Hi,
Does Direct market access Forex exists at all, for retail traders ?
For example IG offers two types of forex - CFD forex and Normal forex, and I have the feeling, none of it has anything to do with real Forex market. It’s all a pre bought pools, a computer game of a sort … Which brings me to my original question - are there any real market Forex platforms for retail ?
Best!
Originally, only banks and people with a lot of money could trade forex, stocks and other things like that.
Thanks to brokers like IG, you can trade the forex market by placing your trades though them. Brokers are like middlemen that link people to the forex market.
Nothing is computer generated, you are trading the real forex market just through a third parties (AKA brokers)
If you buy any currency and exchange it for a different currency E.g. USD for GBP, you are directly partaking in forex.
Only if you have many millions.
And most people wouldn’t call that “retail” trading.
Otherwise, when you “trade” with a spot forex “broker”, NO CURRENCIES ARE CHANGING HANDS.
I don’t want to start an argument, here, but DaddyPL’s post just above really is entirely mistaken.
Thank you for your reply, I’m all in favour of a constructive argument. That’s how we learn. Can you please elaborate more on the ‘Spot Forex’ please. Thanks.
Retail Forex Trading is an illusion. No Retail Forex CFD Issuer, Spot Forex or Prime Forex brokers offers real market access.
Our trades are not executing anywhere, Our trades are not getting exchanged between Base and counter currency. Our trade are executed to broker itself (Market Maker) or Liquidity Providers (STP or ECN). We are not trading but we are betting against Forex Broker or Liquidity Providers.
Real Forex market available only to Multimillionaires, Billionaires and Banking/Financial Institute.
George Soros shorted GBP with 10 Billion Dollar bid and Made 1 Billion dollar as profits, these kind of trade involve real currency exchange between Trading Account Capital currency, Base currency and Counter currency.
Yes, direct market access Forex does exist for retail traders, though it’s less common. You’ll need to find a broker that offers true DMA to access the real Forex market. Best of luck finding the right platform!"
What do you mean?
Isn’t exchanging one currency for another foreign exchange?
Yes, but there are no exchanges of currency being made, when you “trade” spot forex/CFD with a retail forex “broker,” exactly as @TruncatedUsernam explained above.
All you’re doing is betting against a counterparty on the prices of the counterparties own “products” which have been created solely for retail traders to bet on them.
Don’t imagine that because the “broker” calls itself “NDD” or “ECN” or “DMA” that currencies change hands. They don’t.
Wait
So you’re just telling the broker whether or not the exchange rate is going to go up or down, and the broker doesn’t actually go to the bank and all that stuff?
There’s an A book and a B book for every major retail broker.
When you sign up, there’s a reason your broker needs to know if you have FX trading experience, net worth, ect. You’re predesignated to B or A book. B book never leaves the broker. The largest metric is trade/account size. The B book will look like a lot of small positions. Very diverse. Retailers are groomed by their broker’s advertising to put their profit level further away than their stop level so the B book will always have a positive expectancy for the broker. Hence, why BabyPips will never recommend using a Reward:Risk below 1-their promoters hate it.
The A book traders are ones that show profitability, trade with size, and/or have experience. The A book’s manager is responsible to pass these orders on to the Interbank Market and hedge immediately by trading with them. Because these traders are the most consistent winners, the A book will have profitability.
I know about the A book and B book but I thought they both take your orders to the market
So
If you say the price will go down and it does, your broker pays you money?
Not at all.
Only A-book does, and that’s a VERY TINY minority of trades, overall. If any!
It’s just not as simple as “A-book” and “B-book”.
“A-book” almost doesn’t exist at all, these days.
Some CFD brokers set off their own net risk exposure in a real market after internally cancelling out their exposure to/from their customers’ positions, but even that isn’t passing individual trades to a market, which is what most people mean by “A-book”.
Among the UK’s FCA-regulated brokers, according to the FCA, direct A-booking of individual trades almost never happens (which is perfectly legal, of course).
And they’re about the best regulated ones.
If it doesn’t happen even with them, you can be pretty sure it doesn’t happen much anywhere else.
The voices of the informed are drowned out by the disinformation from the financial services industry. Brokers don’t normally lie outright but they lead new clients to believe that we are all taking part in the multi-billion dollar industry of exchangng currencies.
In fact we are taking part in the multi-billion dollar betting industry. If you don’t like the idea of betting to make money, well, there are plenty of other enterprises available. But you can’t come to babypips and expect the industry’s BS to be respected.
So
If I open a buy trade, the broker opens a sell.
If the price goes up and I close my trade in profit, will they just give me the money out of their pockets?
If that’s so, how do they get the exchange rates and all that stuff?
That’s basically betting, right?
It’s not really a “trade”. It’s a bet.
Yes, but overall they win.
About 20% (average figure) of their customers are profitable over any 3-month period, but very, very few are profitable over a whole year.
Again, that’s according to the FCA.
The numbers for other, non-FCA-regulated brokers will certainly be less favourable (to customers).
It’s possible but not easy.
But then it technically isn’t forex since no currency is being exchanged, right?