commissions, its spreads in addition to the losses from clients.
It is a fact that around 80% of retail clients lose money but that is due tp their own failing and is not caused by the broker. In addition, a broker cannot hedge every single trade that is taken by its clients and there are many clients with opposing trades at any one time that, to a certain extent, neutralise the broker’s overall directional exposure. But if the net exposure is still excessive then the broker will offset some or all of the risk with back to back transactions with their liquidity providers.
There certainly are malpractices amongst various brokers and regulation is an important consideration when selecting a broker, but you need your market-maker in order to trade at all and thus they are offering you an essential service that one should be grateful for rather that accusing them of a conflict of interest.
This all relates to brokers offering market-making services. There are other models which work on different terms.
A consistently profitable one…
with a fast computer the broker can calculate if x client are on the winning side and what is the max stop loss
some times i get the message “not enough money” when I am about the enter a trade from a no turning back price
why do you think some broker set up their headquarter in some far off island
just so they can get away with some very suspicious practices
but Trades are the clients and the client is king
all they have to do is report all suspicious practices to the social media so that other traders can be warned
Of course they have “fast” computers! brokers do not have a row of humans taking each individual trade as it comes in and deciding what to do with it.
Why would a broker look to automatically pass through every single little microlot trade to its LPs just to offset exposure of a few dollars when it knows that, on average, some 80% of those trades are losers? They would only be passing on a source of income to their Interbank partners! In any case, out of every 1000 trades coming in a large portion are in opposite directions anyway and automatically neutralise the exposure risk.
Naturally, a broker’s systems are geared to identify and flag statistically consistently successful clients whose trading volume/size put them in a different category in terms of their own risk management. But I doubt if anyone coming here as a newcomer even appears on a broker’s radar from an exposure risk point of view. They are just profits waiting to be banked - and through the newcomers’s own mishandling of their trading.
ECN and STP type broking are in a different category. The topic here is about brokers having a conflict of interest and is aimed at market-makers.
What has this got to do with brokers being a conflict of interest? This refers to a lack of equity in your account to cover the trade you are trying to place.
This also has nothing to do with whether market-making is a conflict of interest. As I mentioned, there are rotton eggs in every industry and forex broking has more than its fair share of it. That was why I said:
Practices such as suddenly widening spreads, delaying/avoiding withdrawals, closing out trades, etc do happen in rogue firms, but that is again a different issue to the principle of market-making.
But what is really hard to understand is why do newcomers even consider such little-known brokers operating from offshore centres with no real regulation. People come here and ask if people know this broker and that broker all of which are based in the strangest of places with addresses that dont even phyiscally exist. WHY? What is wrong with starting with a major broker name?!?
I know some people may try to save money by servicing their car with a backstreet workshop called “I M A Krooke and Co.” instead of an authorised dealer, but why trust your trading equity to the equivalent instead of a highly regulated, highly capitalised and well-established international brokerage?
Yes, there are always risks with brokers, but the only way to avoid these totally is to find another hobby for your money.But if you are going to trade then minimise your risk by using a reputable broker, manage your exposure and take pride in trading with disciplined professionalism - and a whole lot of patience.
no sir equity is available it is just that they have their system programmed to delay possible good winning trades with this kind of message
agree
I really don’t see that! A broker trying to avoid taking business? 
I can understand a broker system delaying filling a trade to save some pips in a fast -moving market, but that is a form of malpractice and does not come with a message about lack of funds. In any case, for example, my broker very frequently comes back with fills with positive slippage! i.e. a few pips better than my order! I certainly don’t complain about that!
If you are really experiencing such wierd issues then change to another broker. If someone would really represent a threat to a broker simply because they might make too much money for them to handle then they would just pass these trades straight through to their own LPs and be happy with the spread earnings from such large positions (which they would have to be in order to create such a situation)- but I somehow doubt there are many here in that class!
But, either way, this is not a conflict of interest issue. A broker would not be actually making any profit by preventing your trades and he can easily cover his risk whenever a trade is made.
not a loosing one 
Especially then! 
As Forex is an OTC market, that mean that there is no general central marketplace, broker operates as a counterpart in each trade. Some brokers (mostly regulated by European authorities) state this in the Terms and Conditions placed on the website, so it is quite easy to check it.
By the way, it is important to read carefully the abovementioned document. Sometimes it may include unfavorable of even strange provisions like the right of the broker to revise the trades and trading result without explanation. If the broker as your conterpart will lose money, the broker as provider may revise that trade and restore the results. But it fact, the brokers do not need this: according to the open data, most of the traders lose money, so it is possible to pay the winners using that money.
Do understand the difference, you may check the rules for broker providing acces to the regulated market like NYSE or NASDAQ. It will be surprising how limited scope of right such brokers have.
strange indeed no wonder why 80% lose
when the trader is about to make profit they cut the light like in casino
and when the trader is about to lose they let him/her go
obviously the broker does not get enough from commission so the broker use unethical and unlawful tactic to bring butter to the table
conclusion Yes there is conflict of interest and new traders must know this
Prophet Mohammed peace be upon him
advise people not to enter in a commercial deal that involves an entity like a broker and where the actual product involved in the deal is not seen (or to my understanding not control by a well regulated body) same like forex
a person does a buy and nobody knows if the purchase was actually made by the broker or not
forex is like any commerce industry but the lack of regulation like the ny stock exchange make it a very bad place to invest your hard earned money
Where on earth do you collect such rubbish from???
If anyone actually reads and believes this kind of junk then just don’t bother trading at all - come to that, if you really believe this then why are you here at all on BP???
I have wasted enough time on this BS 
I leave to carry with this. Honestly, the level of intelligence and knowhow on this site has really struck the muddy depths or ignorance and misinformation…
Feel free to spray away, I’m done here.
sound like you are working to promote brokerage firm
you talk about traders loosing with cheer
it is very obvious
i am here because i like trading and this site is all about trading and making this industry free of unethical practices
This may be of some interest to you:
Market making brokers are facing increasing costs in an environment of low leverage
In particular, this:
“Brokers who run their own book offshore are not impressed with any execution stats, multiple liquidity providers and superior technology that can seamlessly deliver a state of the art user experience. What they continue to care about is attracting clients who can’t trade.”
i guess that is what i have told you
and if the client can trade they cut the light like in casino
why do you think they set up their headquarter in some fare away jurisdiction
y’all should read Flash Boys, it talks about brokerages selling order flow to high frequency trading shops who front run… in the stock market… i would bet my net worth the same thing happens in forex
Any updates on the situation?