I spreadbet with LCG.
SB is only an option in a few countries. At least here its well regulated. Check to make sure the firm segregates clients’ funds from their own capital in separate bank accounts, that they are registered with the FCA and that your funds would be protected by the financial clients protection scheme so if the firm goes bankrupt you get your deposited cash back.
Exactly right! …you’re in their platform using their server they are poling the transaction for stop profit and price levels. A single line of code stops you out when you get close to a stop. Another may prevent you from reaching your take profit number. And if that’s not enough another will prevent you from actually entering say a sell transaction if you don’t place your stop at least a spread length away when you win too much. The latter is new so I know adjustments are being made
Hi @tommor and @CrisValenciana,
You are both correct in saying well-regulated brokers cannot hunt stops the way others in this discussion thread have suggested.
For example, in the US, forex brokers are regulated by the CFTC and NFA. The rules governing how we must execute client orders, and then report the time and price of each and every one of these transactions to the regulators are too many to list here, but below is an excerpt from just one rule to give you an idea of the protections in place for forex traders:
NFA Compliance Rule 2-36 imposes a number of obligations on a Forex Dealer Member (FDM) regarding the manner in which it handles customer forex transactions. Compliance Rule 2-36(b)(1) prohibits an FDM engaging in a forex transaction from cheating, defrauding, or deceiving or attempting to cheat, defraud or deceive any other person. NFA Compliance Rule 2-36(b)(4) prohibits an FDM from engaging in any manipulative acts or practices regarding the price of any foreign currency or forex transaction. Also, NFA Compliance Rule 2-36© requires an FDM to observe high standards of commercial honor and just and equitable principles of trade in the conduct of its forex business. NFA’s Board of Directors (Board) adopted these provisions to ensure that an FDM acts honestly, fairly and in the best interests of its customers.
Unfortunately, the term “counterparty” has been misunderstood by many retail traders. Investopedia correctly defines “counterparty” like this:
A counterparty is the other party that participates in a financial transaction, and every transaction must have a counterparty in order for the transaction to go through. More specifically, every buyer of an asset must be paired up with a seller who is willing to sell and vice versa.
All trades require some sort of counterparty, so for example, the counterparty to an option buyer would be an option writer. One of the risks involved in any transaction is counterparty risk, which is the risk that the counterparty will be unable to fulfill his duties.
The last point above highlights why a retail forex trader always has a retail forex broker as his counterparty. While retail forex brokers are willing to assume the counterparty risk of retail forex traders (the risk that these retail traders are unable to cover their losses), the largest banks in the world (those which trade forex with each other in the interbank market) are not willing to assume the counterparty risk of individual retail forex traders or even the counterparty risk of smaller retail forex brokers.
Since every transaction must have a counterparty in order for the transaction to go through, and the largest banks in the world are not willing to assume the counterparty risk of individual retail forex traders or even the counterparty risk of smaller retail forex brokers, major forex brokers like FOREX.com provide an important service to retail forex traders and smaller retail forex brokers by providing them with access to the market they would not otherwise have.
We question this 95%+ figure. We often see something like it mentioned on discussion boards by retail forex traders, but can you point to any reliable study that confirms it?
In the US, forex brokers are required to report client profitability stats to the CFTC every quarter. Below are the stats FOREX.com reported to the CFTC for the past year:
For the calendar quarter ending March 31, 2018, there were 35,139 active non-discretionary trading accounts of which 28% were profitable and 72% unprofitable.
For the calendar quarter ending December 31, 2017, there were 33,885 active non-discretionary trading accounts of which 33% were profitable and 67% unprofitable.
For the calendar quarter ending September 30, 2017, there were 34,138 active non-discretionary trading accounts of which 32% were profitable and 68% unprofitable.
For the calendar quarter ending June 30, 2017, there were 34,911 active non-discretionary trading accounts of which 31% were profitable and 69% unprofitable.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
You make a great point here, @CrisValenciana. FOREX.com offers volume-based rebates as a way to attract more successful traders.
A misconception some retail traders have is that a broker like FOREX.com must not be offsetting the risk on the other side of many of the orders we receive from clients, when actually the exact opposite is true. While we won’t speak for other brokers, in 2016, approximately 98% of FOREX.com’s average daily retail segment trading volume was either naturally hedged (offsetting buy orders from some clients with sell orders from other clients) or hedged by us with one of our liquidity providers.
We discuss forex trade execution in more detail in this post: Who is the counterparty in an exchange?
You make a great point, @Trendswithbenefits.
It’s worth noting that for institutional traders, our parent company, GAIN Capital, offered ECN solutions through the GTX marketplace, which we recently sold.
However, for retail traders, FOREX.com is a market maker, because we believe market making is the best way to provide our retail clients with reliable pricing at retail trade sizes while effectively managing our own risk. We are fully accountable for every execution and don’t outsource that responsibility to a third party.
It’s important to understand that if a particular retail forex broker tells you they are not taking the other side of the trade, that only means they must offset your trades with another firm that is a market maker. That’s because market makers perform a vital service, not only in forex, but in many financial markets, including major stock and futures exchanges.
Consider what the world’s largest stock exchange says about how their market model works:
The cornerstone of the NYSE market model is the Designated Market Maker (DMM). DMMs have obligations to maintain fair and orderly markets for their assigned securities. They operate both manually and electronically to facilitate price discovery during market opens, closes and during periods of trading imbalances or instability. This high touch approach is crucial for offering the best prices, dampening volatility, adding liquidity and enhancing value.
DMMs apply their market experience and judgment of dynamic trading conditions, macroeconomic news and industry-specific intelligence, to inform their decisions. A valuable resource for our listed company community, DMMs offer insights, while making capital commitments, maintaining market integrity, and supporting price discovery.
Well that’s not what this is …
And by the way companies also hire shills to monitor reviews and post just the kind of post you’ve made … they’re calling it reputations management.
As mentioned I’m retired … using Oanda’s rest v20 API with my own algorithm for determining whether a currency pair is going to appreciate or depreciate … and its working well enough for Oanda to start throwing crap in the way. In other words I’ve not lost anything.
What has gotten me to write and forwarn is it has progressed beyond simple robbery to rule change. Spread is always applied to the buy half of a transaction. That means at the begining in a buy transaction and at the end at a sell transaction. Now they want to apply it on entry to sell transactions too.
Try to cheat me … ok I’m up for it. Change the rules to do it and I’m upset. Oanda should man up when they get beat and pay the bill.
You make a great point here, @beaupritchard, and it’s something we touched upon in this earlier discussion, where unfortunately someone was fooled by reviews he read online: I think I’m being scammed by my broker
The NFA has been contacted … thanks for the rule book information
You get that I am not talking about something I “think” has happened … here’s a suggestion “ask your own brokers when it is they apply spread on a sell transaction. If the answer is “on entry” then you are in violation of the NFA rules”
For what it’s worth “how is it you came by this post on this forum” …
ahh … thanks for the posts. I’m not knocking all brokers. Thanks for the insight … about how much is a stp licence
This does happen and you can see it on the chart. However this is not the case with me. I am not placing stops where big companies can figure out where they are. Mine is a straight 50% of spread from price FOK order. If the broker wants to go in at half spread on a buy fine with me. On a sell since spread doesn’t get added til the end it doesn’t matter and the most I can be stopped out for is 50%.
Its in Oandas interest to not stop me out and get 100% of spread when I win. So I ask you … who’s interest isn’t it in … that’s right “its not in “the brokers” interest”. The broker is acting counter to Oanda (the companies) interest. I think as soon as the company is aware of that things will change.
Are you saying a forex company entered the discussion and tried to dissuade him that what he was seeing with his own eyes wasn’t true … really … that goes on?
It seems the Brokers are getting involved here… I only wanted to let newer traders know what to focus their energies on:
Believe your eyes … believe in yourself … believe in your work. Someone who is counterparty to your order does not have your interest at heart … and if you beat a broker too often he will find a way to cheat
Perfect example of a “Liquidity Play” last night (27-07-2018) on the XAUUSD 15 min TF…
This is my own basic Indicator I have coded similar to the Pit View Software. It uses internet data to display the underlying market seperate to the price feed from my broker…
As you can see in the Chart above…Sharp move down of XAUUSD at 6.00pm (9.00am UK), ~30mins later huge buying from the LP’s in the background goes on for ~2 hours before price (which is being held down) finally starts to move up. Ensuring that the Market is ahead of the price feeds and traders… manipulation 101…you can see the same scenario playing out a few hours later…
This is my issue… we as retail traders are being taken for a ride… the market is always 2 steps ahead…
This is an InterBank play and not the Brokers…so maybe @FOREX.com can comment on why price is not moving as it should… I promise not to bite…
You sound like a jilted lover.
I’m sure that the market is rigged for retail traders to lose, but I don’t believe for a second that the regulated brokers are the problem. For a start, if it was them doing things, then there would be traders out there smart enough to get proof and report them.
Secondly, as the forex.com guy says, 98% of their trades are hedged either through opposite trades on their system or liquidity providers. If that’s the case, then how do they have any incentive to push one persons trade to a tp and anothers to a sl?
I started this post as an informational but as it progressed I got less and less interested in informing. NFA has proof. A case has been filed
As far as Forex.com “the pertinent detail out of this excerp is … “FXCM has announced the sale of the accounts of its own American clients to GAIN Capital Holdings, the owner of the brand Forex.com”( excerpt"FXCM created a new company through a spin-off achieved through algorithmic trading).The staff was the same as for FXCM.” FXCM bet against its own clients.The CFTC, the regulatory body for USA markets, found proof of highly harmful behaviour at FXCM. The regulatory body for markets in the USA, the Commodity Futures Trading Commission (CFTC), demanded FXCM exit from the United States market (25 April 2017)
Account brokers that didn’t go with the account to Forex.com went to Oanda. Accounts were sold at $500 per account. The alleged incidents go back to the period between 2009 and 2014.
The agent on my corporate (Oanda) account (Jason) is a former Senior Account Executive at FXCM Inc. “According to the CFTC order, from at least June 18, 2008 until December 17, 2010, FXCM failed to supervise diligently the handling of customer accounts traded on the FXCM platforms by its officers, employees, and agents with respect to changes in price between order placement and execution on both market orders and margin liquidation orders”
Jason (my account representative at Oanda and former FXCM executive) doesn’t appear to be able to stop making “changes in price between order placement and execution”. I don’t think any of the former FXCM brokers can. Cheating customers was part of the corporate culture.
The relationship beteen market makers and clients though sometimes cordial is by nature antagonistic. I’m ok with that. There are however rules. Do not cheat me … do not change the rules … stay off of my machine.
most counterparty market-maker brokers do that, most of the time
including the ones who mislead potential customers by calling themselves “ECN” or “NDD”
FXCM didn’t get into trouble for betting against their clients: they got into trouble for betting against their clients while stating that they didn’t, in other words for deception and lying
not for the first time
correct, but that was for the fraudulent misrepresentations, not for the betting against their clients itself
this is right
FXCM have been found guilty of cheating clients, worldwide, by countless regulators, for as long as they’ve been in business
they’re no longer in business in the USA, as a result
the surprising thing is that they’re still in business in many other parts of the world
they’re out and out crooks, and many regulators have said so, repeatedly - it’s all public information
If you think your broker will hunt your stop, why not take advantage of that?
Say you are long, with a stop 20 pips below. If you put in a buy order just below your stop, sure, the broker may hunt your 20 pip stop with a spike but you aim that your -21 pip buy will be triggered, so when their price is restored you’ve got the same sized trade but with 21 pips already in the bag. You can then close this for an easy win or let it ride.
If they don’t hunt the stop your buy won’t be triggered, and no harm done. If they see the buy order, this alone may deter them from running the stop.
“According to the CFTC order, from at least June 18, 2008 until December 17, 2010, FXCM failed to supervise diligently the handling of customer accounts traded on the FXCM platforms by its officers, employees, and agents with respect to changes in price between order placement and execution on both market orders and margin liquidation orders”
note “changes in price between order placement and execution on both market orders” this is my concern … moving the price I want to the price they want it to be by
These are exactly the things the same brokers at Oanda now were caught doing at FXCM.
that may work … my strategy is different. I’m not looking for 30 pip movement for half a lot. I am looking 1 to 1.5 pip movement for 10 lots. I am using lot size to set monetary risk instead of pip movement
